Short Sale Business Is Sufering
Our short sale business has essentially dried up. It has dried up not because of a lack of foreclosures but because of the residential market price increases we’ve seen here in Florida. The residential price increase coupled with low interest rates has allowed homeowners in foreclosure to re-finance or sell their homes for retail. Another reason, and probably the main reason, we’ve had a lack of short sales is increase competition. Until last summer, we were generating a 10% response to our direct mail with a 1% close. We were one of approximately 10 total flyers. Today, we are one flyer of literally hundreds (One homeowner told me she was received 2-3 flyers per day from the time the lis pendens was filed until the auction. Here in Florida, that is usually a 3 month period.). Door knockers are out there by the dozen. Does anyone have any suggestions for giving us an edge on our competition? Any other marketing strategies?
We are looking at buying notes, specifically defaulted notes since the transition would be easy. Does anyone have any experience in this? Do banks tend to prefer short sales or selling discounted notes? Any other input?
Any help would be greatly appreciated!
ShortSalePro,
I agree with you that Real Estate runs in cycles. We adapted to the shiort sale slowdown by moving into vacant land and some commercial development parcels. However, the short sale aspect of our business was what we depended on for the cash to do other types of deals. We also agree with you that the SS business will pick up. All the speculators and individuals with ARMs in our Florida market are starting to feel some distress.
Have you had any success with buying defaulted notes?
Thanks for your response.
The only success I have had in buying discounted notes is with private lenders. I have yet to get CITI or COuntrywide, Ocwen etc. to sell me the note at a discount..
A loss mitigation rep came to speak at one of our RE meetings and he said a couple of interesting things.
He would rather short sell than sell the note. That he had authority to approve a short sell under some amount, but that for all note sales the president of the company had to approve.
The other one was that he likes short and sweet SS packages. He said that the more pages the package had, the more he put off looking at it. He said if he had one hour, he would prefer to look at three packages that were 10 pages than one package that was 30 pages. Also, he found that the larger packages were full of pictures, repair estimates and other stuff that he could care less about. There is no way he would know that the pictures were of the house and that people made up all sorts of repair estimates.
From all the input, it appears that defaulted note buying may be more difficult than getting banks to short. Our major problem right now is a lack of response from our marketing. Whether we end up with a short sale or buying a note, we still need to generate some leads from our direct mail. As I said in a previous post, up until about 6 mo -1 yr ago we had a great direct mail response but it has come to a halt. Does anyone have suggestions? Also, if anyone has any input on lenders that sell individual defaulted notes, I am sure all of us could benefit from the information. Thanks!
I think banks are more willing to sell defaulted notes that are not FNMA guaranteed or in their pool.
I.e. commercial paper is easer to discount than residential unless its non-conforming residential that the lender is holding in its portfolio.