Name Games, Cont.

'Non-Distressed,' 'Unforced,' 'Optional'

A continuing thread on this blog has been the so-far lurching efforts to label key features of today's economic landscape ("We Have Some With Ham, Too")

So, while it's certainly not a household term yet, "The Great Recession" looks increasingly likely to be what we collectively call what's happened the last two years or so (vs. the more unwieldy, "The Worst Recession Since the 1930's").

On the real estate front, the industry still hasn't agreed what to call a "normal" sale.

Of course, until recently, that's what the vast majority of residential housing transactions were.

However, the last year or so -- longer in places like AZ, FL, and So. CA -- the market has been dominated by so-called lender-mediated sales.

These include both foreclosures, where the bank has title, and short sales, where the homeowner still has title, but needs the bank to reduce the mortgage balance to be able to sell (in the majority of cases, the bank(s) refuse, and home progresses to foreclosure).

Locally, Realtors have been using the term "traditional" sale to describe a plain vanilla deal with no lender in the mix.

Elsewhere, popular synonyms include "non-distressed," "unforced," and "optional" sales.

You can see why there's no consensus yet . . .

Broken Deals -- Foreclosures

Feeding Frenzy Aftermath: Broken Deals

Broken lines, broken strings,
Broken threads, broken springs,
Broken idols, broken heads,
People sleeping in broken beds.
Ain't no use jiving
Ain't no use joking
Everything is broken.

--lyrics, "Everything is Broken" (Bob Dylan)

Lo and behold, four to six weeks after some of the wildest bidding wars for foreclosure properties this Spring and early Summer, what do you see?

Broken deals, with the properties put back on the market.

(No, no broken hearts in any of these transactions.)

In many, many cases, the banks knowingly fomented Buyer feeding frenzies by listing the homes anywhere from 20% to 50% below market (I've personally documented many such cases on this blog).

The predictable result was 5, 10, and sometimes even 20-plus offers for the same, derelict foreclosed home.

Seller Games Beget Buyer Games

At some point, many of these runners-up decided to fight fire with fire.

So, at least anecdotally, I've heard stories of Buyer submitting simultaneous offers on multiple homes, committing to unrealistic closing timetables, and representing themselves as all-cash Buyers or financially qualified even though they weren't.

It's not exactly a shock, then, when the banks find that they've been stood up.

Maybe they'll conduct all these "rebound" listings more responsibly.

Next post: 'Broken Deals -- Traditional Sales' (non-lender mediated)

"Non-Traditional" vs. "Regular" Sales

"We Have Some With Ham, Too"

One of my favorite Mad Magazine cartoons shows a food stand advertising every kind of burger known to man: 'Buffalo burgers,' 'Chicken burgers,' Turkey burgers,' 'Veggie burgers,' and on and on.

The caption: 'we have some with ham, too, but we don't know what to call them.'

In that vein, the real estate industry is struggling to come up with a name for plain, old, non-lender-mediated sales.

As you may or may not know, "lender-mediated sales" -- namely, foreclosures and short sales -- have devoured the market in many locales the last six months or so.

For now, the preferred label for everything else: 'traditional sales.'

What were the runners-up?

"Regular" sales? "Normal" sales?

P.S.: my clients (and neighbors) know that I have a penchant for quoting Mad Magazine. In fact, another cartoon was the inspiration for my license plate.

It shows an overbearing, 50-ish guy with too much chest hair and bling (not me, I promise) trying to entice women back to his yacht with the cheesy pickup line, "I named it after you."

Sure enough, the last frame cuts away to a yacht with the license plate, "After You."

My car's license plate reads, "MY RLTR" -- as in, "there goes . . . my Realtor."

"Not a Foreclosure," Translated

"Not a Foreclosure! Not a Short Sale!"

Sellers don't usually start out proclaiming what they're not. But this isn't a usual market.

In some Twin Cities neighborhoods, the normal ratio of "traditional" sales relative to lender-mediated sales (foreclosures, short sales) has inverted. Furthermore, many Buyers have come to associate lender-mediated deals with extra risk and hassle.

So, to avoid being lumped in with the bank deals, more Sellers are trumpeting their non-bank owned status on MLS.

Translated, here's what they're really saying (or trying to):

--If you make an offer, you'll get a prompt response (1-2 days, vs. one week or more).
--The Seller is willing to vouch for the condition of the property; provide the standard Minnesota disclosures; and comply with any applicable municipal inspection requirements.
-- The home has been fairly priced -- not 30% under market, to foment a bidding war, or 30% over, because that's what the Seller needs to pay off their mortgage.
--You may write an offer using the standard Minnesota Purchase agreement forms and addenda (vs. using custom, bank-required forms with untested terms, Buyer booby traps, etc.)
--If you reach agreement on terms with the Seller, then find legitimate issues during the Inspection, you'll be able to negotiate an accommodation with the Seller (vs. taking it or leaving it).
--If you have questions about the property or its status during the course of the deal, the listing agent (representing the Seller) will actually return your phone calls and email's.
--The Buyer will be able to use their own title company (vs. the bank's), to check on outstanding liens, taxes, city assessments, etc.
--At the end of the process, the Buyer's Realtor won't have to fight to collect the percentage commission advertised on MLS.

I could keep adding to this list . . . but you probably get the idea.