I took another Short Sale class today. I know most of the things the presenters will speak about but I want to get updated about their stories of dealing with banks.  Each person learns their own tricks of the trade and it is nice to hear from someone else that a certain trick, tactic or method works or learn a new one.

Ian Reekie from Platinum Loss Mitigation was the speaker today and I thought he did a great job. He painted a bleaker picture of the real estate world than I see but if my regular listings stop selling and am left with only short sales, then my perspective might change as well.

He agreed that some banks are getting better organized and decisions are faster.  Like others he also said that the deal hinges on the independent Brokers Price Opinion and not ticking off the person making the final decision.

I have heard many stories of files being “lost” and from insiders that it is usually lost in the trash after a Broker got pushy or nasty.  Just think of a driver in a company vehicle driving dangerously or cutting people off.  He doesn’t really care about his company and doing what is right.  It is just a job; one he probably doesn’t like.  Here is some of the information that he gave us enforcing the idea that more short sales are on our way,

• According to Zillow.com, 29% of homeowners owe more than the house is worth if they bought it within the last five years.
• That number is 95% for one city in California, which I missed the name.
• Bloomberg expects home prices to go back to 2003 values.  (I think this is possible due to lax loan standards that started about that time but this is hard to predict.)
• There are more 3-year Adjustable Rate Mortgages than 2-year ARM’s (I have also heard that 2007 loans are defaulting more than 2006 and 2005 loans.  If we have a wave of 3-year ARM’s defaulting soon we could be in trouble.)

Agents polled in the room gave bank approval times of 5 months, 6 months, 9 months and a year, though the year involved a bankruptcy.

Most agents also disagreed with NAR’s stance that this is a great time to buy and some of the other rosy things they had to say.  It is tough when your leaders don’t speak for you.

He gave an opinion that I hadn’t heard before which was not to accept offers less than 70% of market value.  He said this may annoy the bank and make them more difficult to deal with.  He felt that 1-2 out of 10 of these offers would work but that 50% offers never work.  The conventional wisdom has been to take any offer because the bank won’t start the process until they get an offer.

Of course there is the issue of determing market value.  Some areas are declining and even he said the homes sell below what he expects market value to be.  As far as the bank is concerned, market value will be determined by the independent Broker Price Opinion.

And still the process is thrown off by the fact that the banks don’t actually control most of the loans. They service the loans for investors.  They have to go back to the investor with all of the information you have given the bank to convince the investor that this deal is better.

Lots of work ahead for sellers and brokers dealing with short sales, and a lot of patience by buyers. If you have any stories of dealing with banks we would love to hear them.

If you enjoyed this post, make sure you click here to get free updates in your feed reader or via email!