Latest short sale trends
Just like fashion trends that change from year to year, there are also many obvious trends in the short sale world. When you are working lots and lots of shorts, you begin to notice little trends—often before they are announced by the lenders or become high drama on the Internet.
Top 3 shifting short sale trends
Here are a few of the biggest trends right now in the short sale world:
- Fannie Mae Valuation Issues. For the past several months, short sales of homes with Fannie Mae loans have become more challenging—often because the Fannie Mae valuation is much higher than market value, resulting in the inability of a qualified buyer to purchase the home. There has been much ado about Fannie Mae valuation issues and possible fraud: so much that Fannie Mae has recently created a website to assist Realtors® with short sale valuation issues.
- Servicer Transfers. It may happen that a short sale listing agent gets a call from the short sale lender before (or after) the sale has been approved stating that the loan has been “service released.” What this means is that the seller’s mortgage has been transferred to a new servicer and the short sale listing agent or negotiator now has to begin the process all over again. There have even been accusations that this occurs in order for certain short sale lenders to forego payment of the short sale incentive. Whatever the case, this is one of the many reasons that people become frustrated with the short sale process.
- Short Sale Lenders Make New Rules. Another common trend is one where the short sale lender insists upon certain conditions or terms when the short sale lender is not the owner of the property. These could include mandating that the property be listed on an auction website, requiring the agent to stipulate certain things on the local MLS, or requiring the agent to market the property in a certain way. Remember that unless the property reverts to the bank after foreclosure auction (sometimes called a sheriff sale), the short sale lender is not the owner of the property.
Often, when working short sales, agents find themselves between a rock and a hard place. On the one hand, agents have a fiduciary duty to the seller. On the other hand, in order to get approval, savvy agents need to figure out how to work through much of the bureaucracy at the lending institutions. Just hope that your short sale doesn’t get service released after you’ve worked through all the red tape!