Many REO Realtors who were closing a record number of deals in 2012 may not be able to close that same number of deals, or anything close to it in 2013. This really shouldn't come as a surprise to anyone considering, we have been noticing on dramatic pull back in REO now....for about 6 months or so, This all cumulated for many of us when Fannie Mae decided to fire all of thier outsourcers...or at least, the vast majority of them. None the less, this has many speculators out there talking up the "Rise and Fall of REO" and yes....make no mistake, it is definitely in declined however, let's not forget one, simple, truth. Home sales are directly correlated to jobs. No jobs = REO.
Now, it's true, short sales are playing a much larger role in the default real estate industry...in fact, as the article outlines, they seem to be up....much more than REO. In fact, from what I am hearing in the industry, many of these lenders and participants in "community stabilization" programs are seeing that short sales do a much better job at maintaining home values than REO ever could and as such, are holding back from foreclosing and giving bank directed short salesa much stronger look.
I have heard, the word on the street is, Fannie Mae and HUD are very likely going to be coming out with their own "Pre-Approved Short Sale" .... which isn't anything new however, it will have one dramatic change and that is, it will be bank directed. What that means is, instead of waiting on a homeowner, desperately trying to save their home, holding onto it from either desperation or flat out resolve, banks will hire their REO agent to go out, make contact, discuss options and give the REO agent a "Pre-approved Short Sale".
If you want to read the article, "The Rise and Fall of REO" I referenced it below however, make no mistake people, REO isn't going to fall....untill unemployment falls. These two are one in the same and as long as we stay over 7% unemployment, REO will, at the very least, level out but, it will stay strong.
By the way, for all you agent out there who are just hating the idea of doing a short sale, won't do a short sale or simply think its too much work for the money.....you might want to be changing that attitude because, as Corelogic reports, short sales had a banner year in 2012 and no one expects anything less in 2013.
To learn more about short sales, maybe even attende the industry's only Short Sale Symposium, you need to attend the Short Sale Specialist Symposium at Sea.
Link to: The Rise and Fall of REO
Link to: Short Sale Symposium
Comments
I attended a Chase Short Sale training yesterday, short sales are projected to increase on 2013 and even more on 2014. Contrary to what many may think too much work for the money is not quite right.
REO vs Short Sale Comparison
REO Commission
2.5% commission minus Asset Management Fee equals to as low as 1.5%
Short Sale Commission
Full 3% commission from most Lenders
REO Expenses
Numerous visits to the property including, occupancy check, follow up on relocation assistance, initial BPO, interior BPO, weekly inspections. Replacing keys, lockboxes and signs that very often get taken away. Establishing utilities, obtaining/negotiating pay-off from HOA (this one can be a pain). If Lender requires you to use LPS, need to pay $5.00 every time you submit for reimbursement. If REO are highly desirable in your area, expect a FLOOD of calls, emails, complaints and offers.
Short Sale Expenses
Meeting with the Borrowers maybe 3 times to obtain listing agreement, gather their documentation and take photos of the property.
While the usual complaints regarding a short sale are length of time to close and not being able to complete the transaction that can also be true for REO. Pre-marketing time on REO can sometimes take up to 1 year including relocation, initial preservation, valuation, decisions on marketing strategies, etc. REO listings are often reassigned for many different reasons unrelated to the listing agent.
I have been reluctant to completing short sales for a very long time, I have had a change of mind after this analysis, have you?