New Short Sale Guidelines Encourage Sweeping Changes to Short Sale Process

[Smiling JOe]

Scooter, which part rewards the Realtors? I have worked short sales, and they require ten times more work, and the lenders give us the shaft.

 

[scooterbug44]

The part where they can't reduce the agreed upon commission - I missed that they capped it at 6%.

I also don't think we should be giving checks to the homeowner for "moving expenses", the servicer for doing their paperwork, or the person who just got a deal.

How much MORE is it costing the taxpayers to do that?

I know short sales are a pain to process in their current state, but I think folks need to take their lumps for bad choices, not get checks and continue to get cushions.

The easier we make it, the less people learn from their mistakes.

 

[melscuba]

sweet deals indeed...what about the people the "free money" came from?

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amen

 

[Smiling JOe]

The part where they can't reduce the agreed upon commission - I missed that they capped it at 6%.
...

A Realtor selling a property is contracted with the seller, not the bank, and it is none of the bank's business what goes on between a property owner and his or her Realtor. All the banks care about is squeezing the most money out of their own bad business practices of lending money to people for property they shouldn't have qualified for purchasing. Lending money was the banks' fault, not the Realtors'. That monkey should be on their backs. There is no reason I should discount my rates because a third party not tied to my contract wants to shaft me to help recover some of their bad decisions. The capping at 6% is another BS item, which hints at some kind of standard rate, which would be illegal, and they better be careful when walking that tight rope. It is not the bank's business to say what another person will charge for their work with another party. If the bank owns the property, then they can work that out with THEIR OWN Realtor, but in Florida, a property is not owned by the lender holding the note, unless it is taken back in a foreclosure.

 

[SHELLY]

If the bank owns the property, then they can work that out with THEIR OWN Realtor, but in Florida, a property is not owned by the lender holding the note, unless it is taken back in a foreclosure.

But during a short sale, doesn't the lender have final approval on whether they'll accept an offer that's below the amount on the note? When a seller wants to go the short-sale route, they essentially surrender any power they have over the sale to the holder of the loan. The more power they want to maintain over the sale of the house, the more money they've gotta bring to the table--up to the full amount owed on the note (at which point it will not be a short sale). The begger can't be the chooser in this case.

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[scooterbug44]

So the bank is taking a loss in the tens or hundreds of thousands, the companies who bought the repackaged loans are taking a loss (and spreading it through the stock market), the homeowner is taking a loss and losing their home, the taxpayers are forking over billions to clean up the mess and writing checks to everyone involved along with ponying up an $8k tax credit, millions of Americans are unemployed and homeless, but the unfair part of it is that realtors should be able to charge more than a 6% commission on a short sale?

Sorry, no sympathy here.

 

[SHELLY]

So the bank is taking a loss in the tens or hundreds of thousands, the companies who bought the repackaged loans are taking a loss (and spreading it through the stock market), the homeowner is taking a loss and losing their home, the taxpayers are forking over billions to clean up the mess and writing checks to everyone involved along with ponying up an $8k tax credit, millions of Americans are unemployed and homeless, but the unfair part of it is that realtors should be able to charge more than a 6% commission on a short sale?

Sorry, no sympathy here.

...but it IS a great time to buy!

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[SHELLY]

Scooter, which part rewards the Realtors? I have worked short sales, and they require ten times more work, and the lenders give us the shaft.

...so if you believe a short sale warrants a higher commission because it is ten times more work--did the realtors drastically cut their commissions when they were sitting in their pajamas and taking orders for condos over the phone during the bubble??.....didn't think so.

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[Mango]

...so if you believe a short sale warrants a higher commission because it is ten times more work--did the realtors drastically cut their commissions when they were sitting in their pajamas and taking orders for condos over the phone during the bubble??.....didn't think so.

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Actually, from 2002 to 2004, during the peak of the market, the median income for Realtors actually fell — to $49,300 from $52,200. This is because during boom times, many more realtors enter the business-- it's cheap and relatively easy to become a realtor-- and then they compete for listings by dropping their commissions. In economics, this phenomenon is known as free entry.

The Realtors who are still working are doing so for a reason. It's because they really know the business, are realistic about the market, go up and beyond what other Realtors have done in the past and always have had this work ethic, and are consummate professionals, SJ being one of them.

I can see all sides of the fence on this issue. The Banks are taking huge haircuts on these short sales, and they need to stave off a few more inches off the losses. The Realtors, many times, have no clue where the short sale is in the Banks office, spending a good portion of their days now on the phone and being passed around from desk to desk with clueless new Bank employees; time that can be spent finding new clients or research. The good Realtors, and Mortgage Bankers for that matter, did this during boom time as well. I remember having closing agents and Banks on redial for days at a time to ask questions about clearance issues.

and although I have always felt that 6% commission was steep (4-5% in NY was pretty much average) I can understand SJ's rationale.

 

[Smiling JOe]

But during a short sale, doesn't the lender have final approval on whether they'll accept an offer that's below the amount on the note? When a seller wants to go the short-sale route, they essentially surrender any power they have over the sale to the holder of the loan. The more power they want to maintain over the sale of the house, the more money they've gotta bring to the table--up to the full amount owed on the note (at which point it will not be a short sale). The begger can't be the chooser in this case.

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No, they don't surrender their power to the lender. The lender basically has the authority to release the lien on the property if the seller sells below the amount owed. The lender doesn't have power other than that and any negotiation on commissions of sales should be between the two contracted parties. Yes, the banks are playing hardball and saying they won't release the lien without certain things happening, so I know why people say that the banks are the ones with the power, but by law, they are not the ones with the authority to sell the property, unless they own it.