Denver Short Sales and Why They Suck!

I have been told on three different properties in the $200k-$250k price range that they are no longer accepting showings as they have multiple offers. In my case it was actually 5 or 6 offers on the property. Short sale properties are a huge pain in the backside for a buyer.

I don’t mind being unable to show a house that there is very little shot at the buyer closing on. I actually appreciate it! But the entire short sale process is flawed. I don’t blame the Real Estate Brokers who are listing these properties, I blame the Banks!  The Brokers are just playing the game.  A game whose rules are set by the incompetent banks and lending institutions that started this whole fiasco.

Here’s the deal.

• A homeowner is struggling to make ends meet.
• Their home is worth less than they owe on it.
• They know they need to sell or they will lose the home to foreclosure.
• They talk to real estate brokers for a solution.
• They choose a Broker and list the home.
• The owner and Broker agree the loan balance of the home is greater than the market value.
• They list the home at some price, usually below market value, and hope they get some offers (they need to have offers, because the bank won’t speak with the troubled homeowner about a short sale until they have an offer on the table.)
• The seller then signs contracts with as many buyers as they can find, making them all contingent upon bank approval.
• They then hope to convince the Bank or Mortgage Holder to take a pay-off that is less than what is owed, and approve said offer.
• If an offer is approved, they make it closing.
• Many times, NO offers are approved.

Sounds simple enough.  However, the bank then takes 60-180 days to get to this offer and make a freaking decision. All the while, very little communication is given to the buyer about he status of the transaction.

There are contract addendums that need to be signed (or your offer won’t even be presented) stating that the buyer is aware the process takes a long time, and during this time other offers will be presented to the bank for their approval. Plus, the contract is not really a contract until the Bank actually signs off on the deal, etc…..

Everyone is held hostage by the bank, it sucks!

The system is flawed. If the banks wanted to fix the problem, they would go ahead and approve some short sale amount before the soon to be foreclosed upon seller, put the home on the market. And, then when offers came in, they would make a decision.  Not in 60-180 days, but 60-180 hours!  Sounds simple enough.

The solution lies in the hands of the Mortgage Companies.  How hard is it to empower your employess to make decisions?  How hard is it to set guidelines as to how these decisions are made?  Give me 2 hours with the CEO and we could come up with a solution that would be much more fiscally responsible, not to mention quicker!

It shouldn’t be this hard, and it shouldn’t take this long. What do you think?