#1: Approve more Loan Modifications. Every loan modification is one less home that has to be sold as a distress sale. Distress sales drag down home prices.
In addition, many loan mods are rejected, only to see the lender lose even more money when the home sells. Here is an example. A homeowner offers to pay their lender an amount equal to a $300,000 mortgage.
That means the homeowner would pay the same as someone borrowing $300,000 to buy a home. The lender rejects their loan mod offer and forecloses on the home. It sells for $200,000.
Don’t kid yourself, this happens every single day.
#2: Make short sales easier. Yes, short sales do close. But, many don’t. The ones that don’t are usually sold for less money as a foreclosure. An extreme example is a home that received a $380,000 offer as a short sale.
The lender rejected the short sale. The home was foreclosed upon and sold for $230,000. The reason that lenders usually lose more money on foreclosure compared to short sales.
First, most foreclosures are usually left empty for several months. Mold, mildew, and other things make the home undesirable.
Second, most foreclosures are taking 18 months or more. That is a lot of time that a home can sit empty. In addition, interest, attorney fees, unpaid property taxes and other costs are growing each day.
#3: Handle foreclosures better. We have seen many foreclosed homes sit empty for months and months. In one extreme example, a foreclosed home has been sitting empty for over 3 years.
(The picture above is the front of that home.)
In that time period local housing prices have dropped by 20-30%. Interest and property taxes have accrued over those two years.
Here is how banks could do a better job handling foreclosures.
First, put all foreclosures on the market within a week. There are a lot of hungry, aggressive real estate agents that would love to market these properties.
Put them to work getting the homes sold for top dollar as quickly as possible. The typical 2-3 month wait it not acceptable, especially with all the hard working agents available.
Second, maintain the vacant homes. The home pictured above is wide open. The doors are not locked. Anyone can walk right in and vandalize the place.
I have seen profanities spray painted on the walls of vacant, bank owned homes. Think that affects the sale price?
These are just a few ideas. The next time you hear your local banker tell you how they “care”, ask them about how their bank is handling the recommendations in this blog post.
To us, a banker telling us about how they supposedly “care” just rings of hypocrisy. Thinking about a short sale?
I can help you short sale your property and never pay the bank another penny. Send me an e-mail at firstname.lastname@example.org. I will contact you for a free consultation.
When we talk, I will explain how the process works in detail and answer any questions you may have. Or, if you prefer, you can call me at 1-800-LISTING
Discover how other sellers successfully completed a short sale and request a free consultation by clicking here.
Thinking about a loan modification? Our Pierce County loan modification kit has the instructions you will need to get a loan modification approved with your bank. Click here to request a copy.
Thanks for reading this,
Jonathan is a Real Estate Broker at Phillips Realty LLC. Pierce County Short Sales Realtor: