The banks are killing the housing market with short sales. You think that’s hyperbole? Talk with an agent you know. Very few of these are getting done despite what you’re hearing from the banks. There is a massive backlog of short sales for sale and they take forever to get completed if you can get them done.
How are they killing the market? I was speaking with a fellow agent today at a training and I mentioned I don’t know why we don’t just “pend” short sale properties once we get a contract on them. He reminded me that the reason we don’t is so we can show the bank that we’ve listed it for sale and that it continues to be for sale and the offer that we’ve submitted is the best and only one. The truth of the matter is once it has a contract on it and is now “sold subject to bank approval or third party approval” very few people come in and show the property. Additionally, even if we miraculously got another contract, we couldn’t do anything with it anyway. The seller, by signing the first contract, has sold the house – just subject to bank approval on the short sale. It’s an absolute waste that that home continues to stay on the market. The Realtors and the MLSes are complicit in allowing this to happen in Minnesota.
So here’s what happens, it takes about 225 days on average to pend a short sale if you can get it done. It’s taking about 140 days to pend a traditional seller’s property. Those for sale signs on the short sales continue to hang around forever. There is also a false impression left in buyers minds about how many properties are for sale when they look are various web sites. I can tell you more often than not when I get a request from a potential buyer to see a property that looks like a great value, often times it’s already under contract. However, it’s showing up as active and adding days on market to the overall market stats hurting traditional home sellers.
Short sales are the poison pill for the housing market. It’s time for the banks, Realtors and MLSes to get their acts together and stop this ridiculous practice that is hurting many of the people across the county.
Here’s a link to the Twin Cities Foreclosure and Short Sales Report.