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June 7th, 2011 5:14 PM by David W. Welch
If you practice real estate in Orlando, you have almost had to deal with short sales in some form or another. You cannot shake a stick without hitting a short sale in our market. A few weeks ago I must have been feeling even more optimistic than usual, because I put a survey on my facebook page asking if banks were finally moving in the right direction on short sales. The vast majority of the responses were favorable, so maybe we all drank the big bank Kool-aide. The truth is the closing ratio for short sales each month for the last three years that I have been tracking it has only been 8%-10%. What I mean by this is that in any given month only about 1 in 10 short sale contracts is closing. Last month it was right at 9%.
It does feel like the banks are doing a better job of managing the process or maybe they are communicating with us better. Of course, looking at that closing ratio, maybe we just don't expect very much from them. Last week I closed a short sale representing the buyers that could have gone very badly. The bank was Wells Fargo, and like the other big banks the left hand often does not know what the right hand is doing. Typically, when a short sale is being negotiated the bank will suspend pursuing foreclosure of a property. In fact, the listing agent told me that is exactly what he was told by the Wells Fargo negotiator. Unfortunately, nobody told their foreclosure department. A week and a half before the closing my buyer was checking out his new neighborhood on Trulia. He spotted a new foreclosure filing, and clicked on it to find out it was the house he and his wife were about to close on. He e-mailed me, and I checked it out on the clerk of courts website. The new filing was a foreclosure sale date of May 26th and our closing was scheduled for June 2nd.
Fortunately, the seller's and their agent were able to file a motion with the court the next day to stop the sale, and we closed. Of course the day after closing Wells Fargo contacts the title agency and says there is a document missing from their file. They actually threatened to send the money back and cancel the approval if they did not receive a copy for their records. Can they even do that? Probably not, but the banks seem to think they are above the law and can do whatever they want. Of course, not every short sale is the same. I closed another buyer purchase of a PNC short sale yesterday. We wrote the offer April 23rd and closed June 6th. Everything went very smoothly. In the end both closed, but I have three more pending that have been a struggle. Currently, there are more than 7,000 short sales with contracts in Orlando and another 3,500 active short sale listings.
David Welch Real Estate Optimist, Orlando Real Estate, Any Home-Any Phone