The good news is that 4,706 short sales were closed YTD in Orange County. These homeowner avoided foreclosure, lenders were able to minimize their loses and buyers were able to enter the market.
The distressing news is that 5,759 short sales were canceled, expired and withdrawn in the same period. In other words. That means that over 50% of all short sales attempted this year - failed.
The why is easy ... the process is ridiculous. It usually goes something like this:
First, agents typically under price the property to attract buyers who would otherwise stay away from short sales. Then, dozens of buyers place offers on this and many other properties at the same time. Next, the lenders take months and months to even consider the offers. In the meantime, most of the buyers have moved on to other properties ... except the buyer with the lowest offer. But unfortunately, his offer is 20% below the comparables and the lender says "no".
So then, the agent goes back on the market and tries to get another offer at this possibly, but not guaranteed "approved" price. Then maybe this time, if they are lucky, they'll find a reasonable offer, if the negotiator hasn't closed the file yet, they get the highly coveted approval letter.
Unfortunately, the approval is only good for 30 days and as we all know, it's almost impossible to get a loan closed in 30 days in today's market. So, on Day 28 the buyer's agent sends over an urgent extension request and the negotiator responds that this delay is unacceptable and someone is going to have to pay a per diem for them to even consider an extension.
But remember, the glass is almost half full and despite this process, we are able to get 45% closed.
So, how do we fix it? Based on my inexperience with our current process, here's the easy solution to get about short sale success rate up to 95%.
1. First, the seller submits a standardized hardship financial package to the lender
2. The lender has a negotiator assigned to the property within 7 days
3. The negotiator orders an appraisal and 2 Broker Price Opinions within 7 days
4. The lender evaluates the package and the market value, and gives the homeowner an approved price with a 90 day window to get the property under contract
5. The homeowner hires an experienced Realtor who lists the property as an "approved short sale" that can be closed within the same time frames as a standard or REO sale.
If the answer is "yeah, but ... they don't have the resources" - that's crazy nonsense. This process would save them a fortunate in time, administration, personnel and eventually foreclosure costs.
Have a great week!
Seven Gables Real Estate
License #01727426
www.TheOCExperts.com
www.OCMarketUpdate.com (blog)
Direct: 714 276-7006
Fax: 714 917-2293
"If You Can't Explain it Simply, You Don't Understand It Well Enough"
~ Albert Einstein
