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.600 Is A Pretty Good Batting Average…Unless You’re Talking About Short Sales

March 14th, 2011 categories: Buying, Foreclosures / Short Sales, Viewpoint

BB Shortsale

A few days ago, our state association, the California Assn. of Realtors, released the results of a recent survey which claims that only three out of every five attempted short sales in the state actually went through.

A .600 batting average may be great if you’re Barry Bonds, but it’s not so great if you’re talking about the percentage of short sales that were successfully completed.

The report lays blame with the banks for dragging out the process for months and months on end. And to be sure, with some banks, that’s definitely an accurate statement. But others, like Bank of America and Wells Fargo have made great strides in streamlining the process over the past 12 months.

In fact, on all of the short sales I’ve negotiated with Bank of America since last summer, I’ve gotten responses in about 30 days or less. That’s a far, far cry from what was happening a year ago — when their norm was a good 6-8 month wait (if you were lucky).

I don’t dispute CAR’s findings, but based on my own personal experience with representing short sale clients here in Benicia, Vallejo and elsewhere in  Solano and Contra Costa counties, I think it’s fair to point out that while many banks are definitely the root of the problem, some of the blame for that 40% failure rate lies with sellers or their agents.

Now, I certainly haven’t had a 100% success rate and anyone who tells you they have isn’t telling the truth.

But by the same token, I’m sure I’m well above the 60% figure that CAR’s survey suggests.

What’s more, I’m sure colleagues of mine who know what it takes to successfully negotiate a short sale would say the same thing.

In my experience, if an agent is only successful on 3 out of every 5 short sales, they’re either not doing something right, are plagued by sellers who aren’t really committed to the short sale process or are in the midst of a run of incredibly bad luck.

Most of the time, the handwriting’s on the wall for all to see, with plenty of tell-tale signs that this particular short sale has little chance of going through.

Here are some signs you may be in for a bumpy short sale road:

  • The listing agent doesn’t return the buyer’s agent’s phone calls or emails. Remember, this is the same person you’ll be relying on to process the short sale with the seller’s lender. If he or she won’t even respond to inquiries about the property, what are the odds of that person taking control of the short sale process?
  • The seller makes it very difficult to see the home. If the sellers aren’t motivated to even let a prospective buyer see the property, what are the chances they’ll provide all the necessary short sale documents to their agent? Without that paperwork, there’s no chance of the lender approving the sale.
  • Uncooperative tenants. If there’s a tenant living there, they may not be thrilled about cooperating with the seller if they’re paying rent while the sellers aren’t making their mortgage payments. If they’re uncooperative in letting the house be shown, what are the odds that they’ll actually move out when escrow closes?  Plus, they might even have a long-term lease, which would entitle them to stay there until it expires.
  • The listing has been on MLS a while, but no photos. If the listing agent is engaged in marketing the property, he or she should have a variety of photos of the house on the MLS. If there are none or perhaps only a few exterior shots, it may be a sign that the listing agent hasn’t even seen the home, which could be another sign that the listing isn’t really a high priority to that agent.
  • The listing agent is from far, far away. Most serious sellers will list their home with an agent who is familiar with their home and their community. Occasionally, a short sale is listed with an agent from way out of the area. It’s very difficult to adequately represent the seller from 400 miles away.  I came across a local property recently where the listing agent was from the Palm Springs area and had it listed only in the PS area’s MLS. It was nowhere to be found in any Bay Area MLS system.
  • Is it really a hardship? If you see newer vehicles, a lot of high-priced personal items or other signs that give the appearance that the seller has plenty of cash, that could be an indication that the seller may not have a legitimate hardship. And without a real financial, medical or life-event hardship, getting a short sale approved is much more difficult.

A few days ago, I wrote a post about 10 key short sale factors that an agent or seller can directly control. As I pointed out in that post, unless you pay attention to those 10 important  short sale elements, your chances of short sale success drops considerably.

That’s why the seller has to be fully engaged and the listing agent really has to know his or her stuff in order to have a realistic chance of getting short sale approval.

Short sales can be complicated and there’s no guarantee the bank will approve them.

But, still, if you’re talking about an experienced short sale agent, 60% seems like an awfully low success rate to me.

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This entry was posted on Monday, March 14th, 2011 at 8:10 pm and is filed under Buying, Foreclosures / Short Sales, Viewpoint. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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