Short sales used to represent a fairly small percentage of home sales. But these days, they’re all over the place – on every street corner in every town where housing prices are down and unemployment is up. This means the entire real estate industry is getting a crash course in short sale negotiation and processing. It turns out, not everyone is really enthralled with this new educational opportunity. Several major stakeholder groups are looking to outsource so they don’t have to deal with the hassles and uncertainty that may come along with the typical short selling scenario.
Bank of America made headlines earlier this year for reportedly deciding to outsource its short sale processing to third-party vendors. Agencies like “Dignified Transition Solutions” are relieving BofA of the burden of dealing with distressed homeowners who are trying to avoid foreclosure. This may add another layer of complexity for sellers (since introducing a middle man rarely makes things simpler). Will these vendors have the same rules and requirements for short sale packages? Will they all have different negotiation strategies? Will they be faster or slower than the banks at getting sales pushed through?
Real Estate Investors
Investors who want to snap up houses at rock bottom prices, fix them up, and flip them need to get the seller to accept as little money as possible. When you’re dealing with residential real estate in bulk, every deal is either making you money or taking it out of your pocket. However, most real estate investors aren’t used to negotiating with banks for short sales where the restrictions on acceptable offers are so tight.
As a result, many investors are hunting for houses and then turning over the negotiation process to self-styled professionals. Some firms are no doubt better qualified than others to cut a money-saving deal with lenders. Investors would be wise to ensure that their negotiation vendor has at least a few attorneys on staff as well as some experienced short sales specialists. They should also do their own due diligence to ensure they aren’t being roped into any of the dozens of scams going around in the short sale market.
The final group that is outsourcing short sales is comprised of real estate specialists and firms. That’s a topic that deserves its own blog post, so stay tuned for next week’s installment!