The Saint Paul Condo Blog

Nothing frustrates me more in today's real estate market than the "Short Sale" listed home.  First a little history...

A Short Sale is defined as a sale when the homeowner does not have enough equity in their property to sell at the desired price.  When the transaction closes, the mortgage company (bank) must make up that difference. This is usually tens of thousands of dollars the bank must accept as a loss.  There are a few reasons this is happening. Either the owners refinanced and stripped all of the equity out of the home, or they bought at the peak of the market with little or no money down, and now the value of their home has declined.

The issues with short sales usually arise with the bank.  Most banks will not pre-negotiate a short sale in advance of an actual offer (frustration #1).  So the home owner and their agent are left to guess what price to list the home for that will be acceptable to the bank.  What usually ends up happening, is the advertised price is several thousand dollars lower than what the bank is willing to accept, ending in a counter offer from the bank at or above the listed price (frustration #2).  Normally, a counter offer from a seller takes less than 48 hours.  With a bank, that could be 48 days or 48 weeks (frustration #3).

Not knowing how a bank does their business, it almost seems that the banks want nothing to do with short sales. Once they have actually gone through the foreclosure process, the home gets priced right, and they will usually respond within a week (better than before, but still not great).

As a realtor, it is incredibly frustrating to deal with short sales.  It's hard on both the seller and the buyer.  The seller is trying to get out of a home they typically can no longer afford, and as realtors we feel it's our job to at least try to help them avoid foreclosure.

And with buyers, especially with first-time buyers, the process can scar you for life.  Giving you a bad opinion of the process, and the people working the transaction (realtors, banks, etc.).

I think it's time we, as realtors need to band together and change the way we allow short sale listings into the MLS, as the MLS is owned and operated by the Realtors Association.  I don't think it's right or fair to allow short sales to have an actual price in the MLS.  They should use the same set up as auctions do.  List the home for $1 and just say submit your offer.  At least this way, everyone would know in advance, that they should expect a counter from the bank.  It would also help identify those listing in the MLS.  If you are a buyer who's looking to move in 30-60 days, stay away from short sales.

OK, I think I've said enough, it's time to get off my soap box and return to selling condos and lofts.