A couple weeks ago one of the vice presidents of Sotheby’s International Realty was in town. Most agents at Sudler | Sotheby’s (Chicago’s local Sotheby’s Realty branch) handle transactions ranging from south side foreclosures Gold Coast singles family homes (myself included). However, Sotheby’s International brand only really cares about properties over $1.5 million. Nonetheless, I heard him say somethng that I never thought I’d hear. He said, “All Sotheby’s agents should get familiar with and certified in short sales and foreclosures.”
The reason for this is a phenomenon being referred to as 'short sale tsunamis.' Thankfully, we are about through with short sales that are a result of too many sub-prime loans. These were caused by banks that were giving loans to anyone who simply said they had a job. Most of these were loans were giving for properties under $500,000.
However, the next ‘wave’ is just beginning to hit. This next wave is a result of option adjustable mortgages. These are mortgages where you can pay even less and have your mortgage balance grow. Most of these homeowners were certainly qualified to buy a home, but they were just qualified for an amount out of their price range. This is being enhanced further because of peoples unemployment running out and once things started getting bad many people refinanced out of sub-prime loans into option adjustable rate loans. This group of mortgages was for loans that were for many luxury properties. This wave is expected to continue over the next 24 months, and is why realtors in the luxury market better start learning how to work short sales and foreclosures.
Why is it important to have an agent who is familiar with the short-sale process?
The only thing most people (including agents) know about short sales is that they can be long and annoying. While this can be true, there is a reason why. The most important thing you need is a listing agent who knows how to present the offer to the bank. While banks are getting quicker they still want everything presented in a short sale package. This package includes everything from the proposed purchase price to a letter explaining the sellers’ hardship. If it is not presented in their way they simply reject the offer and it goes into foreclosure. When I’m working for a buyer who is interested in short sales I initially screen the listing agent to see if they know what they’re doing. More and more agents are familiar with the process, but I’ve had agents flat out tell me, “This is my first short sale, and I don’t really know what I’m doing.” This is why 40% of short sales eventually go into foreclosure. If it’s clear the listing agent doesn’t know what they’re doing then I’ll advise my buyer that it is probably not even worth their time viewing the property.
If you are in the Chicago area and you’re interested in purchasing a short sale or you are a homeowner who might possibly be in a short sale situation feel free to send me an email at Bradley.Riemann@SothebysRealty.com or give me a call at 888.471.9993.
