There has been a decrease in REO's due to more properties being sold at auction. These properties are mostly bought by investors who have the cash on hand to purchase them at the court house steps. Investors have reported that the lenders are aggressively pricing the opening bids at the auction to attract more bidders. Typically the lender would start the opening bid at what is owed on the property however; due to the costly nature of a foreclosure the lenders are trying to keep these properties off their books.
In addition to avoid foreclosure the lenders are pushing for homeowners to short sale their property. We are going to see alot more short sales come on the market and a continuous decline in REOS. What does this mean for investors? Most lenders agreeing to short sale are requiring" No-Flip" Affidavits to be signed by all buyers. Most investors want to turn properties in 30 days. With the increase in short sales and decrease in foreclosures I can see this as a potential problem.
Investors typically drive prices down while the short sale lender wants the highest and best offer with the ability to show them the properties were marketed for a substantial amount of time. If these properties are being re- sold significantly higher than what they were purchased at 30 days later and a "No-Flip" Affidavit was signed, that puts all parties a risk. The decrease in REO's are not easy on the non-investor either. Most home buyers do not have the cash to buy a property at the auction.
Short sales are going to become the primary focus of Investors and non-investors purchasing property. Working with investors are going to be tougher with the new forms the lenders require to be signed. Typically the" No-Flip"Affidavit is an agreement stating that the buyers and buyers agent are not involved in a profit scheme to flip the property and there are no current agreements written or otherwise, to immediately re-sell the property at a higher price and that no transactions of this nature will take place WITHIN 90 DAYS of the date of closing the short sale transaction. If there is knowledge that the home will be re-sold after the 90 day mark, it is my opinion that the short sale lender should be made aware and if possible get it in writing that it is acceptable.
For the non-investor purchasing a short sale it would be in the best interest of all parties that the property is the home the buyer truly wants and the buyers agent sets expectation with the buyer giving proper time lines. A homeowner going through a short sale may have a sale date and any hesitancy removing contingencies or putting in multiple offers can put the homeowner at risk of foreclosure.
With the increase of legal action that has been taken against agents who may or may not have operated above board in the short sale lenders eyes; non of us can afford to take risks in any fashion. The more dark allies that people choose to go down the more eyes that will be upon us all. Though this is going to be a stressful time, I believe we can work through any changes and obstacles that come our way.
(Quote) Observe constantly that all things take place by change, and accustom thyself to consider that the nature of the Universe loves nothing so much as to change the things which are, and to make new things like them.
"Marcus Aurelius"
REALTORS, what is in your business plan this year? What are you doing to create a system that will allow you to build your short sale business? How often are you out there prospecting and how do you know if you are taking the listings that are going to be successful and not a waste of your time?
Call us today and let us show you a system that works to help you expand your business and effectively and efficiently close short sale transactions.
LOTUS REALTY GROUP
PROFESSIONAL SHORT SALE NEGOTIATORS
At Lotus Realty GROUP, helping people ethically succeed is at the forefront of who we are...
400 S. Sierra Ave. Ste.102 Solana Beach, CA 92075
858-764-7300
http://www.lotusrealtygroup.com
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