Banks Still Can't Sell Real Estate
There probably isn't any way to fully illustrate the pain and suffering that is involved with a transaction that involves a bank or lending institution. I'm not sure that I can even come up with a comparable or an analogy to demonstrate how unorganized, inefficient and ridiculous the procedure is for trying to help someone buy bank owned property or bank involved property, like short sales. Bank owned properties a just a bugger to work with. They're the hardest real estate transactions known to man.
Consumers become charmed and enamored by the fabulous price of a home that they find on the internet. They just have no clue, no matter how carefully that it is explained to them, that the percentage of successful short sale offers that work out are slim, at best. On top of that, let's not forget that the buyer will probably have a home inspection on their as-is purchase and maybe sink in a couple hundred bucks for a survey while they're rolling the dice. The bank may have even agreed to the purchase price but then change its mind because an unexpected fee popped up on the settlement statement and they didn't like it.
Read also: Three Thousand Reasons Why Short Sales Fail
My desk is currently piled with fossilized contracts involving short sales. Many trees have sacrificed their lives for those pipe dreams. Weeks and months go by with no answer to the question, "Mr. Lender can I take the burden of this property off of your hands"? It takes weeks and months just to get the "package" assigned to a representative in many cases. The representative, in the majority of circumstances, has two or three hundred other files keeping company on his desk. There appear to be no systems in place what so ever to process the glut of short sales and foreclosures. One thing is for sure no two banks do anything alike.
The days of an agent working with a short sale are consumed with phone call after phone call to the lender. Last week I was sitting in the office eating lunch at a day desk. I listened to the agent on the other side of the wall make dozens of phone calls to dozens of banks. They all sounded something like this: Hello, this is so-in-so. I am calling in reference to the contract for file number 23413433, I have left a message every day for over three weeks and I'm just trying to get some indication that the package was received or yes or no or anything. After a while it almost sounded like a jilted lover trying to get their boyfriend back. I just need to talk to you, please call me back. Why won't you call me?
Hey, that agent was lucky she got voicemail. Often times the voicemail boxes are full so you can't even leave a message. Employees at the banks also get shifted around and the bank contact is lost or they just quit because they're sick of it, too. Plus, there is nothing more infuriating than being months into a transaction and the file is nowhere to be found at the bank. Poof! Gone. I call that a Hoffa file.
While all of these shenanigans are going on at the bank people that desperately need to sell their home are suffering and people that desperately need to be in a home are losing patience. Many times a buyer is months into the transaction and they just give up. Funnily enough, the bank representative will call months later and say, "We approve the sale". We then let the bank know that the buyer walked months ago. Guess they didn't get the memo or it got Hoffa'd, too.
Sometimes the buyers eventually up finding a home where the owner has more equity and priced their home competitively. They'll switch up their dancing partner for a sure thing faster than you can say "banks can't sell real estate".
All of this leaves most of us wondering why the banks just haven't figured this out. They're just ignoring the elephant in the room. First, they could make more efforts to try to keep people in their home by adjusting their rate or principal. It has to be cheaper to re-work a mortgage or the interest rate than it is to have a buyer default on their loan. When did banks quit running their business like a business?
I have seen with my own eyes a home owner that had a $150,000 mortgage that the bank wouldn't adjust but they took a short sale under $50,000. Wouldn't it have made sense to keep the homeowner in his home and just adjust his rate? Maybe just give them a little breathing room by adding any missed payments to the back end of the loan? How about a rate break for just a year or two? Anything? Something? Nothing.
When this all levels out and the banks boo-hoo to our government about their woes it would be interesting if there is a way for people who had their home sold out from under them can tell their story to an investigatory committee?
If you think the short sales and foreclosures happening to others aren't affecting those not being swallowed by a bad mortgage, think twice. The only way to market recovery is to get excessive inventory, the short sales and foreclosures off the market and sold. It's doable and we're picking away at it in Bonita Springs and other parts of Southwest Florida. Unfortunately, the banks are just prolonging the whole sordid mess by dragging out this blood bath with their inefficiency.
The mortgage industry needs a hero like a CEO of a bank that "gets it" and champions the industry by setting up systems and developing a standard. So far it looks like everyone is just passing the buck and hiding behind their golden parachutes.