A great resource site that deals directly with information about foreclosures and short sales can be visited at
http://www.realestateinvestor.com

And Jillayne, I wasn’t saying that other counties didn’t have foreclosures, I was just comparing King county non foreclosure to King County foreclosures. It would be interesting to see if that ratio increases in the outlying areas.

Here’s what I found:
1. I reran the ’short sale’ term and this time I came up with 243 active, pending and closed listings. The first time I did it I also put the language in the marketing remarks, so it must have only pulled the listings where the word short sale was in both the agent remarks and the marketing remarks.
2. Using only Lender Approval, there were 46 listings of which 10 DID NOT also say short sale. 9 of these used some language in the marketing remarks.
3. Unsing 3rd party approval yielded only 1. It wasn’t necessarily a short sale or pre-foreclosure. Could be an ex spouse, etc.
4. PreForclosure without also saying ’short sale’ or lender approval yielded only 1
5. Bank approval yielded 0

Clearly, only 25% of the time do agents remark about a short sale or lender approval needed in the marketing remarks.
Searching by short sale yields most of the homes, but there were about 16% that used ONLY lender approval required.

Under what circumstances would the lender approval be needed when it’s not a short sale?

1. using the term ’subject to lender approval’

I’m going from memory now, but I believe that “short sale conditions” were considered a material fact, and those must be disclosed to all parties.

The VERY gray area of behavior comes when a real estate agent plays this game: “well, IF the home sells for X then it won’t be a short sale.”

However, we are now in a flat and declining market. Agents are suppose to be knowledgeable in what homes will sell for, that’s why they’re called “licensed real estate agents.”

Having a homebuyer fall in love with a home only later to be told, “well, if we accept this offer at this price, then we’re going to have to go through the short sale process” is a very gray issue when it comes to timing.

Sure sellers want to be able to attract buyers but buyers also need to know facts such as “this sale may take a LONG time to go through, especially if the agent has not done ANY WORK AT ALL on the short sale approval.”

To reduce liability, disclose, and explain why to the seller.

Am I oversimplifying?

First of all, the “71″ was only run for King County, and only run using one search term. You’re missing Snohomish, Pierce, Thurston, Skagit, and other outerlying counties, but Sno and Pierce will do for starters.

I think Galen did a post on this awhile back and he came up with a bunch of various search terms besides just “short sale.”

Try:

Subject to lender approval
short payoff
preforeclosure
bank approval needed
Subject to third party approval
Third party consent required

Here is Galen’s article:
http://www.raincityguide.com/2007/09/07/short-sales-and-foreclosures-in-the-mls/#comments

I taught the Short Sale class at the Seattle King Co Assoc of Realtors office in Bellevue in early December. That class was filled with the most anxiety-ridden group of Realtors I have ever met during the last 15 years of teaching Realtors. Every single agent had a short sale going on and none of them knew much of what to do (with the exception of one agent who had MEGA experience negotiating short sales.) Although the room was filled with mostly Puget Sound area agents, one had travelled from as far away as Anacortes to take the class and another as far south as Thurston County. That agent said one of every 4 listings in her market area is a short sale.

And like Kary pointed out in comment 5, not every NWMLS member knows about the rule where agents must disclose short sale terms in the agent comment section. For reference, here it is:

Legal Bulletin No. 169
“Short Sales…”
July 13, 2004
Rule 10(f)

“A member must make sure that the listing is complete and accurate when it is input into Locator. A listing is not complete and accurate if it fails to disclose that the listing is a short sale or the third party whose consent is required. Again, if this rule is violated, the listing member may be responsible to a selling member for lost commissions.”

The rule was put into place when the selling agent was asked to cut her commission. The selling broker asked the listing broker for the full commission as advertised in the NWMLS and won.

Some agents think it is not in the seller’s best interest to disclose short sale terms so they don’t, OR they play this little game with themselves: “If it sells for X, then it won’t be a short sale so I don’t have to disclose.” Yikes! That means we could have potentially WAY MORE short sales out there than what we’re seeing on the surface.

It is a logical reaction, and I only suggest that all parties should be learn to expect the unexpected, and allow their LO to work out contingency plans.

It’s time to party! Dinner, then Waterhorse! In bed by 12:15.

Whoo-hoo, at least I’ll wake up without the headache!

But I really don’t think they’re having an impact on the market. Part of that is due to my not thinking a short sale is necessarily a bargain. Foreclosures would have more of an impact.