Short Sale Listings are Devastating to a Marketplace

Here is the quick and dirty about how Short Sales are destroying some marketplaces around the country.  The domino effect these listings are having on some areas is downright disasterous.  Daniel Odio wrote a post about this same topic on varbuzz.com.   

Short Sale listings have an extremely low chance of ever getting sold.  In one section of Northern Virginia, broker Frank Llosa calculated the actually number short sale listings that were fortunate enough to get an offer only had a 5% close rate.  That is a horrible number and I am sure the same can be said for other areas of the country.

Short Sellers do not care about dropping their prices well below market value in order to get a contract.  Why should they care?  They aren't the ones taking the financial hit, the lenders are.  And the lenders are busy trying to keep their companies afloat, they don't want to waste resources on an area of their company that is only going to lose money.

The agents who take these listings and drop the prices to lower and lower numbers are undermining the market prices of sellers who actually can sell their houses without a bank approval.  The agents are enabling this destruction of the marketplace in the hopes of getting buyers.

The buyers who respond to these short sales are quickly switched to an actual foreclosure listing which can be sold or are left to find out for themselves how futile short sales are. 

Agents don't care, sellers don't care, lenders don't care.  So why doesn't someone in a position to do something about this epedemic do something?

There are two very simple solutions to the problem.  One, require all the banks to sign off on the listing agreement or an addendum to the listing agreement.  This would have to be required by the states because the multiple listing services don't really have a vested interest in this matter.  Two, require any short sale listing to pay a non-refundable retainer fee to be listed.  Any agent that can see the destruction these listings are having on the marketplace should have no problem requiring this deposit.

Any other ideas?

Comments

[socorro]

for buyers, it is a chance. for real estate person, it is nightmare.