Short Sales, a Win-Win? Not Quite. – Developments – WSJ

Well, not quite. Short sales have been underutilized, real-estate agents say, because they’re time consuming. It can take months to get a bank to sign off on a short sale, which is a lot longer than some buyers are willing to wait. Realtors say that banks also try to reduce their commissions on a short sale, which means that the process can involve less pay for more work. “As a Realtor, most of us avoid them like a plague because we all get burned,” says Brett Barry, an agent with Realty Executives in Phoenix.

Under the retooled housing aid plan, mortgage servicers can receive $1,000 for successful completion of a short sale or deed-in-lieu transaction, and the program aims to set standards for short sales. While there’s a ready-made infrastructure in place to dispose of bank-owned properties, known in real estate parlance as REO, for real-estate owned, there hasn’t been much infrastructure developed yet for short sales.

Services aren’t the only ones who gain. The program will offer borrowers up to $1,500 for the transaction, a move that mirrors the “cash for keys” payments that some lenders make to entice borrowers to move out after a foreclosure without trashing their house. Read Full Article