Sally English Atlanta Real Estate: February 2009

It has already started. Short sale mania is spreading throughout the industry like a brushfire on a dry country road right of way.  My in box is stuffed full of offers for short sale courses, short sale how tos and insider information about short sales.  Buyers want to know if they can make "short sale" offers on pre-foreclosure properties.  Here the thing...nobody really knows what a short sale is.

I have successfully closed exactly one short sale transaction.  I am negotiating several right now and have been involved with several that did not work out. In my one successful transaction my seller was caught up in the foreclosure process with a very large National lender.  My client stopped making house payments and moved out of the house.  After six months of negotiation we finally reached someone in the lender's organization who could make a decision.  We lowered the list price accordingly and started marketing the home as a short sale.

Offers did start coming in when the short sale identification was announced.  These buyers had to be VERY patient because it took the lender several months to respond to the written contract offers.  Somehow, an agreement was reached between the lender, the homeowner and the buyer.  After the agreement was struck, the lender tried to get the seller to sign an unsecured note in the amount of the "short" part of the sale.  My client declined.

I figure I made about $4.50 an hour based on the amount of time this sale required.   I did not mind so much because my chief motivation was to help my client through the process.

Here is my two cents on what needs to happen in the short sale (and REO) world before we are going to clear this excess inventory from the market

1. Lender's need to rspond to homeowners BEFORE they become seriously delinquent on their loan repayment.

2. Hardship letter forms should be readily available on lender's websites.

3. Same thing for power of attorney allowing a Realtor to obtain information from a lender.

4. Lender's need to give authority to a readily identified individual or department so transactions can be processed in a timely manner.  This individual or department should be identified on lender websites, loan payment mailings, delinquency notices etc.

5. Lenders need to respond to short sale requests in approximately the same amount of time it takes to underwrite a loan.

6. Realtors representing buyers should inform them a long delay in response from a foreclosing lender is the norm.

7. It shouldn't require more than a week for the lender to respond to written contract offers.

8. Realtors representing sellers should prepare them for the emotional consequences of dealing with a non responsive lender.

9. The Brokerage industry needs to start educating the general public about short sales.

10. Consumer advocates should educate consumers about the impact of short sales on their credit ratings, credit reports and credit scores.

Working together, we can help folks caught up in mortgages they can not afford and simultaneously clear excess housing inventory from the market,

The lack of stability in economic markets (and the uncertainty in Washington) has given buyers an influenza that paralyzes their ability to make a buying decision.  The $15,000 tax credit in the stimulus bill would serve as a much needed antibiotic but rumors have that portion of the bill being traded for other "more urgent" spending needs.

The economy will not turn around until the housing markets find some stability.  Buyers will be missing in action (Buyer's Flu!) until they gain some confidence in a positive direction for the economy.

Sellers have "housing dementia" causing the portion of their brain that logically determines a sales price for their home to be caught in a time warp.  "If you don't have to sell your home, sit tight".  Thats the advice the most senior real estate agent I know is giving her clients when they call to ask about listing their home.  Her advice is absolutely correct in my humble opinion.

Too many listings represent sellers fishing for home prices that have gone the way of the dodo bird (extinction).  Sellers in this market should have a clear need to sell and be prepared to price their home competitively in a challenging and volatile market.

In December of 2007 I listed a two story traditional home in a stable neighborhood with excellent schools.  The listing was fairly priced though the owner was the first to admit there were a few repairs to be made and some staging issues that needed to be addressed.  I cranked up my fairly intense marketing program and we started to get showings from other Realtors. 

We got quite a few showings and the response was virtually the same from each person viewing the home.  "Nice home but the prospect was not ready to make an offer."

Note: I use an automated feed back system to obtain reviews from Realtor's who show or preview a home.  This system allows the home seller to see the feedback from the Realtor but the Realtors name is protected.  The Home seller never sees the Realtors name or the Brokerage companies name.  Sellers like this because the info is delivered real time by the software program to each home seller simultaneously with my recipt of the comments from a showing agent.

So, back to the listing that had been on the market over a year.  The seller was jutifiably concerned that no offers were presented on the home.  Through Top Producer I prodded the seller to consider price redutions along the way.  The seller was not interested in price reductions though their motivation to sell the home was high.  The first listing expired and the seller signed up for a new listing period with the caveat that the listing agreement could be terminated at any time. 

After a long stretch on the market you begin to feel the home owner's pain when a listing does not sell.  A price change was finally agreed to and then we hit a really slow stretch in the market (November, December, January).  Both the homeowner, myself and my marketing team became frustrated that we could not get an offer on this property.

I don't know who was more pleased when an offer came in over the weekend, me or the seller.  What a relief to finally have something concrete to work with on this home.  Will it work out...I certainly hope so.  If it doesn't work out it won't be because I failed to apply 100% of my efforts to make it do so.

Sally English

The English Team

at RE/MAX Executives, Inc. Atlanta Georgia

www.englishteam.com

770-939-3174

I will demand a commitment to excellence...Vince Lombardi

Times are tough for Realtors in the Atlanta market.  We are providing pro bono therapy for sellers who have been dealt a bad hand in the housing poker game.  And then we turn around and respond to buyers who want to buy the White House for $150,000 and some glass beads.  Guess who gets caught in the middle?  Didn't think it would take you long to figure that out.

Like many of you, I am working in an office environment that has been nurturing and supportive.  My broker runs a tight ship and the camaraderie in the office has been a real plus for me over the years.  As a result, I spend most of my day at the office where I manage 30 or so active listings and wait for the phone to ring, my email to flow in or the fax machine to light up.  I've been doing this a long time and for the great majority of those days the time flew by so fast the day ended long before I got tired or bored. 

It's different these days.  The office is quiet, lots of agents don't come in at all, or just stop by to pick up their mail.  Much of our staff has been furloughed and there is practically no activity.  So where can we find motivation in this environment?

I have found comfort in talking candidly with a couple of Realtors I trust.  We share our thoughts about the market, about finances and and about the obstacles we face.  Sharing has helped me reduce the stress related to this tough market.

Secondly, I have re-dedicated myself to providing excellence for my clients.  I am re-working marketing materials, tweaking my website and looking for new ways to promote the properties I have listed for sale.

I started my real estate career in the Homebuilding side of business in 1982, I have weathered every cycle in the market since that time and the biggest lesson I have learned is to accept change.  When we emerge from this present tough market, the landscape will be very different on the brokerage side of the business.  Open yourself up to change and be prepared for opportunity.

How to dig out of hole in a tough real estate market?

Basic human greed is the necessary ingredient for turning around the tough market we are experiencing.  Even when the chips are down and consumers are faced with tremendous uncertainty in financial markets, families still dream about improving their housing situation.  When greed outweighs fear, the housing market will turn.

My husband and I have lived in the same home since 1982.  It is a spacious three story brick traditional in the Emory University neighborhoods of Atlanta, Georigia.  Despite all the economic bad news we are being bombarded with from evey media outlet imaginable, we still took a few minutes this morning and looked at some "bargain" homes", priced far above our pay grade by the way, that are available in our community.

It occured to me while scrolling through photos of one very nice home on the MLS website that at some point greed will be the catalyst that finally gets the housing market in gear again.  There will be a tipping point where families will decide they want that dream home bad enough to chance going against the grain and making a purchase.  When a a couple fo families make this decision, others will jump on the bandwagon so they don't "miss out" on these incredible deals.  When will this happen?....that is the golden question.

OBSTACLES TO HOUSING RECOVERY / Steps to a Housing Recovery

Potential buyers have a couple of hurdles to overcome before they will "make the leap" and purchase a home they have long considered way out of their price range.

1. Potential buyers need some reassurance from the marketplace that they are not going to be terminated.  Job security has gone out the window and almost everyone considers their job to be threatened by our national economy.  Our government leaders are working on this but we do not feel reassured at this point in time,

2. Buyers have to improve their credit scores to qualify for mortagage loans in the "new" economy.  Lender guidelines have tightened and many potential buyers simply do not qualify.

3. Potential buyers must build up a cash down payment equivalent to 20% of the purchase price of their "bargain" dream home. Note: FHA has more flexibility.

4. Where homeowners are "upside down" in the mortgage loans on their present homes, they must negotiate short sales with lenders and bite the bullet on losses they incur.  Congress could provide a lot of assitance in this area by removing the tax implications of debt forgiven by a lender.

5. Buyers who already own a home must get realistic about what their present home is worth in today's market.  If they want to sell these homes (so they can purchase the "dream home"), they have to deal with the emotional aspects of the decline in value of their present home.

Our problems are man-made, therefore they may be solved by man. No problem of human destiny is beyond human beings......John F. Kennedy