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Let’s consider the other side of the coin.

1. The news is ALL BAD.

Whether it’s mainstream media or the blogs, the news about the real estate markets is not only bad, but it’s getting worse every day.  Heck, even Gary Watts issued his nine-page disaster report! 

The government’s programs aren’t solving the problem either, they’re just kicking the can down the road.  The trillions they are spending are going to come back to haunt us someday too, and the way it looks, financial armageddon can’t be far off.

2.  The servicers are getting worse.

It might just be us, but the processing of REOs and short sales has not improved.

In the last couple of months, I’ve experienced cases getting mangled in the new-clerk shuffle, mortgages being sold while in escrow, and counter-offers coming back from both REO and short-sale lenders that were outrageous.  Yesterday, on a short-sale in process at $750,000, the bank countered with $880,000, even though the property had been listed for a year in the low-$800,000s!

Now this:

In 1995, after years of bloodbath, the banks got smart and started fixing up their REOs, offered to finance them, and listed at full commissions.  It’s a package that was well-received, and while the market may have been due to improve by then, the REO sales really took off, once they had the right pieces working together.  Now it seems that the servicers feel like we’ve already turned the corner, and they can start cutting back.

3.  The realtor community is in shambles.

The two big local associations of realtors have spent all year and $250,000 trying to convince the members to merge, only to be soundly defeated.  In the meantime, there’s been little effort to improve the internet presence for realtors (like creating a smoking-hot public MLS), there is no decent education for consumers (or agents), and nothing has been done to stop the rampant fraud and deceit being inflicted by realtors on the community. 

I had another one this week where the agent said if we wanted to have a shot at buying his listing, my buyers would have to agree to pay his short-sale negotiator $9,500, and around $30,000 to the second mortgage holder to get them to go away.  The first mortgage holder would then be paid in full.  That’s not a short-sale, that’s extortion!

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In spite of all these, houses keep selling.

Things to watch for that could make a positive difference:

1.  Pre-approved short sales. 

A few months back when they were rolling out HAFA, the servicers said that they’d pre-approve short sales, – but I haven’t seen, nor heard of any yet.  Short-sales with an approved price and date would be more enticing to those buyers currently turned off by the shenanigans, uncertainty, and the long waiting periods.

2.  Deed-In-Lieu programs

It was reported last week that Bank of America has mailed 100,000 deed-in-lieu solicitations to troubled borrowers. Hopefully that’ll provide more well-priced inventory, and faster market clearing!

3. Lower Mortgage Rates

To be able to get a 30-year mortgage with a rate under 5% is encouraging, and now they’re slipping into the mid-fours if you don’t mind paying a point.  If rates were to go any lower, it would help keep buyers engaged – if they could only find the right house!

Motivated buyers have been willing to shrug off the bad news if they can find the right house, at the right price.  If the servicers recognize that this would be a good time to unload some product, and price it right, I think they’d be surprised at how many they could sell.

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