I wanted to highlight a post by Ichabod that was very interesting. It really shows how slow the banks are to react to this downturn:
Actually, the bank needs to wise up and TAKE the short sales! With our market going downward (it used to be the kiddie slope, now its triple diamond slope!) the banks will make MORE money on homes through short sales. I had a home listed with a buyer wiling to pay $204,000 in April of '07- the bank wouldn't halt the trustee sale. They are now trying to sell it REO (after putting a town of money into the house for new carpet, paint, plus the monthly utility bills, hello?) for $100,000 LESS!
I had another house listed where the owner owed $254,000. I was trying to short sale the house, I had a buyer willing to pay $180,000 CASH, the bank said they refused to look at offers less than $200K. The house foreclosed (oh, and a transient broke in, flooded the bathroom, trashed the place) and the house sold REO for LESS THAN $120K!!! The funny thing is, the bank never even listed it for $200K!
One more boring example: I had a house listed For under $200K and had a buyer willing to pay $150K- the bank demanded $175K. The buyer was even willing to pay $175K if the bank would simply compensate him for the missing appliances- the bank refused, and foreclosed on the house. The bank then listed it for $134K! They never even tried to get $175 or even $150! It is still on the market for less than $100K!In conclusion- short sales are the best bet to a bank- but they have so much red tape, they are losing so much more than they really have to.