With all the past 'flakey' transactions going on in the past, ACT 137, (Mortgage Rescue Fraud Prevention Act) was passed by the Hawaii Legislature and signed into law by the Governor on June 3, 2008. This act protects Hawaii consumers from those that prey on homeowners who face property foreclosures, liens or encumbrances.
I have not listed any short sales nor have I sold any due to my clientele being mostly military relocation clients who are not willing to wait out the time period just to find out if their contract may/may not be accepted.
It's not to say I didn't try....I did put in five offers recently...all were turned down.
They are also staying in hotels and for military personnel it is NOT the best option when they have little children and staying in the hotel for the duration of a transaction.....let alone the extra time and a lengthy process to have the lender approve it first!
Randy Prothero, fellow agent in my office as well as long time ActiveRain member wrote a post Lack of Action by Banks is Causing Harm best describes the inadequate staffing for lenders taking care of short sales. The time length and the amount of files a processor is handling is causing properties to stay on the market longer than needed and some may steer clear of these when it comes to buying a property.....yesterday.
A property is considered a "distressed" property if there has not been payment on the property for sixty days and over.
Act 137 makes it clearer to say that when the property becomes ‘distressed' that:
...........Thus, it is no longer possible for a real estate licensee (or anyone else, for that matter, unless they are specifically exempted from the Act) to assist or even coach an owner of Distressed Property with regard to lien holders, without entering into a Distressed Property Consultant Contract, which specifically defines notices that must be given, obligations and restrictions placed upon services to be rendered, and a limitation on the charges that can be made for such services..........
HUH?
If a consumer has the time to wait around in hopes that the underpriced home showing up in their emailed list of properties will be their home they could MAYBE get lucky. Remember, Hawaii is made up of little islands and we just have so much buildable land on each island. So, the inventory is there but the prices are still high for the most part, gone down in some areas, remained the same in others.
For others, such as the relocating military who usually don't have a whole lot of money when they get here it doesn't seem like a good alternative for the 'waiting game':
They do have a healthy Basic Housing Allowance every month that Uncle Sam gives them on top of their salary They also have COLA (cost of living allowance) added on to adjust for our higher living costs in Hawaii.- Until their allowances ‘kick in' they have no alternative when putting in an offer but to ask for a credit for closing costs...which pretty much lowers the net price of a short sale to the point the bank is looking at all the rest of the offers.....first.
- Should they WAIT?.... HOPING...WISHING .....when they can get into something else in another area....asap.
- The problem is that they do not have but 30-60 days in a hotel before they have to find a rental....or they are threatened to go into base housing lest they lose their place in line should they not find adequate housing
Again, short sales may be out of reach due to time constraints for the buyer....the seller....and US
Bottom line, the majority of short sales are either beyond reach for some and a great deal for others.
There is no in between.
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Celeste "Sally" Cheeseman is a Realtor-Associate with Century 21 Liberty Homes in Mililani, Hawaii. With a sharp understanding that a listening ear is the key to a client's needs she serves the island of Oahu (Honolulu County) and all Hawaii Military Relocating to Hawaii, Hawaii Retirees, Hawaii Job Transfers and Hawaii Residents. Website: www.hawaiihomesmarket.com
Celeste "Sally" Cheeseman is a Realtor-Associate® and Certified Residential Specialist (CRS) with Century 21 Liberty Homes in Mililani, Hawaii. With a sharp understanding that a listening ear is the key to a client's needs she serves the island of Oahu (Honolulu County) and all Hawaii Military Relocations, Hawaii Retirees, Hawaii Job Transfers and Hawaii Residents, Home Buyers and Sellers.
© 2007-2012 Celeste "Sally" Cheeseman's Hawaii Real Estate and Relocation Blog.
All rights reserved.
Sally, it's a bigger issue than being understaffed. It has to do with contractual relationships between the lender and the investors. Most loan servicing contracts require that the loan servicer pay the investor even if the loan is non-performing. Since the investor is being paid, there is no incentive for them to modify the loan. California has a similar statue that was passed last year.
Your military market must be even more challenging than other markets across the country.
Did you make that picture yourself? You really get into those posts girl!
Regardless of the behind the scenes reasons causing the delays, the fact remains in our market that for every short sale listed there is another home, very similar to it, owned by a bank and listed as well. So it sometimes does not make sense to wait on a short sale when there is a foreclosure ready to give you a response in 2 days. Your concerns are totally valid!
I've got offers in to the banks on two of my own short sale listings right now and am deeply grateful that the buyers decided to stick around. It was a long haul, more so on one than the other and all along you wonder if the buyer is going to see a foreclosure and back out before the bank responds.
I have 6245 reasons that absolutely prove that short sales do exists . .
I had a closing yesterday.
my listing
Happy client (seller)
Happy buyer (they waited 45 days)
Happy agent. .
and have two more to close in the next 21 days.
Way to go, Sally! You are very wise (and lucky) in not dealing with short sale properties. Fernando might be a rare exception, but most of them (90%) in our area never make it to closing. Lousy agents? Ridiculous bank asset managers? Whatever the cause, it's just simply not worth the headaches, frustrations and unpredictability. And as soon as I explain the reality of short sales to my clients, they are perfectly content to blow them off and consider inventory that is MUCH easier to work with.
I am so with you on this. Have at them guys if you want too but for me I'mdoing everything else but short sales. I don't have enough energy for them.
Short sales stink!
However, they are often the best homes on the market and the consumer does not, I repeat does not, understand why they can't get answers timely.
They talk with friends and relatives who have purchased homes, not short sales, but homes in the past and all I hear is "My Mom says a house should close in 30 days". "My friend says their contract took only 35 days. . . . ."
They say that heard what I said, but they don't really understand.
Sally - Excellent overview of Short Sales and the dilemna for military clients. Supposedly the legislature is trying to correct the inequity of Act 137, so the real estate professionals can help the distressed homeowners. I don't think there is much hope that the lenders will do anything to fix the Short Sale process to help anyone, themselves included.
Like you Sally I have not worked with short sales. I deal mainly with military and they don't usually have time to wait. I only know of one Navy family that was successful because they started buying 3 months prior to moving. They also said they would not do that again because the banks treat them as a game. After 35 days the bank called the agent and said we will make a decision on Wed. Wed comes and the decision is who would handle the short sale. 35 days and they are just assigning someone to the file? They did finally get the home but they said it was not worth the effort. Don't think I have a warm fuzzy on short sales.
Kate: It's only challenging with the short sales. Bank owned are a breeze (not many though) and we have a moving market because of the military. The Act 137 is enough to take a deep breath and step back to evaluate the scope of it. There are many in violation and hopefully the language can be better understood.
Cameron: Having ones OWN pictures surely brings out the best in a post :) :)
Maggie: You're right about that! I do believe that there is something comparable on the market that is better than the wait time...and worrying about if we'll get booted out of the equation. Sometimes the same applies to listing a relocation property. After 3 mos. they give it to 'their' people.
Fernando...of course they exist. Did you read the 'new law' I posted in my post? It's just not a matter of the significance that a short sale can work...it's all in the manner of the situation and circumstances for each client an for whom it may work for.
Randy: It's not that I don't do them...it's the point that I've put in a few offers and none worked...for my military clients. With tighter lending and lengthier processes...plus the wait time for a short sale to GET approved....and then the time to close (30-45 days) it's too lengthly a process for some....a bargain for others who can waiti.
Laura: Oh, I don't think it's about energy here....clients get frustrated and move on.... and there are other properties available without all the 'red tape'.
Lenn: I agree. They don't understand...and why should they understand when everything else on the market is moving in a timely manner. On top of everything...they complicate everything here with an Act that is not really being heard.
Hey Mike: Yeah...it sure has become a thorn in the side to even try to understand the timely process. I worked with clients 4 mos before even getting here. NONE worked out....
Ron: Even my clients and I started 4 mos prior and still...none worked out...over here it's just a bidding war. I can imagine when the market starts going back up...OMG.
I do feel for the homeowner facing a short sale scenario, however. We do live in difficult times.
Hey Kent: It can work for both buyer and seller if the process were more organized.
Sally the shortest closing that I have had on a short sales was 78 days from the day the contract was first signed. Most of them are more around the 100 day mark for me.
Sally, I just closed on the second and last short sale I will do. From now on they will be referred out.
Sally - oh yes, they are a trial for all concerned. I have offers in on two, one an "approved" short (whatever THAT means) that we are still waiting on. I do, however, know of some folks who have been fortuante to have short sales close in less than 60 days...but then they were single lender deals.
Jeff
Sally, What a shame that ALL of yours were turned down. I know there is a lot involved with a short sale and wish I knew more about them. Yu definitely have a challanging market with short sales and the time factors.
George: Yeah...the problem with the military is that they do not have time to wait for an answer....and if turned down ....wait on another one...
Lizette: I am thinking twice about them as well. It takes much time and effort to keep putting in offers and then bunches of other offers come in and ours gets left in the dust. Even after adjusting one of our offers it still was left in the dust.
Jeff: I know this is not something you and I have dealt with in the past ...and it is so time consuming ...my clients (military) do not have the time to piddle around.
Carole: Yeah...but that's the game going on now. I am closing on a property (next week) and I represented the seller...there are a couple in the area that are short sales....this one was not and got two offers and in contract by day 11.
Hi Sal !
It is indeed a trying transaction with a short sale. But there is definitely a benefit to knowing the expected process and for the right buyer who can wait, they can be a great option.
I have closed two this yr already and have 2 more on the hook (both approved and in the limbo period to closing).
There are waay too many unknowns to make any short sales a 'slam dunk' but the people who have bought them in my transactions got terrific deals, and the homeowners breathed a huge sigh of relief.
... but that's in my area... it may well be different up with you ... sorry they've been so tricky for you :o(
I think they may be here to stay for a while, so I wish you luck, and hope the process gets more streamlined and quicker !
Cheers Sally and good luck !
Sheldon
Sheldon: The tricky is not getting sticky with our new law as well. It makes things more complicated and with incoming military personnel they do not have the time to wait around. Yes, it can be a blessing for the ones who do get to buy ....then again, our prices are high and coming in with 20% is not chump change on a 500k and up home. Therefore, the VA loan at 100% is great for the military but time is definitely not on their hands.
Woo Hoo, You did a great job on this dissertation about Short Sales and why they mostly don't work for the Military transfers. I know that agents collect offers and the bank sits on them. Maybe they should do some hiring of the many that have lost their jobs and get some of this paper handled. There need not be the 60 to 90 days that it usually takes from the time the offers start coming in. It is ridiculous and so not necessary. The truth is the banks benefit by these delayed times frames and getting buyers to out bid the others. Then many back out and they start all over again.
William: Yup...that's it in a nutshell isn't it? And when they all back out then they have to start all over again and they still...end up owing more money.
What I've run across is the bank sits on them for so long and HOAO dues are in arrears of up to a year or more and expect the buyer to pay off that too!
Sally- THis is the same ridiculous legislation that Washington state passed. I guess Hawaii followed Washington State on this one. It ties the agents hands. I coach agents in WA and their brokers told them they could no longer do short sales. Most of the agents I coached had to start their own brokerages to do them. This is so ridiculous because who better to help them than the realtor.
Katerina: That is a fact... we need a better process so that the time limit is cut and sellers don't end up going into the distressed property situation because of it.
Sally-wow that is quite a set of handcuff that the state decided to put on agents. The issues isn't with the agents "coaching" of an owner but with the lenders who are overwhelmed and don't understand the value of accepting a market value offer on a short sale property. I've watched properties where my clients made an offer while it was a short sale go to foreclosure and end up selling for 50K less.
Hi Sally - The best advice I can give if buyers want to pick up a gret bargain on a short sale (not usually as trashed as many REOs are, because they haven't yet been foreclosed) is to work with an agent who is experienced in short sales. I have buyers wanting short sales and sometimes the listing agents have no idea what they are doing. It is frustrating when I ask questions about the status of dealings with the bank and they don't even know what I'm talking about. Another agent in our office and I are doing a lot of short sale work these days and we have connections - either directly or indirectly - with the asset managers in many of the banks, so we can often get responses sooner than other agents.
You do, however, have to respect that the asset managers are overwhelmed these days in many banks. Others have hired and trained addiitonal personnel. Yelling at them can only delay work on your deal - they are only human, after all, with frustrations of their own. Bottom line - short sales are tricky, and not for the occasional dabbler in them.