When I was first invited to write for BiggerPockets, I was told that I had editorial freedom—but I should keep to my all-time favorite subject, short sales. Between the BiggerPockets Blog and my other gigs, I think that I have probably written about 2000 articles about short sales. I also calculate that sometime in 2012, I will reach 1000 short sale closings in five years. That’s right, my team and I will have processed and negotiated 1000 short sales before this year ends—maybe even before we hit summer.
What I am pondering today and what people always ask me is this: How have short sales changed in the last five years? Are they easier to process? Are the short sale lenders easier to deal with?
Of course, hindsight is always 20/20. But, by today’s standards, my first short sales in 2007 were nearly impossible. Even the largest servicers were not equipped to process and negotiate a short sale. By mid-2007, I had about 15 short sales with Bank of America, so they were kind enough to assign one employee to all of my transactions. The transactions still took months and months to close, but I had a phone number and a name (no emails were given out back then) and having that contact information was invaluable to my success.
Little by little over time, most of the servicers have become more efficient and more accommodating. However, we have run into more trouble with the postponing of foreclosure sales. Both Fannie Mae and Freddie Mac began to practice tough love in late 2010, and they have not stopped since—despite the huge irony there.
For those individuals buying short sales, things are tough. Lending guidelines are tough, and many buyers find that despite the fact that the short sale has been approved, they still may not be able to close.
For our market to change, we need equity buyers to pick up distressed properties and rent them to folks who have lost their homes to foreclosure or sold them in a short sale. However, for the equity buyer to be interested, the banks need to lower their prices a little bit in order to incentivize the buyer. Banks don’t need to give away the homes, but perhaps they should not insist on top dollar for homes that need love and attention.
Sometimes when I look at my dog, Charlie, I find myself thinking “he’s sad” or “he’s lonely.” I then need to remind myself that I am anthropomorphizing (say that three times fast). Charlie does not have human traits. Well, the same applies to short sale lenders. While I have come across many, many bank employees who have been lovely, freethinking individuals, I must remember that I cannot give human traits to the lending institutions. To be successful in short sales, I need to work within their box—whatever that might be.
Photo: flickr creative commons by Umberto Fistarol