Housing News
Agents fume over Nationstar’s relationship with Auction.com
(AGENT/GENIUS) – As Nationstar’s new acquisitions take effect, many are raising their eyebrows at the widespread implications on the market.
Nationstar Acquires Billions in Servicing Rights
(AGENT/GENIUS) – If you have listed or processed more than one or two short sales in the last year or so, then you may have had the pleasure of processing a short sale with Nationstar Mortgage. In 2012, Nationstar acquired billions of dollars in servicing rights from both Aurora Bank and Bank of America. So, they have certainly garnered a pretty large corner of the mortgage servicing industry.
Unfortunately, many of Nationstar’s pre-foreclosure servicing policies and procedures have real estate agents across the nation very unhappy. You see, Nationstar requires borrowers that want to sell their homes as short sales to auction those property through the website, auction.com. Don’t be misled by the name of the company. Nationstar does not own the property and auction.com is not auctioning off a property that went through the foreclosure process. This is a pre-foreclosure arrangement between Nationstar Mortgage and auction.com.
The Nationstar Short Sale Process
Here’s how the Nationstar short sale process works: After a short sale offer and all of the accompanying paperwork is submitted to Nationstar Mortgage, the listing agent is then notified that the property must be placed on the auction.com website. The property then becomes available for public bidding through the website. When a buyer makes on offer on auction.com, auction.com charges a 5% premium on top of the sales price at closing.
Agents and sellers are very angry about this process. Despite the fact that there is a fully executed, legally binding contract that has been submitted to the short sale lender, the seller must be willing to go through this process on auction.com or Nationstar will not move forward with the short sale. If the borrower refuses, the property could end up as a foreclosure.
It seems like a backwards process. Agents have already marketed the property and the seller—the rightful owner of the property until the foreclosure date—has selected the buyer. When the property is placed on a third party website, this legal contract is ignored. In fact, if the current buyer has a contract on the property to purchase it for $100K and an auction.com bid exceeds that offer, the current buyer will have to bid against other bidders in order to purchase the property. At the end of the auction, the highest bid wins and there is no opportunity to counter the offer after the auction closes. Remember that in addition to this process, there is the 5% buyer surcharge that is making many buyers very displeased.
While this auction process on auction.com benefits Nationstar, this process has created some controversy for buyers, sellers, and real estate agents. Being able to accept the highest bid certainly helps Nationstar recover their losses more quickly, but what about the investor and the original buyer with the legally binding purchase contract? What about how that 5% surcharge which the buyer would not have paid in a more traditional short sale process?
Will the Nationstar Process Change in 2014?
It will be interesting to see how this process will evolve in 2014. Due to slightly increased interest rates, certain parts of the United States are already transitioning away from the extreme seller’s market with short market times and multiple offers. With more properties on the market and less buyers, properties that have a 5% premium may languish longer on the auction.com.
Just about three weeks ago, I saw the auction.com folks at a booth at a convention in Los Angeles. They were giving away mugs, baseball hats, and the most gorgeous and high-quality ballpoint pens. With that 5% surcharge, it’s no wonder they had nice goodies. But, will your short sale close on auction.com? Should you agree to work with auction.com when directed to do so by Nationstar Mortgage? As always with short sales, agents walk a fine line between doing what’s right and legal while also accommodating atypical lender requests. As agents, we constantly walk this tightrope. Just be careful not to fall.
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Housing News
Average age of houses on the rise, so is it now better or worse to buy new?
With aging housing in America, are first-time buyers better off buying new or existing homes? The average age of a home is rising, as is the price of new housing, so a shift could be upon us.
The average home age is higher than ever
(REALUOSO.COM) – In a survey from the Department of Housing and Urban Development American Housing Survey (AHS), the median age of homes in the United States was 35 years old. In Texas, homes are a bit younger with the median age between 19 – 29 years. The northeast has the oldest homes, with the median age between 50 – 61 years. In 1985, the median age of a home was only 23 years.
With more houses around 40 years old, the National Association of Realtors asserts that homeowners will have to undertake remodeling and renovation projects before selling unless the home is sold as-is, in which case the buyer will be responsible to update their new residence. Even homeowners who aren’t selling will need to consider remodeling for structural and aesthetic reasons.
Prices of new homes on the rise
Newer homes cost more than they used to. The price differential between new homes and older homes has increased from 10 percent traditionally to around 37 percent in 2014. This is due to rising construction costs, scarcity of lots, and a low inventory of new homes that doesn’t meet the demand.
Click here to continue reading this story…
Housing News
Are Realtors the real loser in the fight between Zillow Group and Move, Inc.?
The last year has been one of dramatic and rapid change in the real estate tech sector, but Realtors are vulnerable, and we’re worried.
Why Realtors are vulnerable to these rapid changes
(REALUOSO.COM) – Corporate warfare demands headlines in every industry, but in the real estate tech sector, a storm has been brewing for years, which in the last year has come to a head. Zillow Group and Move, Inc. (which is owned by News Corp. and operates ListHub, Realtor.com, TopProducer, and other brands) have been competing for a decade now, and the race has appeared to be an aggressive yet polite boxing match. Last year, the gloves came off, and now, they’ve drawn swords and appear to want blood.
Note: We’ll let you decide which company plays which role in the image above.
So how then, does any of this make Realtors the victims of this sword fight? Let’s get everyone up to speed, and then we’ll discuss.
1. Zillow poaches top talent, Move/NAR sues
It all started last year when the gloves came off – Move’s Chief Strategy Officer (who was also Realtor.com’s President), Errol Samuelson jumped ship and joined Zillow on the same day he phoned in his resignation without notice. He left under questionable circumstances, which has led to a lengthy legal battle (wherein Move and NAR have sued Zillow and Samuelson over allegations of breach of contract, breach of fiduciary duty, and misappropriation of trade secrets), with the most recent motion being for contempt, which a judge granted to Move/NAR after the mysterious “Samuelson Memo” surfaced.
Salt was added to the wound when Move awarded Samuelson’s job to Move veteran, Curt Beardsley, who days after Samuelson left, also defected to Zillow. This too led to a lawsuit, with allegations including breach of contract, violation of corporations code, illegal dumping of stocks, and Move has sought restitution. These charges are extremely serious, but demanded slightly less attention than the ongoing lawsuit against Samuelson.
2. Two major media brands emerge
Last fall, the News Corp. acquisition of Move, Inc. was given the green light by the feds, and this month, Zillow finalized their acquisition of Trulia.
…Click here to continue reading this story…
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Sharon Canada
October 23, 2013 at 1:35 pm
I am surprised that there are not more comments on this controversial topic. I just completed a Nationstar short sale that had been transferred from BOA. Had a FAIR cash contract from the beginning. REQUIRED the Auction.com participation in order to proceed with SS. Legal in Fl. informs me that SS and any purchase contract executed is subject to Lender Approval. If standing on my head was required to get approval, I would have to stand on my head. What is most troubling about this whole process and is NOT being discussed is that the 5% premium (fee) is added the the ‘bid’ amount for ‘total purchase’ price. All fine for Auction paperwork, but HUD will show Purchase price of auction fee and bid price. Reports to MLS and numbers used by Realtor, appraisers, banks will reflect an artificially inflated sales price. No where else have I seen ‘fees’ added to a purchase price to result in the SOLD price of a home. Any thoughts on this aspect?
Sharon Canada
October 23, 2013 at 1:53 pm
One other point in the article suggests that homes may languish on the Auction.com site. With respect to Nationstar SS. The property is listed for a short time. A week or two at the most. It is offered as a ‘One Time Event’. If the reserve is not met or exceeded, Nationstar will go back and usually approve the purchase contract already submitted (if it is a fair market one). No buyer premium required. That’s why they also want you to present SS with an executed Purchase contract. Honestly if this is just a ‘valuation’ tool as Nationstar claims, why not just go with it from the beginning? Is this valuation tool going to present itself as a decision maker to deny SS’s and proceed with Foreclosure?
Len Malena
November 6, 2013 at 1:16 pm
Wow, this is disturbing. I have done a fair amount of short sales, though not many lately due to the increase in home prices but I have not yet run into this “scam”. I’m sure Nationstar and Auction.com have spent alot of legal fees already to get to this point that they feel ok with the process (that seems so wrong on so many fronts). I do hope our CAR or NAR legal is investigating as well.
Sidney Kutchuk
November 11, 2013 at 11:37 pm
This model is not working for homes here in Southern Calif. It only caused issues,wasted time,loss original buyers. Back on track with the traditional method of selling the short sale after being sidetracked by this AuctionStar nonsense nusence.
R W
March 3, 2016 at 6:14 am
Theses auction site are being disingenuous. They are not allowing the true condition of the property to be known to the buyers on the auction sites. In a situation with one of my clients the house was listed as good condition with pictures of the interior upon doing a drive-by it was clear to see that the house was a burned-out shell. I had a discussion with the auction platform to notify them about the discrepancy in the description and the actual condition of the house they’re only response was you have to do your own due diligence this seems to be a scam for the auction sites to make a fees while hurting both the homeowner and the potential investor/buyer. The state attorney general should really take a serious look at how these auction platforms are duping the system