By Jonathan Osman
Step 1: Find a buyer. In my market, the unemployment rate is 11.1 percent and the under-employment rate is around 16-20 percent. While a few years ago, one could conceivably purchase a house without a job; today, employment is essential.
Step 2: Find the buyer a loan. As long as the buyer has a job, modest credit scores, and reasonable debt load, this can be accomplished with relative ease. However, only 75 percent of buyers ever make it past Step 2.
Step 3: Find the house. SO VERY EASY especially with only 24,000 homes in the market to choose from; 5 percent being REO, and the buyer wants “a deal.” The buyer then proceeds to view all 24,000 homes, making offers at fifty cents on the dollar, with only a $10 earnest money check.
Step 4: Under contract: Oh yeah baby. I can count the dollars now. Just sit back and wait for the closing day. If that were only so true…
Once the home is under contract, now there stands a nearly insurmountable set of obstacles that will kill any transaction such as (All of the following actually happened at some point in the last 3 years):
- Did the inspection reveal needed repairs? Yes. Will the seller repair? No! Deal dead.
- Does the inspector freak the buyer out over unnecessary repairs? Yes! Deal dead.
- Does the house have mold? Yes every house has mold? Buyer freaked? Yes! Muerto.
- Did the house burn down before closing? Yes! Does the buyer still want it? No! Done. Continue reading »
By Jonathan Osman
If you ever want to start a heated discussion among agents in my area, ask them their opinion of short sales. What will pour forth is the most draw-dropping tales of sheer lunacy; always ending with “I’ll never show or sell another short sale again.”
This presents a problem for me on a number of levels. First, to my own self interests, I list and sell short sale listings. While most of the agents I have interacted have not done business with my group, they are hesitant to jump back into one of these transactions with anyone…and I totally get that. Out of the four short sale contracts written by my buyer agents on other listings, only one closed. Today in the Charlotte area, we have more than a 13 month supply of short sale listings and only a 3 month supply of REOs. That may not say much until you learn that the actual inventory numbers for the REOs are slightly higher than the short sales; the results of those bad experiences.
Beyond my own interests is the interest of a home owner facing foreclosure. Due to any number of hardships, they now face the difficult prospect of losing their home, a future deficiency judgment, and possible bankruptcy if things don’t work out this time. Along with that home owner is a neighborhood with values that drop with every foreclosure, pushing another home owner to a short sale, strategic default, or walk-away. The most profound statistic I compiled through data in our local MLS and through the state was that last year, more home owners lost their home to foreclosure in my county (the largest in North Carolina) than agents closed homes through the MLS. Continue reading »