Short Sales in Minnesota

A Recap of The Minnesota Real Estate Show – Saturday, June 07, 2008

A sunny June, Saturday afternoon here in Minnesota brought our weekly radio show topic to a number of outstanding issues:

1. Short sales that are listed for sale on the MLS – Are they really able to be sold?

In our local market, we are finding more and more homes being listed on the MLS as short sales. However, we are finding many of these short sales may possibly be unsellable. In other words, there is virtually no possibility that the bank would be willing to take such a discounted offer. On our team, we probably have 20 of our agents who have offers in on short sales right now. They are just waiting, hoping to hear something from the bank. Sadly, month after month after month passes with no response from the bank.

2. Short sales listed for sale on the MLS – Are the listing agents really “versed” in how to navigate the waters on these complicated transactions?

With all of these offers that are being put in, many buyer agents are finding the listing agents who do not truly understand how to work these sorts of transactions. It goes without saying: the short sale transaction is a completely different “animal” than a regular real estate transaction. Because of this specialization, unless the listing agent really understands the “ins and outs” of short sales, the likelihood of the short sale closing is next to nothing. And unfortunately, this is exactly what is happening with so many transactions here in the Twin Cities. Offers are being submitted by the buyer’s agents, and again, no response whatsoever is coming from the bank.

These two items are creating a great deal of frustration not only for the buyer agents, but more importantly, for the clients! Think of the first time home buyer that has submitted an offer on their first home, just waiting…waiting…waiting to hear from someone. And they get no response. Eventually, after months and months of waiting, the buyer then decides to move onto another home.

What a frustrating buying process for so many buyers and agents right now!

In response to these two items, we discussed on today’s show the requirements that should be in place before any short sale properties can be listed on the MLS. First of all, the listing agent must have all the financial documents in place from the seller and in with the bank. Again, many of the sellers on the short sales have not been given the proper information what documents are required to be in with the lender before the home goes on the market. By requiring agents to have all of this information, all fellow agents and buyers would know that the first most important steps have been done with the short sale process.

We also discussed some education and experience requirements that should be in place for listing agents to place these homes on the market. Because again of the specialized nature of these transactions, listing agents need to have the proper education and experience so they know how to handle these transactions.

By implementing these two steps alone, we would alleviate so much of the frustration that buyers and buyers agents are experiencing here in our local Twin Cities real estate market. These steps would also shrink the inventory levels here in the Twin Cities. Lastly, if a home was listed as a short sale, the buyers and buyers agents would know that it was actually a home that could be bought and sold! Imagine that!