Brandon Green discusses short sales round 1

Brandon Green discusses short sales round 2

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This week I had an opportunity to speak with heads of Bank of America, Citi, Wells Fargo and Fannie Mae about the process of selling distressed properties – particularly short sales.  During the two hour mastermind session in Austin two things were very clear.  1) there is a substantial amount of inventory that is “distressed” and will come to the market as a short sale soon and 2) the process is still so difficult, with so many interested parties to negotiate with, that a large percentage of short sales will roll into foreclosure before they are approved to sell short.

Common sense would dictate that the bank will lose less money by selling as a short sale, but since when was this process governed by common sense?  The reality is in most cases the servicer – the entity you see on your loan statement – would very much like to help facilitate a short sale, but the investor and the mortgage insurer block it because they would rather pay for the loss later.  Even if that means paying more later…

The group agreed this week that we have 2-4 more years of high levels of distressed inventory so expect more of the same in real estate likely until 2015.

We all agree in my office the real estate market has seen a noticeable bump in activity and a slight bump in price in the last 45 days.  Perhaps it is spring, or perhaps it is low interest rates, but who cares – we’ll take it!  Not all segments of the market are moving unfortunately.  It seems the “hot” activity is concentrated in the lower price point of each market category.  There are multiple mini markets in every market and all the buyers are on the trail of only a handful of very well priced homes.  Buyers would be wise to make offers on homes – even if they don’t feel they are well priced – before the seller drops the price and the buyer has to then compete with three other buyers.

Multiple offers are common place for foreclosures and short sales throughout the area.  A recent client of ours bid on a short sale with twelve other buyers in Centreville, VA (we won) – and another had a similar experience in DC.

It is too soon to call the end of the real estate recession, yet I suspect we will soon look back and determine the lowest point in the DC Metro market was October and November of 2008.