Short Sales Secrets to Success

Short sales, whether you love them or hate them there is a big push right now to make them work better and get completed faster since they are a big part of the real estate market and will continue to be for several years.  This month’s newsletter takes a new look at short sales and how to make them more effective and less painful for sellers and buyers.

But before going into that, let’s take a look and how the market did last month.

Typically the trend each year shows the lows in January and February with a noticeable increase from March through June and then a gradual weakening from July through November.  August typically is a month with sales that are slightly lower than July (4 out of the 5 previous years) and at least 10% lower than June (5 out of the 5 previous years).  This year was very unusual because August was not only higher than July but it was also nearly even with June and it was more than 20% higher than last August.

The trend has continued since the beginning of this year with each month’s sales being higher than the same month in all of the past 5 years, and the past 6 months including August are now the top 6 months since 2006.  This continues to demonstrate the strength of our local market and that buyer demand is not weakening in any way.

Information for chart above was taken from PRO/Suncoast MLS from Jan 2007 thru May 2011 & from the MFRMLS for May 2011 thru Aug 2012. This information may or may not include all listed expired, withdrawn, pending or sold properties of one or more members of the My Florida Regional Multiple Listing Service.

The other statistics I’ve been showing each month is the ‘months inventory’ statistics which shows the amount of property available to purchase based on how long the current amount of property for sale would take to be completely sold at the current rate of sale.  This is important because when there is too much for sale, it takes longer to sell and prices drop and you have more of a buyer’s market.  When you are around 6 months inventory  the market is considered more of a neutral market and when you start getting below that you will see properties sell faster and prices start to rise and it is then considered more of a seller’s market.

We went below the 6 month mark beginning in March of this year and have actually been at about 4.5 months or below since then.  In August this fell to its lowest point since 2006 with only 4.0 months of inventory on the market.

Information for chart above was taken from PRO/Suncoast MLS from Jan 2007 thru May 2011 & from the MFRMLS for May 2011 thru Aug 2012. This information may or may not include all listed expired, withdrawn, pending or sold properties of one or more members of the My Florida Regional Multiple Listing Service.

This is affecting both buyers and sellers.  Buyers are finding that there is less available and that the really nice homes and condos that are priced reasonably will sell quickly.  Sellers are finding that prices are increasing some and that in some cases they get multiple offers.  However, even with all that occurring buyers for the most part are not willing to pay much above the market value of  a property.  So it is even more important now for both buyers and sellers to get help in determining where the actual market value is for a home or condo.

A New Role for Short Sales

Banks are moving more toward doing short sales than foreclosures now for many reasons and with so many home and condo owners falling behind on mortgage payments (nearly 1 in 6 nationwide) there will very likely be more and more short sales for the next several years.

Because of this, most major lenders have been worked to become more efficient at processing short sales and several have streamlined programs now which, in some cases, will allow for an approval of short sale terms even prior to getting any offers.  In addition, some lenders are offering buyer relocation incentives of several thousand and up to $30-$40K upon the successful completion of a short sale depending on the specific circumstances and qualifications of the home or condo owner.  There are also federal programs that have buyer relocation incentives of up to $3000 that some home and condo owners will qualify for if their bank doesn’t offer its own program.  And there are incentives under this federal program for lenders to do short sales rather than foreclosures if the home or condo owner meets certain criteria.

The overall push is to help get home and condo owners who are struggling with a mortgage they truly can’t afford so that they are able to get out from under this burden and to do so in a way that:  1) the home or condo owner has less harmful effects, 2) there are less foreclosures and empty homes and condos which not only drop property values for others in the same community but also create hazards which come from an empty property which is not being maintained and 3) gives the major lenders a way to deal with the large number of potential foreclosures with less overall losses.

The biggest problems I’ve run into when working with buyers on trying to purchase a short sale property is that they can take a very long time to get a reply from the lender and in some cases we find out months later that the short sale is not approved because the owner wasn’t qualified to do a short sale.  Both my clients and I have been through quite a few frustrating deals and it appeared that short sales were best to be avoided.

However, last month I decided that since the number of short sales are increasing as compared to foreclosures and that since they will likely be a part of the overall real estate market for several years, I should try to find out if there was a way to be more effective in handling them.

After doing much research I found out that I needed to know everything I could find out about how to do a short sale in a way that would get the fastest response from the lender and have the highest chance of being successful.  To do this I had to learn how to list a short sale and work with the lenders in the way that would get them to get their part done the fastest.

I found that the most recognized training for this was for the Certified Distressed Property Expert® designation and I recently completed this extensive training and am enrolled in their ongoing, monthly Advanced training as well so as to keep current on any changes with procedures and lender programs.

I have been successful in the past as a listing agent for short sales, including one of the most difficult short sales that you could imagine, but now I know the ins and outs of how to really determine whether a home or condo owner can qualify for a short sale (and for any of the incentive programs) as well as the exact steps that need to be done to ensure that the short sale will get processed in the fastest time possible.

What I learned from this is that in most cases the difficulty in getting a short sale approval (including the lengthy time frame) is mostly due to the listing agent either not knowing or not doing the steps of the process exactly how they need to be done.  This doesn’t mean that these agents are bad agents, they just don’t have adequate training to know how they need to handle this correctly.

With this training under my belt I will now be doing a lot more listings than in the past (both short sales and regular sales) as there are a lot of people who are facing a possible foreclosure who just don’t know what to do and really don’t need to get foreclosed upon – they need some help from someone who knows what can be done.  This will not only help these home and condo owners but will also help get more properties on the market to help meet the buyer demand.

The other benefit from this training is that it helps me understand how to better help my buyer clients and how to determine which short sales are worth pursuing and which are not.

To provide more information about foreclosures and the options home and condo owners have to them, including short sales, I have put together a new site with a lot of good information including videos and a whole bunch of really good reports.  I highly recommend you visit it and look through the information since it may be helpful and timely for you or someone you know.

The site is TampaShortSaleAgent.com.

I’ll keep you updated on this area in future newsletters including news and info about changes to laws, bank programs, etc.

I hope you had a great summer and that you fall will be just as good.

If you or someone you know could use my help in either buyer or selling, don’t hesitate to contact me.

Sincerely,
Ron