The Climate is Right for More Short Sales, but Real Estate Agents Don't Want Them

09/20/2014 12:25 PM (CST)

Short sales are back, but not to the extent they could be and real estate agents are to blame. How? Here’s the story…

During the course of the last summer, a lot of real estate professionals grew accustomed to the regular equity sales. If you were an active real estate agent with multiple years in business under your belt, listings somehow found you last summer. It seems that this is about to change. Home prices are stagnating, the number of days on the market seem to be increasing (this trend varies across the country).

Banks are really pushing foreclosures these days. They are also being pushed by Fannie and Freddie to meet the deadlines.

Lee Honish, a marketer and a good friend of RealtyProx, has looked at the RealtyTrac data pertaining to homeowners with a Notice of Default (NOD, which is California legalese for “foreclosure auction” or whatever it is called in your state). What he discovered was that 50 percent of homeowners in his hometown in Southern California who had a sale date about a year ago are no longer in the house. Their properties went to sale in 30 to 90 days from the NOD. Some of the homeowners who walked actually

RealtyTrac data backs it up. Banks mean business these days and they will foreclose if they can.

Having said that, it doesn’t mean that banks won’t take a good deal and a well-structured short sale can definitely be that.

In addition, as Daren Blomquist (VP of RealtyTrac) has recently said for Lee Honish’s podcast, there are plenty of cases when banks do not have proper documentation and are not able to foreclose, so they will definitely take a short sale at this point.

Officially, since RealtyTrac’s data is not real time, short sales are not “back.” Based on anecdotal evidence, including National Closing Center’s numbers, they are, especially in judicial states.

Now let’s get back to our opening statement of real estate agents being to blame for the lack of a full-fledged short sale comeback. Most of them got used to the listings situation over the summer and they abandoned short sales whatsoever… once again… Big mistake!

No matter what kind of market we’re living in, diversification hasn’t hurt anyone. Having a few short sales in a pipeline is not going to hurt you, especially when you hire competent people to process them.

The climate for more short sales is there. There is enough NOD data for everyone. Distressed homeowners are under more pressure to act than ever with banks pursuing foreclosures more aggressively. So, put your default advocate hats on and hit the streets. It’s up to you, real estate professionals, whether these NODs are going to end up as foreclosures or as short sales…