I think the question is fairly straightforward, but…
Assume a bank has several foreclosures coming (because it does.) Instead of an investor arranging a short sale of ONE property, taking some amount of money out of ONE deal, even if only a little, why wouldn’t a bank contact a broker (or investor) and say,
“we want this batch of houses sold in X days for a total of Y dollars”
with Y being the lowest dollar amount they can accept on the batch?
Do they think they can sell enough houses at market to cover the losses, so the only short sale when someone goes through the work to bring it to them?
I don’t know much about the SS biz at all, but it seems like it could be good money right about now (and the next few years) - which is why it seems like the banks would just do it themselves, selling homes at a drastically reduced price and securing the mortgage to service, making back some interest.
I know the banks try to retail the house and get the mortgage, but that isn’t working out so well, is it?
I’d say the reason would be because. They hold on to the hope that the owner can continue making payments. They also are generally in one state. Well the main office I would say. They lend nationwide and it can be difficult enough to network in your own area, so for them its probably near impossible. The short sale is the last ditch effort to get paid.
Well - the big reason is the legal standpoint for the homeowners. Each foreclosure is different, and a bank can’t say “Gee we have a bunch of foreclosures in the works, lets get them all done at once.”
Foreclosures are often delayed for various reasons. All of these things have to be announced publicly when dates change ( and to the home owner).
If banks did that, they would have a big class action lawsuit on their hands.
Now - once the bank actually owns the properties, they will sell them in big batches to institutional investors.
The simple answer is that banks can’t sell the homes until they actually own them. Just because a homeowner is in foreclosure doesn’t give the bank the right to sell the home. Even after the bank has taken the home back, many states have a “redemption” period where the homeowner can get the property back if they pay the outstanding loan balance plus interest, penalties, attorney’s fees and sale costs.
I was actually starting to work on a SS package for a home owner and the bank sent him a letter saying that if he can sell the house or refinance it before 45 days from date of this letter they will accept $98,000.00. (Which was about $25,000 lower than what he owed with fees, interest, back payments etc). And he is able to keep any proceeds from the sale, so we are supposed to clsoe this friday. He will be walking away with about $14,000 with all closiing costs, Realtor fees, and my fee deducted!