Rampant short sales and huge lender losses
I understand the pain lenders must feel with all the losses they are suffering right now. So, why doesn’t someone from within, from within and above, streamline the process so they can minimize their losses and move on?? The extent of the bureaucracy is unbelievable.
The short sale process: a classic bureaucractic quagmire
A prime example of lenders cutting off their noses to spite their faces is what’s happening with my clients P and T. They are all cash buyers, ready to act swiftly and close within a couple of weeks, but looking in areas where virtually every listing is a short sale or a foreclosure. We restricted our search to properties whose listing agents had specifically told us they were extremely close to getting bank approval. We wrote offers on two properties, both with reassurances that we should have an answer within a week or two at the latest. It has been 6 weeks with the first, and almost 5 with the second. We get no courtesy updates, no calls even inquiring whether we are still in the game or have found another property.
The perfect property with an imperfect agent
Meanwhile, we’ve been keeping tabs on the market, checking out new listings, hoping for an REO (banked owned) property that would meet their needs – these sellers (i.e. the banks) generally respond quickly and we’d be able to close in a couple of weeks. No such luck, but we did find The Perfect Property. The problem is,
- it’s a short sale,
- it just came on the market, and
- the listing agent has done no homework.
This particular listing agent lists homes with particularly low prices to generate lots of offers, submits them ALL to the lenders (there’s a first and a second trust deed holder), and then waits for them to make sense of them all. While the banks are proceeding with the short sale approval process, he continues to submit offers as he receives them, bogging down the system. Eventually, the lenders come back with a minimum approved figure, of which the listing agent then informs all buyers, giving them an opportunity to respond with their highest and best offer. Then, buyers must wait again for the next round of bureaucrats to assess the offers and pick one.
We were informed this process would take 90 days! Here are a couple of high quality buyers, willing to pay FULL price, all cash, and the lenders are stupid enough to risk losing them. It all could be settled within a matter of a couple of weeks. But because the lenders haven’t taken the time to create an efficient system for dealing with offers, and because the listing agent is lazy and doesn’t want to do the extra work of finding the best offer to present to the lender, we have to sit around and wait for this inefficient process to run its course… We may or may not stick around…