Short Sales affect on local Real Estate Market
I recently read a commentary from a Real Estate professional who’s take on Short Sales differs vastly from mine where he thinks Short Sales are more damaging then Foreclosures are to our local Real Estate Markets. I will also point out that I have closed on substantially more Short Sales just so you know my level of experience. So what was discussed about Short Sales?
Most of the complaints that were issued by this commentator/Real Estate professional about selling your home as a Short Sale and their effects on local markets were that his complaints against the Short Sale Seller should have actually been issued against the Short Sale Realtor, as the issues prevalent could be virtually non existent had a trusted, experienced, skilled Short Sale Realtor been representing the distressed Seller. Here’s what was discussed:
- 1. Stating that the distressed Seller isn’t concerned about getting top dollar. Well they should be, and any Short Sale Seller that I represent our goal is to get top dollar which is based on fair market value. If you know Short Sales as a Short Sale Specialist would, they’re not going to set an unrealistic low offer as they’re well aware of the fact that the majority of distressed Seller’s Lender(s) are not going to approve a Buyer’s offer that is way off of fair market value. The Short Sale can be priced just like a Traditional home sale would be priced which is determined based on closed sales, pending sales, expired sales and active sales and it’s up to the Short Sale Realtor to know how to place the Short Sale Seller’s home on the market to generate a Buyer’s offer and quite possibly multiple offers that will even increase the selling price while gaining Short Sale approval. It’s not about throwing a low price at the wall and seeing what sticks. All fees and costs of the Short Sale transaction are scrutinized being taken into consideration and will always be kept to a minimum if the distressed Seller is being represented correctly. We all know how low sales prices can depress a local market.
- 2. Stating that Short Sale Sellers are just looking for extending the time that they can live at their home without making a mortgage payment; a mortgage payment that most Short Sale Sellers can’t afford. If a Short Sale Seller is not making their mortgage payment then the foreclosure process has likely reared it’s ugly head. If they’re looking to live longer in their home they sure aren’t interested in doing a Short Sale as a Short Sale will only give them a set amount of time until a Buyer’s offer would come and then get approved by their Lender(s). So if they’re just looking to stay longer in their homes then I wouldn’t recommend a Short Sale as a foreclosure would likely do a better job for them if their goal is living free for longer.
- 3. Stating that the if they’re going to Short Sell their home, then they’ll probably not want to fix their home up to be in good condition. Did you know that a great majority of Short Sale homes do not need to be fixed up as is not always the case with homes that have been foreclosed upon. I can count on one hand the number of Short Sale Listings of mine that needed a lot of fixing up. I recommend all of my Short Sale Sellers to get their homes “sell ready” which is neat and sparkling clean. How many foreclosures have you been in that have been trashed from a very unhappy homeowner?
- 4. Short Sale Sellers just aren’t willing to cooperate such as not wanting to let prospective Buyers in to show their home. I’ve had only 1 Seller who we had an issue with this as the distressed Sellers had a non paying Tenant in the home who made showings very difficult. This is not the norm. When I have an initial Short Sale consultation with a distressed Seller I know whether or not they are motivated to move forward and if they’re not, then we don’t represent them with a Short Sale. The unmotivated Short Sale Seller becomes a foreclosed upon homeowner.
- 5. Delays of a Short Sale make it hard to sell. A Short Sale is not hard to sell to if you know what you’re doing, if you have a system. There are delays, yes, but as long as everybody on board knows, going in, that you need to anticipate a 30-90 time frame then all is well, understood and accepted. Recent guidelines effective June 1st, however have gotten a push in to Lenders to get them to reply sooner; a good thing. Overall, time frames can be kept to a minimum with a Short Sale Specialist who is on the side of a distressed Seller.
- 6. Buyers don’t want to buy a Short Sale. This is true of some Buyers who do not like Short Sale due to the additional time frame yet if they find a home of their dreams and know that the Seller is being well represented they are willing to wait. It’s all about a Buyers expectations up front; making sure that all is clear and understood. How many Buyers are excited about buying a foreclosure dealing with multiple bids and being beat out time and time again by a cash Buyer.
- 7. Lastly, the concern of fraud with Short Sale Listings. Where is the massive fraud with Short Sales? The fraud with Short Sales are the deceptive individuals who try to take advantage of the distressed Seller either getting them to pay extra fees or in their lack of being properly represented to get their home sold to avoid foreclosure. We all know about the fraud with foreclosures; particularly with the robo signing and what it did to the Real Estate Market.
So again, tell me why Short Sales are more damaging than Foreclosures? Short Sales affect on local Real Estate Market is not good , this we know, but more damaging than Foreclosures, No. Perhaps what is most damaging to the Real Estate market in Short Sales is who is handling the Short Sale and this is not the result of a Short Sale. Foreclosures should be a last resort after a loan modification didn’t work and a Short Sale didn’t work. How can a Foreclosure be better for the neighborhood. Is the vote in yet?