Tuesday, November 1, 2011 / by Ira Miskin
How Long Will This Tough Market Continue?
Last week we spent a full day with nearly 200 of the top REO sales and marketing teams from across the USA listening to the collective thinking of eight of the top asset managers from six asset management companies representing billions of dollars of foreclosed properties for both large and small banks and investors. The information they shared was a stark commentary on the state of the housing market today and their best prognostication of the market to come. They described the huge backlog of “grey or shadow inventory,” perhaps as many as 6 million mortgages in default or eminent default still to come to the market. That number in itself is more than 10% of all mortgages nationally. If the market is depressed today, imagine what would happen to the housing market and home prices if all these defaulting mortgages were foreclosed at once. A huge quandary for banks and investors holding these defaulting mortgages: How to clear the inventory from their balance sheets, which hurts their financial health, without crashing the housing market. Although it seems like a large portion of the resale housing available for sale today are foreclosed homes, a rising percentage of the distressed properties for sale in the Metro Atlanta market and across the country are short sales. These are properties whose mortgages are in default and whose owners are attempting to sell and also work out a settlement with their mortgage holder to repay less than what is owed and have the balance (called the deficiency) forgiven. For sellers of short sale properties this is still, although a good alternative to foreclosure, a tough row to hoe. Banks, investors and the asset management companies hired to manage the short sale negotiations are still woefully understaffed. Processing and procedures vary widely from bank to bank, and federal and local regulations and restrictions on how Realtors can represent sellers in short sale transactions are restrictive and inhibiting. Not a pretty picture out there. The bright side of this gloomy picture is that industry professionals recognize what a mess the market and the process to clear out the glut of defaulting mortgages is. But there is much work to be done to stabilize home prices and allow the housing market to help lead the nation out of economic distress. As Realtors, the more we know about how to navigate the unclear and turbulent waters of marketing and selling short sale and foreclosed properties, and the sharper our understanding of the internal systems of lenders and asset managers when negotiating sales for our distress sale sellers and buyers, the clearer the housing picture will become. Taking many months to unsuccessfully negotiate a short sale transaction only to see the property go to foreclosure helps no one. Learning how to successfully bring a short sale offer to a defaulting seller’s lender and thread the eye of the needle in order to get the sale approved, clearing one by one the backlog of distressed homes from the market, can only speed up change in this otherwise dismal residential housing environment. At the end of the day, it may well be educated and adept Realtors and their Teams, who have become expert at guiding defaulting sellers and bargain hunting buyers through the process, who will clear out the defaulting inventory and bring the market back to health. We can help distressed home owners find financial relief, and help buyers anxious to find a good opportunity at the bottom of the market to find the “perfect home,” stabilize neighborhoods, and do our part in forging a path toward economic recovery. Until then, there's is no telling how long this tough market will continue. Remember, selling or buying a home is a process and a journey, not an event, you will want to subscribe to our free video e-mail series for home sellers and buyers. For access to the complete series of free video and informational emails that can provide you with many of the important strategies and information you will need to make the best home selling or buying decisions you can email us at info@TMTRealtyGroup.net and ask for the SPECIAL E-MAIL SERIES REPORTS, the free no obligation series of email reports to be sent to you regularly over the next few weeks. Just put FREE VIDEO EMAIL SERIES in the subject line and let us know if want the home seller or home buyer series. Or contact us directly for free, no obligation information at info@TMTRealtyGroup.net