Here is a story about Mr. Mcardle who lives in Mesa, Arizona. Mr Mcardle being in the construction business suffered loss of income due the declining real estate market conditions. Mr Mcardle got behind in his mortgage payments and his bank or servicing company Litton Loan Servicing LP started the pre-foreclosure process.

Mrcardle employed Encompass Realty ® to sell his house at fair market value but fair market value is less than originally owed, so Manny, Broker of Encompass Realty ® started the short sale November 2007. After over 50 phone calls Litton Loan Servicing gave a short sale approval on about February 2008. But one week before Litton Loan Servicing fax over the approval, the buyer would not wait 4 months and cancel and bought another property.

Encompass Realty ® received another offer February 2008, and Litton Loan Servicing stated it should take two days for an approval. Mean while the real estate market is still declining in most areas. Litton Loan Servicing promised May 27th 2008, in about 48 hours we should get the approval. This is now 3 months later. May 30th, 2007 .Encompass Realty® received the fax approval and guess what, buyer cancels and buys another property couldn’t wait 3 months. Who is to blame them.
So the question why would any buyer make an offer on a short sale? why wait so long? agent for Century 21, who does not want to be name, stating that the agents are being told not to make offers on SHORT SALES properties for sale.

We talked to Encompass Realty ® located downtown Chandler, about how real estate short sales are done in today’s market. Manny, from Encompass Realty ® said the process is somewhat simple but frustrating due the response times from the banks.
Manny says the short sales process starts with the homeowner. The homeowner will need supporting documentation to be presented to a bank upon a receipt of a purchase offer from a buyer. You must have a complete short sale package to be successful but more importunately you need patience. A short sale from beginning to end will take up to 30 days to 6 months. So why would anyone wait for approval for a short sale when there is so many REO’s on the market?
We recently visited ReconTrust website and got some information regarding foreclosure sale data from May 1st to May 9th which is about 7 days of data. According to ReconTrust there were 135 properties that went to auction and 95% or 128 properties when back to the bank and will in sometime be REO property for sale.
ReconTrust is just one company or trustee in Arizona that process the auctions for the beneficiaries (banks). So if there are about 5 top volume trustees foreclosing about 640 homes going back to the bank every 7 days or about 2,560 homes a month, that’s a lot a home yet to make it to the market. Banks are losing more money when they don’t short sale but ‘investor’ policies are keeping the majority of short sales from even taken place.
On the ARMLS there are about 6,880 single family homes that are REO for sale out of 44,588 residential homes market today. This represents 15% of the homes for sale are owned by the bank but if you combined the properties that went back to the bank in the last 7 days it would be estimated the bank has over 25% of the real estate market for single family homes for sale.
The only reason to do a short sale is if and when you can close from an approved short sale the seller will not have a foreclosure on their credit.

The Arizona Real Estate Foreclosure market is seeing an increase in foreclosure notices according to Manny Caballero of Encompass Realty ®. Today in single family detached homes that are about 6,710 properties that are REO, or bank owned and about 44,613 single family detached homes on the market making REO representing about 15% of the Arizona real estate resale market and that percentage is growing.

In speaking today with Anthony with AZCO Properties says that a good percentage vacant REO vacant properties are getting broken into and what is getting stolen are taking cooper plumbing, AC units and more.
Manny Caballero of Encompass Realty ® stated he just got off the phone with Ocwen they stated Ocwen is not doing short sales? What is Ocwen Financial Corporation up to? Manny is also stating Indy Mac is charging to process a real estate Short Sale.

take example of a short sale with Encompass Realty ® who is currently negotiating with a bank:
Property Purchased in March 2005 with a $ 143,000 purchase price. The first mortgage is foreclosing with a sale date May 21st, 2008. There was a second mortgage taken out by the owners to remodel their house. The second mortgage is with Washington Mutual, aka WaMu.

In a real estate foreclosure situation when the first mortgage reaches the foreclosure auction date and nobody bids to purchase the property, it goes back to the bank as a REO, which is a good chance in today’s real estate market. What happens to the second mortgage? The second mortgage loses their investment.
So with the foreclosure sale date approaching, Encompass Realty ® has been trying since early April 2008 to obtain a short sale approval on the second. The second mortgage investor would get back 25% of the loan amount which is unheard of in a real estate short sale. Normally a second would only be allowed to bet only $ 1,000 to $3,000. Washington Mutual doesn’t return phone calls. Stay Tuned.
Realtors may want to rethink making offers on real estate short sales. Unless you can wait months, Manny states he rather make offers on REO and real estate resale’s.