How to Find Short Sales in the MLS

It’s important for real estate agents to track the percentage of listings where the homeowner is in financial distress as well as REOs (real estate owned), compared to the overall number of listings in a given market area. When short sales, pre-foreclosures, and bank-owned property make up a larger percentage of the overall available number of homes for sale, this has a downward effect on home values in that area. Yes, neighbordhood to neighborhood there “may” not be any short sales or bank-owned listings…today.  However, we are on an upward trend with foreclosures and watching what’s ahead can help home sellers make good decisions about how to choose a more agressive listing price if they are truly motivated to sell. We’ve done some research in the past on this. Galen wrote a post about search terms that work on Estately.  A few months ago I taught a Short Sale class in Snohomish County and an agent remarked that he had a buyer in a specific price range, I believe it was between $200K and $250K and he was looking for home in Everett, North to Marysville. He said ALL the listings in that price range and area were short sales with only one exception. Yikes! More short sales and bank-owned REOs mean more downward pressure on home values as the short sales that don’t close turn in to REOs and banks bring more and more REOs on the market. At this time, searching for short sales is not an option on the public-side MLS (Multiple Listing Service) per rule. Perhaps this is because the commission is paid by the seller and many believe it’s not in the sellers best interest to disclose the short sale status because that may draw low-ball offers. Now that we’re in a buyer’s market, perhaps home sellers and voting members of the MLS rules board would see that it’s in everyone’s best interest to attract the right kind of buyer. Investors have poured into California scooping up low end REOs because the sales price is low enough to allow for the home to be rented for enough to cover the mortgage payment long term. At some point, when Seattle area prices are more in line with rents, investors will want to search for short sales and REOs here.   Until then, by doing keyword searches we can also keep track of possible “ghost inventory” (REOs being held off the market by the banks) making an appearance here in the Seattle market. 

Here are some possible short sale and REO search terms to use besides just “short sale” and “REO.”

foreclosure
preforeclosure
pre-foreclosure
short payoff
motivated seller
subject to lender approval
bank approval needed

bank owned
corporate seller
corporate owner
vacant
no repairs
fixer
instant equity

What search terms should we add to the list?

About Jillayne Schlicke

Educator in the field of mortgage lending and real estate. Follow me on Google+

Comments

  1. I’m curious about this rule on hiding short sale status from the public. When in the process does the potential home buyer learn that it is a short sale? Hopefully before they submit a contract.

    Also, it makes sense that short sale offers are low. From what I’ve read, the typical short sale takes 5 months to get a response so the homebuyer is predicting the future home prices. Why pay today’s prices for a house 6 months in the future in a declining market.

  2. At a recent Rules and Regs class provided by the NWMLS I asked this very same question. I was told that the NWMLS is going to be adding a Short Sale input field for listings. There was no timeline given for this… but hopefully soon.

  3. The Kansas City MLS (Heartland MLS) still makes it difficult to find and track short sales. I get buyers that request them and they are hard to find.

  4. New Fannie Mae guidelines make short sales a win-win for Buyers AND agents! {seesmic_video:{“url_thumbnail”:{“value”:”http://t.seesmic.com/thumbnail/Pfo5dTtU59_th1.jpg”}”title”:{“value”:”New Fannie Mae guidelines make short sales a win-win for Buyers AND agents! ”}”videoUri”:{“value”:”http://www.seesmic.com/video/GSLZrH50de”}}}

  5. Thanks Jim, that IS great news. Hopefully Freddie Mac will follow suit. Then we’d just need to work on getting the lender/servicers to do the same. Sounds like Fannie is motivated to keep their own REO inventory from growing.

  6. Many MLS now require that agents inform other agents if the listing is a short sale. Doesn’t show up in the public section necessarily but at least buyer’s agents are made aware ahead of time.

Trackbacks

  1. [...] There was a question about how to search for short sales and REOs (bank-owned foreclosed homes) in the NWMLS, until such time as a search feature is activated.  I wrote a blog post about this here. [...]

Leave a Reply