This morning I ran a search on the RMLS for my buyer clients. The results showed that 11 of the 14 homes meeting my client’s criteria were distressed properties. Two of which were bank owned and nine were short sales!
It is my experience that transactions involving bank owned (foreclosure) properties seem to be closing reasonably smoothly. The banks negotiate in a timely manner and will even pay for repairs, home warranties, buyer closing costs and other requests. The foreclosure departments at the banks seem to be organized, efficient and incentivised.
Short sales, on the other hand, are processed out of a different department than foreclosures at most banks. They are typically very challenging to get closed. As banks, Realtors, buyers, sellers, lenders and title companies all ride the short sales learning curve, there are any number of things that can go wrong. Sellers must be approved to sell their home short and the process is complex to say the least. The short sale departments are overwhelmed and understaffed. Buyers can wait weeks and even months to get a bank’s response to their purchase offer. Often buyers get tired of waiting for an answer, withdraw their offer and move on.
The good news is that the U.S. Treasury has unveiled a plan to streamline and encourage short sales. The “Foreclosure Alternatives Plan” will include standardized documentation, cash incentives to lenders and even moving allowances for homeowners. This plan will play an important role in getting these properties sold and keeping people out of foreclosure.
Have a great week!