(614) 212-7729
I'm a former Bank Regulator (Comptroller of the Currency/U.S. Treasury Dept.)and a former bank and bank holding company president. I'm also the co-founder of a web based logistic software company serving North America and parts of Europe.
I am part owner, with my wife, of EXIT One Realty in Columbus, Ohio, although I am not a real estate agent.
Looks like the writer has created a problem where there is none. A short sale, with an investor, if done right, benefits everyone in the transaction. First, let’s look at where the investor found the property…either researching NOD’s or from homes listed in the MLS. If listed, the investor may then call their real estate agent to look at the property, determine what the property is worth (much like their own personal BPO) and make an offer. The most likely offer on the first round is 60% to 66% of what the investor determines is fair market value (FMV). It may finally go for this, but most likely the property will go for something higher. With the investor in the transaction the bank can determine what it will net vs. what it could net if the property goes to foreclosure (many…many months from now). The Bank has a business decision to make, sell it now to an investor who is going to flip it…hope that the agents can sell it to some one else for a higher price and hope they will stick around long enough to actually close or let the property go into foreclosure. What to do is not difficult for the bank to determine…they have programs that determine the likely “net” if the property goes into foreclosure. The bank also knows that they have a much higher probability of doing a successful short sale with a ready, willing and able investor than they do with a “retail” buyer. Only about 10% of retail deals close, 1.) It takes so long to get the first offer in; the foreclosure clock runs out before a transaction can be completed and 2.) Retail buyers will find something better or just won’t wait the necessary time to complete the deal. Banks will take less from an investor for a property than from a retail buyer because they actually want to move the property. So, let’s look at a situation where the investor is NOT involved. Agent gets the listing and places the property in the MLS with the normal warnings…it is a short sale and your commission may actually be determined by a bank. Agents that represent retail buyers won’t show the property because of the time involved (time to close) and the potential commission cut…and in the end, even if their buyers do make an offer, it may still go to foreclosure because of all the paperwork that needs to be completed. Now let’s look at what happens when the property goes to foreclosure. For one it will be many, many months, if not years in the future. People may or may not still be living in the property. It may be boarded up, the plumbing missing, weeds in the yard and grass three feet high. But the bank nearly now has it back…it just needs to go to sheriff’s sale. Now before it actually goes to sheriff’s sale you need to have three appraisals (in Ohio) to determine fair market value. Opening bid…2/3 rds of the estimated fair market value of three qualified appraisers that rode around “together” in the car. Because an investor bids 2/3 rds on a short sale, that can save the bank many thousands of dollars and months of work, people want to call it fraud. They would rather see property go to sheriff’s sale…neighborhoods plighted by abandoned homes, banks take much bigger losses, and now have an investor bid 2/3rds, rather than an investor buying the same home as a short sale Additionally, it is easy to identify agents and investors that are true professionals. They disclose everything to everybody. The listing agent and the seller are informed, as is the Bank. The agent that potentially represents the buyer and the buyer of the so called “flipped” or “flopped” is informed. Additionally, everyone signs off on the transaction. Agent, and writers of article, who don’t take the time to separate the honest transaction from the dishonest one, does everyone an injustice. With informed buyers, seller, banks, title companies and agents we can make honest business decisions and to actually start solving the national housing problem. I wonder what Forrest Gump would say about this? Vince Ciroli vciroli@gmail.com www.ShortSaleNation.com www.EndLenderForeclosure.com
With 2010 being a mid term election year and real estate being a major contributor to the overall economy we can expect some type of "help". As we have just witnessed politicans take trillions of dollars out of the productive economy and spend it on pet projects. We have been asking China to finance these pet projects and new entitlement programs and when they stopped buying our treasury bonds, the government "loaned" money to the banks and they in-turn buy the bonds. What we have witnessed over the past 10 months is the migration of both power and money from the financial community to the political community. Now to remain in power they must pull out all the stops...even as voters now understanding that we can't borrow our way out of this mess...just like we can't use credit cards to solve our personal credit issues. KICKING THE CAN DOWN THE ROAD: The $7,500 "loan program" was the first "can" kicked down the road by the political community to make the "voters" happy...the program was not big enough nor attractive enough; a bigger "can" was needed. Thus we have the current $8,000 "can". Some what more attractive, especially to both first time homebuyers and realtors. But this "can" is only working for those select few first time home buyers and for lower end inventory. To get the housing market really back on track a much bigger "can" is needed...maybe more than $8,000...maybe the $15,000 discussed. While I personally don't believe in these "bailouts"; this type of tax credit proposal has some merit, especially for first time buyers. With first time buyer, the $8,000 will more than likely be spent and spent quickly on such things as appliances, carpeting, furniture, paint and many other things that are produced here in the USA as mentioned above. Given a multplier effect we can expect about a 7X or a $56,000 impact into the economy for each $8,000 given to a home buyer. (For those that don't believe in the mulitplier, just wait until your friendly elected official introduces you to the Value Added Tax (VAT)...you will understand the mulitplier effect in reverse.) So when I look at this type of program (pure tax credit), relative to other programs (cash for clunkers), it has more positive economic impact than many of the other alternative that politicans will deploy to keep themselves in "Power". You know your elected official is going to spend your money to stay in power...so where would you like him or her to spend it...not spending it is not an option. Enjoy it will you can!! Vince Ciroli EXIT One Realty Columbus, Ohio http://www.EXIT1Team.com 614-212-7729
Great article, as always. The Internet seems to generate tons of Buyer Leads but very little in the way of Seller Leads; and I'm talking about the same people. Internet Buyers will want to use us on the buy side but use another agent, who has the most signs in the area (and also the most un-sold homes)to list their home. I tried to figure this out one day but it just made my head hurt. Vince Ciroli Marketing Director EXIT One Realty Columbus, Ohio www.EXITOneTeam.com www.TheColumbusMLS.com
