If you have not downloaded my latest report on the 7 Deadly Sins of Short Sales, stop right now and make sure you download immediately and READ it in its entirety! I will save your short sale life.

So, an article published by ABC Channel 7 News in Denver dated 7/31/2009 headlined:

“Few Homowners Seeking Short Sales Realtor: Frustration, Confusion Clouding the Foreclosure Alternative.”

The article cites (4) VEY STRONG points that I will address in this blog:

1. “Only 3 percent of homeowners sold their property through a short sale in the second quarter of 2009.”
2. “Homeowners are unaware of a foreclosure alternative that could save their credit and their piece of mind”
3. “The vast majority of owners are just walking away”
4. “Agents need to do a better job in the process as well to alleviate the frustration”

While the article shines a light on the Denver CO market, the same low statistics and overall negative view of short sales remains constant throughout the country. Let’s take a look at some of the factors that shape the negative view that dominates the short sale market today, and most importantly how to overcome them.

The Factors:

1. Ultra Low Success Rate In Short sales Nationally.

A report in May revealed that across the nation, only 23% of all short sales actually close.  This ultra-low success rate has led many in the real estate community to turn away or in some cases utterly abandon short sales altogether.  Both realtors and buyers alike see the short sale as a stagnated process that will ultimately end in failure, despair and a waste of time.

The “Catch 22″ of this statistic, however, is the fact that some of the main causes of the statistic being so low, also cause the statistic’s inability to rise!  How so, you may ask?  Well, for starters, so many view short sales as a waste of time they will intentionally skip over a short sale listing, which causes the short sale sit on the market without any offers until it ultimately goes to foreclosure auction. Another common occurrence is when buyer’s, under the guidance of their agents, put a contract on a short sale and then walk away from the deal when a bank foreclosure or traditional sale that is comparable to the short sale appears on the market. This leads to a failed short sale and causes the success rate to go lower.

2. Real Estate Agents Don’t Know How Short Sales Work:

I recently posted mini-blog on Twitter from USA Today on how Short sale deals across the nation were falling apart, and how the National Association of Realtors (NAR) citing Realtors as part of the blame.   This is a 2 part equation: Buying Agent + Listing Agent = Short sale collapse.

On the buying side, agents who are under the pressure to make a commission and feed their families in a down market, too often encourage their buyers to walk away from a short sale contract that is near lender approval for another property which would allow them to get paid faster.  Others who have simply heard from their fellow Realtor colleagues or the media that “short sales aren’t short at all”, simply bypass short sales altogether. This again leads to a short sale sitting on the market without an offer and ultimately foreclosing. A sad, sad reality.

On the listing side, agents often submit packages that are incomplete or improperly “engineered” to bank loss mitigators who are alread over-worked and under-paid, which causes extended delays that causes buyers to walk…and you can see how this vicious cycle goes on and on.  There is also a management process that accompanies short sales that many realtors are unaware of.  I discuss in my free report on 7 Deadly Sins of Short Sales.

3. Banks Are Slow:

This is rapidly becoming a “perception” more than a “reality,” but as a whole many banks can still take upwards of (6) months to approve a short sale.  This long time table often discourages many from even daring to approach a short sale. The bulk of this time line however is spent faxing and re-faxing documents that the lender has either not received or lost during the onset of the process.  While this document exchange is going on, weary buyer’s end up getting lost, and financially spent homeowners lose hope, and the property goes to foreclosure auction.

The Solution: Change Your Approach

After a review of the factors of above we must conclude that the current system for getting short sales done is BROKEN.

• Waiting for offers on short sale listings, that never come because buyers avoid them is a BROKEN
• Having deals fall apart because the buyer walked out on the deals is BROKEN
• Faxing an Re-Faxing the same paper work over and over again is BROKEN
• Waiting for up to 6 months for an approval is BROKEN

There is hope, and there is a smarter way to do get your short sales approved and closed.  Do you want to know how?  Well all you have to do is pay me an upfront fee of $995 and I will show you how…NOT!

Seriously though, smart realtors and homeowners alike are using professional investors to submit an offer on the short sale and negotiate it from Day 1 of the listing going on the market.  This means that while the bad mortgage debt is being negotiated the house is simultaneously being marketed for sale and the foreclosure timeline is being cut.  With an investor offer on the table you never have to worry about the buyer backing out!  Furthermore if the investor owns a loss mitigation company, then it eliminates the realtor and/or homeowner from ever having to talk to a bank or fax any paperwork  period.

Conclusion:

If we intend to raise the national averages we must change our approach.  Smart realtors hold the keys to turning the foreclosure and economic crisis around.  Turning the keys will not cost you money but it will cost you a change in how you work the system.

Regards,

Aubrey Kipp, Investor
OrlandoShortSale.TV