On September 7, Kerry Curry wrote an interesting article on Housing Wire entitled “New Normal Means a Lot More Pain to Come.” I read the article, which addresses our existing housing market. In it, an economist for the Federal Reserve Bank in St. Louis discusses how our “new normal” in housing is marked by 2% to 3% growth rates, more frequent recessions, and decreased consumer spending. The article also states that equity investors who can purchase properties and then rent them out may be the key to cutting our recovery time.
It’s a thought-provoking article, and you may want to check it out. But, here’s my problem. While I agree with the economist from the Federal Reserve Bank of St. Louis and I can see clear as day that equity investors who can purchase distressed properties are the key to the quickest possible resolution of our national economic problem, I’m not all too convinced that the banks are on board.
As a short sale agent, equity investors get no preference or preferable treatment in the purchase of most short sale transactions. For example, when Fannie Mae sends out an agent to perform a BPO, in most cases there ain’t no wiggle room on the price that they are willing to accept. Many times investor note holders stay so firm in their prices that the properties end up at auction. Additionally, few and far between are the cases I’ve seen where bank employees move more quickly just because there is a cash offer on the table.
Having been an REO listing agent, the same seems true here. In some parts of the United States, many banks are still listing their properties at high list prices and holding out for buyers that need to obtain loans—instead of accepting a lower cash offer and getting the deal closed fast.
With about a year before our next election, I’d like to propose a plan. It’s called the Single Page Plan (not to be confused with the 999 plan). Let’s get the equity buyers, the banks and the government all on the same page so that we can get these distressed properties off the books and begin to move our economy forward.
What say you?
Photo: flickr creative commons by Gageskidmore