Real Estate Snippets

Short Sale Woes

The St. Paul listing agent moaned and groaned about the misery of listing short sales.  The unresponsiveness of lenders was the primary complaint.  For an agent to submit an offer and wait months, not weeks, for a response was beyond his comprehension.  What were the lenders thinking?  Why would they stall in this market?  Do they want to own property?  About the time I was going to offer him some cheese to go with his "whine", he finished the tirade with, "I'm just not going to list any more short sale properties.  They aren't worth it!"

I pulled my eye brows from the roof of my car and wondered about that last statement.  My latest experience has been that more than 3/4 of the listings today are short sales with a few foreclosed homes tossed in for seasoning.  To refuse to list a short sale would take the headache out of negotiating a difficult transaction, but wouldn't refusing all short sales be a kiss of death to one's business?

Short sales are frustrating to everyone in the business.  The brunt of work lies in the listing agent's lap.  Compiling the mass of documentation required for the sale is the listing agent's duty.  Submission of the same packet of paperwork is also the agent's job.  Negotiating with the lender's mediator is the listing agent's job.  Pressing the lender for a decision is the listing agent's job.  A whole pile of responsibility lands in the listing agent's lap.  It's no wonder an agent might complain.

The frustration of short sales for the buyer's agent is not having control of the transaction.  The buyer's agent must rely solely on the listing agent's communication, or lack thereof, with the lender and the buyer's agent.  There is no first hand contact with the lender.  Advising their buyer client regarding whether to continue to patiently await the lender's decision is a terrible dilemma.  Yes, short sales take a long time to complete but some don't happen.  What if the buyer's agent advises to wait patiently, other opportunities are lost in the interim, and then the bank ends up rejecting the offer?  If we could read the future . . .

The listing agent had good basis for whining.  I still questioned whether an agent in the St. Paul market can avoid dealing with short sales.  From the buyer's agent perspective, there are far too many short sales on the market to avoid showing them to buyers.  Most are also a good deal financially.  How can a St. Paul real estate agent narrow their business to less than 25% of the homes going on the market without some dire consequences?

Different Showing Procedures

Most St Paul area houses listed for sale by a real estate agent have lock boxes on the door with a key for the home safely tucked inside.  The lock boxes may vary in style including numeric or alpha coded ones or the new fandangled electronic boxes that require an electronic key to access them.  The one common denominator is that there is a key to the home inside the box.

Not all markets use lock boxes, however.  There are some locations that require the listing agent to be present to open the home for showings.  Other areas require the agent who is showing the house to pick up a key at the listing agent's office and return the key after the showing.  Some locales allow appointments to be arranged between the seller and the buyer's agent. 

My personal preference is the system we use in the St. Paul area.  Here are my reasons:

• Imagine a listing agent that has 50 houses on the market having to go to each home to open it for every showing!  That might work in a very compact community, but when listings are 30 miles apart it could be cumbersome. 
• If the listing agent were required to open each house for showing, imagine the nightmare that would be to schedule.  The showing time would need to be scheduled around the seller, the listing agent, the buyer and the buyer's agent's calendars!   And I think I've got problems scheduling our family gatherings.
• Often my buyer clients ask for a block of time in which many houses can be seen.  Obtaining a key for each of the listings to be shown, would be cumbersome.  Imagine if the listed house were in Eden Prairie and the listing company that had the key was in White Bear Lake.  My showing would require driving to White Bear to pick up the key, showing the house in Eden Prairie some 30 miles away, driving to White Bear to return the key and then repeating the procedure for each house being shown.  Hundreds of miles would be required for each tour of houses.  It's not a very "green" idea.
• Requiring the buyers' agent to get a key from the office would also limit the amount of showings that could be scheduled for each listing.  If my showing were at noon, the key obtained at 11:00 AM and returned at 2:00 PM, any other agent wanting to show the house during that time could not gain access to the house.  Whereas when a key box is on the property,  multiple agents could show the house during the same block of time.
• Asking the buyers' agent to arrange showings with the seller is also difficult.  Sellers are usually not present for showings in the St. Paul market.  Buyers are more comfortable seeing the house and discussing the pros and cons of the property when the seller is absent. 
• Some sellers try to "sell" their home to potential buyers which usually makes the buyers uncomfortable.  In some cases the very thing that a seller considers an asset is actually a deficit for the buyer.  Occasionally a seller tells too much information about their personal circumstances and compromises their negotiating position without even realizing it.

Lock box codes must be obtained through the listing company.  As a result, permission to enter the home has to be granted before the real estate agent can get the code.  Sellers can be notified so they can prepare the house and leave.  When properly used, the lock boxes are efficient and safe allowing the maximum number of showings in a block of time and allowing agents to be more efficient with their time as well.  Thank goodness I work in a real estate market that uses lock boxes!