Northern Michigan Real Estate and Life in general.
Friday, March 6, 2009
Fannie's new rule matters more to the market than it does to brokers
I noticed the new ruling by Fannie regarding "negotiating" commissions, and have to say I'm hopeful that it is a sign of positive direction.
The long and short of it is Fannie has instructed their servicers that they may not negotiate a commission below 6% in conjunction with a short sale (existing commission agreements below that level are acceptable.) I know many agents have been burned in working short sales, when after weeks or months of hard work, their commission gets axed for the sake of the deal.
This ruling demonstrates that Fannie recognizes the importance of getting short sales closed, both to their customers and the overall health of the market. It also recognizes the importance of Real Estate professionals in bringing these deals to fruition.
The link below provides more information about these new instructions.
I'm hopeful that in taking a leadership position on this topic, Fannie will encourage other mortgage holders to follow suit.
It's a small step, and certainly pales in comparison with the issue of the time it takes to respond to short sale requests and get the sale done. The market should drive a correction there, as one would hope that banks will, sooner or later, realize that by dropping the ball on short sales they are losing massive amounts of money.
In the process of foreclosure, home values most frequently drop dramatically. With no homeowner in place, it just becomes a house, with no history, no sign of life, and no pride of ownership. Foreclosures have one thing and one thing only to compete on- price. The increased significance of foreclosure sales drag the balance of the local market downward with them, and while increased affordability is great, the trend becomes cyclical. Surrounding homeowners now have increased difficulty getting their homes to appraise for re-financing, or have to fight for a short sale themselves when it comes time to sell.
What's the issue with banks approving short sales? One can only assume it is either systemic lack of resources, corporate structures that don't allow for dispersed decision making, or just sheer ignorance, coupled with arrogance.
I’ve been a Realtor since 1998, and actively list and sell as well as managing an office for Coldwell Banker Schmidt Realtors. I’ve led my office in sales over the past 5 years. I’m also active in the Realtor organization, and have served as President of the Traverse Area Association of Realtors in 2008.
I was born and raised in Benzie County, which is located just south of the Leelanau Peninsula (think “pinky” on your hand map of Michigan) and west of Traverse City. My roots to the area run deep, as my great great great grandfather (mothers side) was the 3rd keeper at Point Betsie Lighthouse, having previously served at Manitou Island Light. My fathers side of family were among the first families to settle Benzonia, moving to the area some 140+ years ago.
After graduating from Benzie Central High School, I sampled a couple of colleges before finding an academic home at Northwood University in Midland, Michigan. It was at Northwood that I met my wife, Tammy. I worked in advertising in the Metro Detroit area before returning to this area.