By signing into my site, you can access your favorites from any computer and get e-mail updates when new listings come in that match your recent searches.
October 20th, 2009 8:27 AM by David W. Welch
Orlando Sentinel today by Mary Shanklin about short sales. The only thing I question is the statement that banks were approving short sales in seven weeks back at the beginning of the year. I have not seen that as a typical or average response. There are short sales that receive approvals very quickly, but they are generally limited to smaller banks that only have a handful of short sales that they are negotiating. Currently, there are just over 5,100 short sales pending and 199 have closed so far this month. We have seen between 350 and 450 closing each of the last few months which represents less than 10% of the total number of short sales with contracts on them. I typically see about half of the closings occurring by the 20th of the month, so if we double the short sale closings so far to 398 the closed to pending ratio is just under 8%. Let's compare that with "normal" sales of 354 so far this month. If you double that to 708 and as a percentage of pending "normal" sales of 1432, the closed to pending ratio is just over 49%.
This is where I have come to the conclusion that the average short sale that actually closes is around seven months. The closed ratio for "normal" sales is about seven times that of short sales. Unfortunately, time is the biggest enemy of a real estate transaction. While waiting on a short sale approval, how many more properties will come on the market or reduce their price luring the short sale buyer away. How many times can the bank or banks in a short sale ask the seller to bare their financial soul to them before it becomes disrespectful as the person in the article states. Realtors have been calling for banks to adopt a uniform streamlined process for dealing with short sales. Sometimes I do not believe the banks have a process at all.
If the banks did have a process it would go something like this: Step 1-Fax all the paperwork to the bank; Step 2-Call the bank (they did not receive the fax); Repeat steps 1 and 2 until the bank acknowledges receipt. This usually takes one to two months; Step 3-Call to check the progress (this takes another one to two months); Step 4-Phase 1 Negotiator assigned (re-send all the information you sent in step 1); Step 5-Broker Price Opinion ordered by negotiator; Step 6-File sent to Phase 2 Negotiator (re-send all the information you sent in Step 1 and Step 4); Step 7-Phase 3 Negotiator assigned. At this point the actual transaction could be approved or the negotiator will want to negotiate the sales price, the Realtor's commission, and the release of hostages to this process. Add a second mortgage or home equity line of credit to this situation, and things take even longer and become more difficult to resolve. Currently in Orlando there are 5,100 pending transactions going through this "process" with another 5,400 active short sales waiting in the wings.
Orlando Real Estate, David Welch Real Estate Optimist