What's The Hold Up?

When I write my blog, my inspiration mostly comes from the issues that I find my self dealing with on a daily basis. Recently, I find myself dealing with a very slow but steady short sale market. Typically I'm asked the question, when are things going to turn around? I usually say that things have turned and we are through the worst of it. Just look at the closed and pending sales this year.

The bigger question is: what's holding up the short sale market? We can easily be further through these tough times if the banks just figure out a way to get through the short sale glut. There are a tremendous amount of pending short sales on the market right now, and if these could just get processed in half the time it is currently taking, we'd be through these hard times twice as fast!

Simply put, the banks are holding up the real estate market! There are many reasons for this, but for the most part, nobody is truly sure why. It could be because the banks want to wait for a specific fiscal quarter to take a loss, or maybe they only approve short sales once a month, Again, nobody knows for certain, but many people I talk to also say that the banks are simply overloaded and can't get through the contracts fast enough. I mentioned in a previous blog that this should change for the better, sometime soon. Then again, not soon enough.

Either way, the short sale market is like a clogged drain. Unfortunately I'm not a plumber and I don't seem to have any liquid draino around.

For some extra value I offer these few points when buying a Short Sale:

1.) Ask if it's an approved or unapproved short sale? Typically, an approved short sale can take up to half the time as an unapproved short sale! This is because, in order to get the approved status, a short sale must go through the BPO process and be approved by the bank. What tends to happen is that the initial buyer who got the short sale process started, got tired of waiting and took their contract off the table. In the meantime the process went forward without the buyer, and now there is a small window of opportunity for a new buyer to put in a contract after all the processing has been done. A buyer can still get a discount off the price, but if the BPO is current, then the bank would want to get a price close to asking.

2.) How the Seller's Realtor handles the short sale is very important. Each Realtor has their own way of processing a short sale. This one of of the reasons for the overall delay when dealing with a short sale; there is no one, uniform way of processing them. Either way, as a buyers agent I like for the seller's Realtor to put the listing into either back-up or pending status. This should keep prospective buyers away from your listing, as it is no longer showing up as "Active". If the other Realtor is entertaining your offer along with several others, than it becomes a bidding war and like a foreclosure, a quasi auction. This is good for the seller, but not for buyers. Either way, it is important to a have a cooperative Realtor on the other side handling the processing.

3.) Find out who is responsible for selecting the escrow agent and title company. Many people don't understand this part of the transaction, however, it is probably one of the most important parts of the entire process. With whom you put your money with, and how much you will get charged for closing costs is a tad on the important side. The seller may say that they are going to select the title company and pay for the title insurance premium, but there still are some closing costs you will be responsible for paying for.

RADIO CHECK: No longer is the buyer in Broward and Dade county responsible for selecting the title insurance company, at least not for a short sale or foreclosure. What's happening is that the seller will offer to pay for the title, in order be able to get the short sale processed for free. The seller doesn't actually have to pay for anything, because it's the banks who truly pay for it. This enables the title company or lawyer who is processing the short sale to eventually get paid for their work. The buyers don't care, because they don't have to pay the title insurance premium. I don't even think the banks know that they are not customarily supposed to pay for the title insurance policy, but they don't care either, because they'll just short the Realtors commission by a percent to pay for it. Either way, my title business is getting crushed by, what I think is an unlawful practice and a violation RESPA. The buyer will still have to pay for some of the closing costs and never gets to pick the company charging them for those fees.

That's it for now. Feel free to call me to discuss all of your short sale needs.

This is "Awesome A!", signing off. Thanks For Reading!

Aaron Glassman, Broker/Owner
A-1 REALTY GROUP, INC.

http://www.a1realtygroup.net/
http://www.a1titleandescrow.com/
http://www.lglassmanlaw.com/


***Picture taken from the stern of the Carnival Imagination, sailing South from Miami to Key West.