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I am not a reporter.  The news and articles I post here are from my own experience and from my day-to-day life as a full time Realtor and St. Paul resident.  I live it, I experience it and I write about it. 

Last Sunday I was quoted in the St. Paul Pioneer Press.  Jennifer Bjorhus wrote a story about  short sales.  The quote was exactly what I said but there is more to it.   Jennifer is an expert reporter, and I have a lot of respect for what she does, but she does not have actual experience working with banks or with buyers and sellers.  She only has experience talking to people who do have experience.  I have first hand experience, and wrote a post about it a couple of months ago. "When banks sell real estate"  I continue to get more alarmed by the situation as I deal with banks. They do not understand how to sell real estate.

It doesn’t take any special kind of expertise to represent a buyer or a seller on a short sale or foreclosure, it takes experience.  How much experience depends upon the individual and how fast they learn, or if they learn.  The short sale, which seems to be a mystery to most, is about negotiating with a bank and getting them to accept less money for the home than what is owed on it.  This often saves banks money because it does cost money to go through the foreclosure process.  Buyers should keep in mind that it is not unusual for a home owner to owe more on a property than what it is worth and even if it is being sold for less than what is owed on it, the property may not be a bargain. 

The foreclosure process is simple.  The home owner stops making mortgage payments, the bank demands payment in full, if the borrower can’t pay it,  the bank goes through a legal process and becomes the owner of the property, and they then sell it.   I outlined the process in Minnesota in a post I wrote earlier this year.

The problem with the bank owned properties is that banks are often slow to respond to offers.  If a buyer makes an offer while  the one bank employee that is responsible for the file is out with the flu the offer sits.  There are often multiple decision makers, which  slows the process.  They make excuses too.  Not my problem, or the buyers.    Banks don’t treat buyers the same way most home owners do.  These properties are just part of someone’s job and apparently no incentive for them to move fast on it before the buyer moves on.

A quick count in the MLS revealed that in St. Paul, the average cumulative days on market for all single family homes sold since the beginning of the year was 127.2 days.  The average cumulative days for foreclosures over the same period of time was 169.3 days.

I have been successful with both short sales and with representing buyers who are buying bank owned properties and properties in the pre-foreclosure stage where the bank will sometimes accept less than what is owed on the property. (short sale)   Again the only problem I encounter is that when an offer does come in the buyer is left hanging because  a bank employees voice mail box is full, or they are on vacation, or the file has been reassigned or the file has been sold, or some other bureaucratic snafu, like a sudden change in policy.  The buyer moves on, there are so many properties to choose from they don’t have to wait. 

Buyers sometimes assume that if a home is being sold by a bank it is a bargain.   Not true, just an over hyped legend.   Banks have expenses on the properties that they need to recoup, and price the property at market value.  Sometimes borrowers owe more money on a home than it is worth, sometimes less but that isn’t how value is determined.   I have also written a post about that.

As a buyer the smart thing to do is to compare properties that are for sale and to work with an expert to find the best buy.  The matter of who owns the property is unimportant unless the buyer has a tight time frame in which case a bank owned property should be avoided. 

I will say it again, banks do not know how to sell real estate.   It has very little to do with which Realtor represents them, because they make lousy clients.  It isn’t the Realtor who can accept or reject an offer it is the seller.  Their inability to unload these homes  is showing up in our neighborhoods as more homes are left vacant.  It is hurting our communities.  When it hurts the economy enough our tax dollars will be used to solve the problem.

The article in the Pioneer Press was interesting but it only tells a little bit of the story, and it really is more about telling a story.

Also see They Don’t Undertand  Homeless Renters  Sad Stories and Upside Down for a look at the human side of the story.  Again this is part of my life and what I see and experience first hand.