Many followers of the Short Sale Expeditor® blog and California real estate professionals have contacted me in the last few weeks to get my impression on the impact of the pandemic on our business throughout the remainder of 2020 and beyond.
First, let me say that like you, I am enormously saddened by the pandemic. To hear about the merciless ways in which COVID-19 ravages people is unthinkable. And, I pray that each of the states gets the ventilators and tests necessary to help us through this pandemic as quickly as possible. Additionally, nobody can deny that this virus has not touched them in some way—particularly with regard to economics and finances. I’m glad to hear that the national and state associations are urging Congress to address the financial impact on independent contractors who are currently banned from working in many states, such as California, New York, New Jersey, and Washington among others.
I’d like to also address the most common question that I’ve been asked: ”What do you think we can expect moving forward? Will we see a tsunami of short sales?”
Will we see a short sale tsunami?
Certainly, I do not have a crystal ball. Each day I look at the new cases reported. And although I realize that we do not have enough tests, it gives me a barometer to measure how long many of us will be asked to stay home.
In 2007, my team and I began processing short sales for agents in California and beyond. We provided support on over 1500 short sales. Despite several years of a strong economy, we have never stopped negotiating short sales; we have definitely adjusted personnel to ebb and flow with the number of transactions, but we have always had some short sales in the process of being negotiated.
In the last few years, our economy has done pretty well. Mortgage guidelines have loosened, but the number of subprime loans issued is definitely much smaller than in 2002-2006, which could indicate that the influx of short sales could be a little less than in the Great Recession. Nevertheless, the pandemic is so far-reaching and the industries impacted by this are so great that an incredibly large percentage of the population is not able to work right now. In California alone, there were 80,000 new unemployment applications each day last week. And hopefully, when stores and restaurants open again, a percentage of these individuals will be back to work.
Another difference is that many mortgage lenders are already permitting forbearance agreements for up to one year. If homeowners are proactive about calling the lender and making such arrangements, this would definitely assist in addressing the future influx of properties on the market.
What should we, as real estate agents, do to prepare for large industry changes?
First and foremost, if you are not familiar with the options available to those borrowers in financial distress, learn the ropes. Understand the difference between a borrower in financial distress that just needs to liquidate and a borrower that needs to participate in a short sale. Also, refresh yourself on the foreclosure process in your state. President Trump has discussed a foreclosure moratorium, but know that this will likely not apply to most borrowers’ specific situation. Principally, this foreclosure moratorium refers to people who are already in foreclosure with certain types of loans; it is a moratorium on the actual foreclosure date and it a moratorium on the eviction of an owner after the bank has taken back the property in foreclosure.
How Short Sale Expeditor® Can Help!
Next, if you are uncomfortable speaking with prospective clients (borrowers) about these issues, please contact our office. Our entire team has experience with all sorts of unique situations and can be conferenced in to support borrowers.
While we would love more than anything for real estate professionals to make some money this year, our ultimate goal is to assist borrowers in finding the best solution to their unique problem—which ultimately may mean strategizing on how a borrower can stay in the home and avoid being forced to sell.
The team at Short Sale Expeditor® is here to help. Please feel free to take advantage of the resources on our website or contact our team for anything that you need.
P.S. As we are in California, beginning on 3/18 and continuing through the end of the emergency order, our staff is required to work from home. In the event that you do call our office and nobody answers, please leave a voicemail and your call will be returned as soon as possible. Also, feel free to email firstname.lastname@example.org and someone from our team will respond promptly.