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Saturday, March 13, 2010

Making a living in the twilight zone...

Rod Serling could not have produced a more bizarre Twilight Zone TV show about real estate than the reality that we are now experiencing in real life. Talk about things being turned upside down and being disorienting, take a look at the graphic below. This was how the market distribution of home sales ended the year in 2009. The market in 2010 is expected to tilt even more heavily towards the distressed categories of short sales and bank owned.

So, now, imagine trying to make a living in this market if you were not doing short sales and bank owned sales - it's not possible.

I avoided getting into the listing side of foreclosures and short sales because I just didn't want to deal with the hassles involved; however, it's now impossible to make a living in real estate without engaging in those listings. The bank-owned category is tough to break into, unless you have established relationships with some bank asset managers; however, the short sale listings business is something that we all hit all the time, since so many sellers are under water on their homes.

The short sale listing business requires training, patience, persistence and caution. I've got the caution part down pretty good and I've developed better patience and persistence with things, so now I'm working on the training part. I plan on engaging in my first short sale listing soon. I've done lots of deals from the other side (representing the buyer in a short sale) and now it's time to represent the seller. Hopefully my first few short sale listings will be the relatively simple kind where there is only one mortgage to deal with and one lender to negotiate with on behalf of the client.

I'm still working with a professional short sale negotiator and may recommend that clients use her for the more complex situations - multiple loans involving multiple banks. For the less complex deals, I feel that I can do the job myself, using the training that I have received. A key to my involvement with these types of sales is going to be to make darned sure that my clients understand what they are getting into and what the potential outcomes could be.

For many, starting the short sale process involves stepping out onto the slippery slope towards foreclosure and hoping that the lender will approve a sale before that happens. Hopefully the Home Affordability Foreclosure Avoidance (HAFA) program will help. It at least encourages lenders to pre-approve short sales and to not go after deficiency judgements against the sellers, once they have agreed to the sale.

Stay tuned. The next episode of the Twilight Zone is just beginning.

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