One of my Realtor® friends showed me a letter that her client had received about a deed-in-lieu of foreclosure program (à la Fannie Mae) whereby the seller would receive up to $7500. My friend was a little displeased that her client had received this letter because she was about to close the short sale transaction. Now, however, the client is going to opt for the deed-in-lieu because he might get more money.
In 2012, with all of our apps and functionality tools, society pressures us to focus on being the most productive that we can be. So, it’s tough to understand how much time will actually have been wasted if this short sale sellers opt for the deed-in-lieu of foreclosure.
First off, it goes without saying that the short sale listing agent has spent countless hours processing the short sale on behalf of the seller. Not to mention the cost of sign installation, advertising, and time lost not being able to serve and prospect for additional clients.
Next, what about the servicer (including Fannie Mae)? How much time and money was spent by the servicer’s loss mitigation department and by employees at Fannie Mae? Why bother with all the expense if the seller is going to receive a deed-in-lieu offer at the very same time that the bank is processing the short sale?
What about the escrow and title companies? There is cost involved in due diligence activities including generating a preliminary title report, conducting a deed and lien search, and doing all of the activities surrounding opening an escrow (in escrow states). It is unfortunate that title costs are accrued on a transaction that will never come to fruition.
While this deed-in-lieu offer scenario may have just been a simple right hand not communicating with the left, it seems a little tough to stomach the thought that so much time was wasted and so much productivity lost–especially if the bank is going to offer the seller a little incentive for NOT participating in a short sale.
Is this the future of short sales? Or, rather, will the future be consumed by deed-in-lieu of foreclosure?
Photo: flickr creative commons by Jack Everett