The Skinny on Short Sales

Diligent Shoreline readers will recall the September 2008 issue in which I referred to a short sale as “foreclosure’s clumsy and viciously irresponsible little brother” and cautioned about what a nightmarish process it was to have to suffer through. I even went as far as describing the proper way to pronounce the term “short sale” (spewed with roughly the same disgust with which Jerry used to snarl out, “Hello, Newman”).

That was then. This is now.
Don’t get me wrong, they’re still tough to deal with. They’re heartbreaking at worst and aggravating at best. But I want to reverse myself a bit on that stance by updating a couple of things.

First, the process is getting better. A lot better. Banks are streamlining their procedures; some banks are actually taking proactive measures to get things done more quickly and efficiently.

And just last Monday, the Treasury Department announced new guidelines which would make short sales simpler to carry out. The biggest change is a requirement to force the mortgage servicers to either approve or disapprove the short sale within 10 days. That’s been the most frustrating part about the process...waiting six months, only to find out that the short sale you’ve been hoping for (both buyer and seller) gets rejected.

Second, it’s absurd to carp about short sales any longer. It’s a little like turn-of-the-century city dwellers complaining about those loud, smelly horseless carriages ruining the streets. It’s just the way the world is now. There’ll be more and more of them in the foreseeable future.

How many more? Take a look at these numbers.

Of all homes that closed in North Las Vegas, Las Vegas and Henderson during the first 11 months of 2007, only 3.6% of them were short sales. That rose to 8% during the same period in 2008. This year, that figure has risen to 10.8%. During the past 30 days, the percentage of homes that have sold that are short sales currently sits at a mind-numbing 17%. If that isn’t trend enough, try this on for size. As of 12:45 p.m. on Wednesday, December 3rd, 63% of all homes in escrow here are short sales. Gulp!

Okay, no more numbers…

So aside from some number-crunching geeks and real estate wonks like me, who should care about these numbers? Well, you, for one. Because even if you’re not one of the majority of people in this town who is upside-down in your mortgage and may be facing a tough decision on what to do about it, I can guarantee you that you personally know at least ten people who are. Short sales are the most desirable alternative for most people. More than a “desirable alternative” really. More like a lifeline. Especially if the alternative is foreclosure.

Loan Mod, Loan Schmod

And if I hear another sickeningly earnest radio spot or TV ad for loan modification attorneys and services, I’m going to throw up. I really will. It’s these folks, more than anything, that have gotten me to commit to helping people this year with the short sale process if that’s what’s best for them. There’s so much lousy information out there, and so many leeches who make a living preying off of regular folks in tough situations, I want to scream. If you’re reading this blog, chances are you know me, and know what I’m all about. I want to help as many people as I possibly can in 2010. So, please, before you or one of your friends subject themselves to bankruptcy attorneys, loan modification hucksters or anyone else, please call me. If I can’t help, I’ll at least steer them away from the bad ‘uns.