Thursday, September 30, 2010

Bank of America Short Sales and their Dawdling Process

Almost any real estate agent trying to work out a short sale deal with Bank of America will express frustrations with the slow and painful process. Bank of America is dealing with more short sales than any other company, in large part due to their acquisition of Countrywide Home Loans which was notorious for offering bad loans during the housing boom.

There are a couple of things Bank of America does that especially make the short sale transaction difficult. For one, Bank of America will not allow the same agent to represent both sides of the transaction. They won’t approve a short sale file unless there are two separate agents.

I’m sure they are doing this because they feel it will help them to get the best purchase price for each home they need to approve, and will help them stay out of potential legal issues. But, for real estate agents who have BOA short sales listed, this can be a royal pain when they have a buyer who is interested in a property they have listed.

Bank of America also requires that buyers get prequalified with BOA before they will accept a short sale offer. This is a pain for people who are trying to buy short sales, who are already prequalified with other banks, but it’s actually a smart move by Bank of America. For one, they know that the potential buyers are actually qualified, and they might actually get a few more loans out of the deal, helping them get business in a time of major losses.

If we step back and look at short sales from the view of Bank of America, it is a really tough situation they are in. They are losing millions every day. And while the policy’s they have are annoying for real estate agents, as a business, they have to do what they can to try and make a profit, or at least reduce their losses.

Now Bank of America has paid the attorney's fees to foreclose (estimated at a low end of $40K in my state) and will continue to face the same or worse market conditions. Not a good business move, but that's Bank of America for you. Wasting America's money!

They say that learning to do a short sale is very simple with Bank of America compared to other banks. But since they have been attacked due to their slow approval rate, short sale homes are processed painstakingly. In today's real estate world, purchasing short sales can really turn homeowners, buyers, sellers, and real estate agents upside-down.

Monday, September 20, 2010

Increased Foreclosures Could Double Real Estate Inventory

I just read an article that brought up an interesting thought. According to a recent study done by CoreLogic, foreclosure homes should start flooding the market during the last quarter of the year. They say that this could DOUBLE the average time it takes for homes to sell. Right now the average time residential homes are on the market is 11 months. Can you imagine nearly 2 years before selling the AVERAGE home?

If the market really got this bad, I wonder if real estate agents would start declining listings. With the way the real estate industry works, real estate agents don't make money unless the home actually sells. Having an overpriced, unsellable listing is only a cost. They still have to pay for advertising, filling flyer boxes, etc.

Most listing agreements are for six month terms. If only a select few houses actually sell within the first six months of listing, then real estate agents will be wasting their time with most listings.

While there will always be the desperate and new agents willing to do anything to get their name out there, I think we will begin to see the top agents decline listing homes unless the seller is reasonable and will price their home at a sell able point. It will be interesting to see what happens for the future real estate market.

Because foreclosures in Logan Utah have been low, we hopefully won't see double the time homes are on the market. Hopefully the Logan Utah Real Estate market can avoid this possible catastrophe.

The future for areas like Arizona, Nevada, California and Florida Real Estate could be substantially bleaker if the number of foreclosure homes really floods the market.