Glenn Kelman, CEO of Redfin, was quoted in a Wall St. Journal article today as saying that "Redfin represented buyers on 65 short-sale offers in the first quarter of 2008 but only expects to close two or three sales". As a result of this inefficient unsuccessful unfruitful closing history on short sales Redfin has enacted a Short Sales representation policy and in Glenn's blog post today, he asks the real estate community for feedback on this policy.
Here is an overview of Redfin's policy:
"What Types of Short Sales Does Redfin Support?
In many cases, Redfin will not be able to represent clients in a short sale. We’ve had plenty of clients, frustrated after months of waiting for bank approval, abandon their offers. For a short sale to have a realistic possibility of bank approval, the seller must meet several criteria, which we now insist on; this is the list that we’d like some feedback from other brokers about:
- Only one bank has to approve the sale: .
- The bank has confirmed receipt of the preliminary paperwork: the seller has stopped paying his mortgage, received a notice of default and sent the bank’s loss mitigation department the following:
- a hardship letter and financial statements documenting the seller’s inability to pay his mortgage;
- a preliminary net sheet showing what the proceeds of a sale could be after taxes and fees; and
- a comparative market analysis (CMA) or an appraisal that establishes the home is being sold for a reasonable price.
- There are no liens on the property:
- The listing agent has experience or training in short sales:"
What is surprising about the blog on Redfin is that they had 65 buyers but were only actually able to close 2-3 deals. This is not what one would have expected.
In this market, short sales are necessary to move properties and save some buyers from foreclosure. They are also an opportunity for some buyers.
Our record is a lot better than theirs, thank Goodness. They are about year late with their policy. Not only that, their policy limits opportunities for consumers.
Jonathan - working with many buyers of short sales I will say that we have closed several short sales and it has taken as much as 5 months to get an answer.
I think their list is on target with knowing how far the seller is in the short sale process and how prepared they are to shepperd the deal through on their side.
I agree that if there is a first and second mortgage - you can expect a much longer process;
You'd be surprised how many agents here list properties for short sale and haven't even begun the hardship package, etc.
We've done lots of work and had buyers wait month to month to see if property is going to be foreclosed on or bank will accept short sale offer. Of those who are buying a home to live in - we find few are prepared for the uncertainty and lack of control in the whole bank process - many have given up months after no answer (thankfully to buy another home with us)
The thing I see most often is people who think because it's a short sale it MUST be a good deal - I say buyers need to keep an open mind and often sellers with lots of equity, estate sales, etc. tend to be opportunities to buy well without the bank headache.
Waiting for a short sale to get approved can be a long drawn out process. It takes time and being on the phone hours upon hours. Some agents and companies just don't want to deal with them. I have found help so am on my way. If we can't deal with them another Realtor will deal with them. So I found myself forced to learn in this market. I can't see Redfin doing them based on their model unless they hired a short sale expert to handle them.
Finally, we tell our buyers if they won't do purchase a short sale and have to be in a place soon, best not to write an offer on one because "time is of the essence" is not going to happen.
Redfin is not in the business of servicing clients IMO. Disclaimer: This comment is an opinion and not meant to be defaming in any way. I just do not feel their business model is in the best interest of buyers or sellers.
We do close 100% of our short sales, so just bring your buyers to our listings and we'll get 'er done!
I think that this policy is not in the best interest of the buyer but is in the best interest of the agents.
Redfin's ratio of getting only a few short sales through only proves they are not experienced and not a vital part of the transaction. They probably just send the offer over to the listing office and leave it at that. How are they proactive in the transaction?
I am SO sick of agents especially spilling out negatives about short sales. That is no better than the media preaching their doom and gloom.
Short sales are a great opportunity. Sellers are saved from foreclosure, buyers are getting great deals, banks are saving money by not foreclosing, the economy is being built up because inventory is being moved and good agents who know what they are doing get paid! I can't think of a better win/win transaction! Katerina
Short sales do close. Those success rate is kind of low. It could be the luck or...
If the 1st and 2nd by the different banks it WILL take longer and alot of time is those asset managers are overloaded.
It took my short short sale for 3 months and closed last year.
Grace