See? So not scary, this blogging stuff. Thanks for contributing!

John ~
I have done one short sale in my 35 years in real estate and that one taught to avoid them.
The lenders call the shots, do not respond, make decisions by committees that don’t often meet, and are out to save their own hides ~ not grant the buyer a great deal.
They don’t close on time, the lenders want you to cut your commission, and the workload for the agent(s) is many times that of a normal transaction.
It will be a very long time before I let myself get into another such transaction.
IMHO, you are better off to find a manageable normal transaction than to put yourself through a short sale escrow.

Joh: What a great way to enter the world of blogging. An insightful look at the realities of dealing with REO’s. What boggles my mind is why so many lenders select listing agents who are so clueless and non-responsive. You would think it would be in their best interests to have a pro, yet so few are. Congrats on a great contibution.

Lisa! Are you out there??

Nicely done. Much as I’ve never been one to do a knee jerk jump to the defense of a bank, one of the things I learned at a short sale seminar recently is that it’s not unusual to see a single loss mitigation coordinator handling up to 350 transactions. That kind of put in perspective the trouble I’ve had on short sales.

One thing that I’ve found it very important to do with buyers is to counsel them that the bargain they’re likely to get with a short sale or REO (on average, about 10% or so in our market), is generally offset by inconvenience and less negotiating room on the repairs. Having said that, I don’t avoid them — I have this thing about making money.

One other thing worth throwing out in this context is to be careful as a buyers’ agent with investors, if there’s an NOD filed and the property is non-vacant owner occupied. California Equity Purchaser’s Act can bite you on that one.

John, nice debut.

Banks just don’t get it. I too have had many a dealing with shorts and REOs. As Mr. Lockwood pointed out they handle too many cases (Hey Banks, for the fees you are paying and collecting do you think you can hire some help? How ’bout it?) and are out of touch with ANY local market.

They sit in banks 1,000 miles away from the property not realizing the condition or neighborhood it may or may not be in.

And here is the crux of the problem. They rely on BPOs (Broker’s Price Opinions) to help them set an acceptable price for the property. Who does BPOs? New, inexpereienced agents looking to make $35 or agents that have not been able to generate enough business on their own and need $35 for their time and lack of knowledge. (Stop! If you are an agent selling a minimum of 20 sides a year and you still make time to do BPOs then I’m not talking to you. So don’t get upset with me.)

All of those factors make for a difficult transaction. You hit the nail on the head. Congratulations on your jump into cyberspace. I’ve never met the Bergs. But I’m impressed. Here’s to your success.

Phil – all things equal, I agree with you 100% that a “normal” transaction is typically preferable to a short sale/foreclosure/REO transaction in terms of the agent’s ability to manage and influence the process. That being said, I feel an obligation to go where my clients lead but certainly with our eyes wide open!

John – great input regarding case workload and most importantly the advice regarding representing investor buyers in an owner-occupied sales transaction. That was one item consistently covered in all seminars and highlighted the fact that investors taking advantage of distressed homeowners is not highly thought of by the courts. The advice I was given regarding this particular scenario is to refer your investor client to the listing agent (the referral fee is typically the fee listed in the MLS as the cooperating broker fee).

Chris – yes, it’s all about managing everyone’s expectations. As John Lockwood stated, a 10% below market “discount” is a reasonable expectation. As you have pointed out, the process gets way out of kilter when the list price is out of touch with reality. I have felt your pain when it comes to then trying to establish a consensus market value for a local San Diego property (factor in the “as is” condition of sale) with a lender located in Pennsylvania and most recently one in Western Nebraska! It can make for a very trying and difficult transaction, especially when representing the buyer looking for and expecting the “killer” deal. After all, how many ads do we see about all of the money to be made in the foreclosure market?

John (Lockwood) – Welcome back! Good point on the NOD and the buyer who is not planning on occupying – As agents, in this scenario, it is time to bow out (run for the hills).

Congrats on your first Blog John! Very well put.

So does this mean I owe you lunch now or something??

Thanks, Kris.

May someone please explain to me why it is that buying a condo in Chula Vista is so difficult? I have put in three offers on three different locations, lost all three to a bidding war. Is the housing market starting to rebound? I don’t know what to do, any advise?

Ken,

I don’t think this phenomenon is limited to Chula Vista. We are living in strange times. I have been in more multiple offer situations, on both the buying and selling side, than not during the past month, including one of each just yesterday. The market has been more active of late – Perhaps a combination of buyers tired of waiting for Armageddon, Spring Fever, and prices in many cases coming back to Earth. Some homes still sit with painfully long market times, but the well-priced homes, particularly in the lower price segments, are moving quickly right now.

I suppose there is some consolation in knowing that you are a good judge of value. Otherwise, you wouldn’t be repeatedly finding yourself in multiple offer situations. I wrote a little rant on the subject here, my advice from an agent’s perspective. If your agent is handling things exceptionally well, however, I can only recommend patience – And an engine warmed up and idling in the driveway for the moment the next oppotunity becomes available. In real estate, my favorite saying is “time is never on your side”.

Ken – I would add that I think many buyers are starting to get interest rate jitters. They have been growing in numbers, waiting on the sideline for prices to come down. Now, as they watch rates start to rise they may realize that whatever they may gain on the price could be lost to higher interest rates.

John
Very interesting post. Countrywide hosted a seminar facilitated by their Home Retention division (formerly Loss Mitigation).

You may be interested to hear that they said in front of 400 Realtors that they pay 6% SOC. It was a very informative seminar, however I agree that selling REOs is not for the faint at heart.

Keith Sorem
Keller Williams Realty
http://www.beautifulglendalehomes.com