Recent article in Bloomberg referencing RealtyTrac's recent stats on U.S. home sales and distressed home sales.  The article states, "Home Short Sales Increase as Banks 'More Realistic' on Market".

In a nutshell, banks are agreeing to more short sales as the best alternative to foreclosure.  Something we the public already understand, however the banks have often times proven not quite as smart as us.

Proof the banks are a little off their rocker when dealing with short sales:

  • Will often counter offer an already strong offer.
    • Why piss off the very few lucky soles who can qualify for a mortgage in this tight lending environment?
  • Will counter offer above the market value.
    • Isn't paying more than market value what led us to the bubble?
  • Will attempt foreclosure by accident while in the middle of negotiating a short sale.
    • Happens all the time.  Makes no sense.  We have to fight to stall the foreclosure while getting the short sale approval.  It's crazy.
  • Will take forever to make a short sale decision.
    • Seriously, how long should this really take?  If the house is in foreclosure, does the bank really need every tax return and bank statements for the past 2 years?  Shouldn't they just look at the value of the property and take 85% of the value and move on?  Less legal fees than a foreclosure, they get more money in a short sale than a foreclosure.  Etc.
  • Will agree to a short sale if we REDUCE the contract price.
    • This happened 1 time to was tens of thousands of dollars in reduction of contract price.  I guess the bank had already received their limit of bail out money for the month?  Not sure how or why this went down.
  • Will often tell sellers that they have no record of the attempt at a short sale.
    • Almost every seller will call their bank for a status update at some point in the short sale negotiations.  Amazingly, the bank rep will state, "We have no record of your short sale on file".    This after pages and pages of phone calls, notes, and email correspondence back and forth with the same bank for months.  Happens all the time.
  • Will not allow people related to each other or even friends with each other to buy the others house.
    • Banks are worried the general public will work together to help the other out.  ???  Why wouldn't we do this?  If your dad wants to buy your house at half of what you owe and then rent it back to you....why is this a bad idea?

My solution for the current housing market is Short Sales.  I believe the banks should heavily streamline their approval process, rip the band aid off the losses, and stop stalling out the housing recovery.  If they don't get with the program, they single handily will be the cause of an ever delayed housing bust.  Which by the way is still seeing signs of no recovery.

Posted by Brad Officer on
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