What would it take to ignite the market in 2011?
All we need to do is to increase sales.
Because if the pace of sales increased dramatically, it would give direction to all involved. More comps would assist sellers in getting their price right, and buyers would have more certainty, and comfort, about the trend in their area, and make decisions accordingly.
Is it possible? Yes, I think it is – and these are the things to look for that could cause more sales:
1. Servicers get more proficient at processing short sales.
Bank of America and Chase, two of the biggest servicers, seem to be getting better. Our experience of BofA is that they are getting the appraisals/BPOs/valuations done in 30 days, though after that they are still dragging. Other realtors have had Chase closing short sales in 60-90 days, and on the Chase website they say that they’ll have an answer within 30 days after receiving the full package.
If buyers and agents knew that they could close short sales in 60 days, instead of going to a black hole, they’d be more likely to pursue them.
2. Servicers pre-approve the prices they would accept on short sales.
In April they said that they were going to start pre-approving the prices, but I haven’t seen or heard of any. If they smarten up and put a price on them first, and then authorize the listing, it would feel like a regular sale. We’d even settle for a price range if it were combined with a 60-day process. It would also help to eliminate the fraud and deceit being committed by realtors. Sure, some of the prices would be too high, but that could happen to any listing. Of today’s 12,194 active listings in San Diego County, 2,820 of them, or 23% are marked as short sales.
3. Servicers should publish the trustee-sale opening bids a week in advance.
They could really move some product if the trustee-sale process was made easier for all to pursue. It seems like basic common sense that if they wanted to quit taking back so many properties, they should streamline that one simple ingredient. They have postponed virtually all trustee sales at least once or twice – heck, put the price on them and postpone for an extra week so owner-occupiers can round up the money and make plans to attend.
4. Lenders and servicers should publicize their intentions clearly.
Nobody knows what to expect next, and maybe it’s asking a lot for banks/servicers to be that organized. But if the CEOs would step in front of a microphone every week or month for updates on their workload, it would at least bring more certainty. Look at how BP handled the oil spill – they publicized their intentions so much we got tired of hearing them, and it went away. The banks should do the same.
5. NAR, CAR, and the big real estate franchisors should tell sellers to lower their price.
It’s the 900-pound boa constrictor in every office that is strangling sales, profits, and agents’ careers. The re-education of realtors on how to operate in this environment is close to zero – there is none, until you are just run out of the business.
We had a case this month where our buyer got within 97% of list price, but the listing agent said that wasn’t good enough. He and the seller countered that we had to pay for termite and septic work too – but hadn’t bothered to complete reports on either, so the dollar amounts were unknown. The listing agent has been in the business longer than me, and still hasn’t re-calibrated – he thinks he can demand whatever he wants from buyers. This type of stuff happens every day.
Instead, our buyer bought a different house a mile away for 90% of list price.
6. The government and servicers should set a deadline for loan-mod requests.
If all loan-modification packages had to be received by June 1, 2011, and those that qualify have to close by the end of the year, at least buyers would know that this loan-mod charade would have an ending. Many will re-default anyway, give them their one chance and then let’s stop insulting the good-paying folks of this country.
7. Process a borrower’s loan mod and foreclosure together.
The robo-signing settlement is suggesting that all loan mod attempts have to be exhausted before the foreclosure proceedings can begin, but that is hogwash. Don’t give deadbeats and servicers another opportunity to exploit the system, and delay the inevitable. Run them both at the same time and light a fire under everyone involved.
Have any other ideas? Leave them in the comment section, and I’ll send them to the powers-that-be.