Short Sales 101…or the rant of a short sale listing agent

December 19, 2011

Okay – I have to voice this or I might just explode!  I would love to get a few basic messages across to the various parties in a short sale in hopes of making this process easier and faster for the next person who utilizes just one of these tips.  Even if just one person takes a point from this – my day will be complete!

After working on several very difficult short sales in the past month I have found myself at a point of exasperation a few times while staring up at the ceiling of my office, or the soft top of the Jeep and talking to myself.  This is distributing to both myself and any passerby’s.  I know that short sales are difficult and they are especially hard on the home owners who are facing of variety of challenges in their lives BUT with these few simple tips…we can make them easier.

So…here you are…by party involved…my advice in simple terms:

BUYERS

•  We do realize you are helping the sellers by offering to purchase their property and they hope that you will enjoy it and love it as much as they have.  They have raised families, enjoyed moments and poured money and physical effort into their homes to watch it sell at a loss.  This is difficult for them and your appreciation of that goes a long way.  So please – don’t treat the house as if it’s already a foreclosure and walk around it at will.  Make an appointment, have your Realtor with you and respect their personal belongings.

• We also realize how hard it is to wait for an answer while the short sale is being processed through the bank.  If there is more than one lender involved – this is an even longer process.  It’s improved A LOT over the past year and we are now seeing very short processing times but we know that anything longer than a day is hard.  I have been a home buyer and I know how anxious you are – how excited you are – and how much you want to buy THAT house!  But please – don’t insist that your buyer’s agent call the listing agent daily to find out what’s going on.  Chances are – they don’t have an update and will let your Realtor know when they do.

• You are enjoying almost instant equity in your purchase because short sales have a lower market value of identical properties that are traditional sales.  This is because of the risk associated with your patience and waiting.  Please don’t insist your agent submit insanely lowball offers – the bank will not accept them because they know what market value is, your agent will be embarrassed to do so and the seller will be insulted.   It wastes everyone’s time including yours and results in both sides of the transaction feeling slighted and unwilling to negotiate.  A well thought out offer with a reasonable price in comparison to market will get all the parties talking and result in a very good deal for you.

• Use a lawyer who is experienced with short sales.  Your Realtor will more than likely have a few to recommend and consider their recommendations.  A short sale transaction is not a typical sale and the attorney in your corner needs to be able to navigate it.

BUYER’S AGENTS

•  EDUCATE your buyers!  We deal with short sales every day but they don’t and might not ever again.  Please set a reasonable expectation prior to even showing your buyers a short sale listing so that they know what they are getting into.  Be sure they understand there is a process to it and that the closing time frame might not be what they expect.

• Interview the listing agent ahead of time.  Have they done a short sale before?  How many?  With what lenders?  Who does the negotiating?  If the listing agent is experienced, holds a CDPE or other distressed property certification then you can proceed with some confidence that it will be handled well.  If not, then be prepared to take on more responsibility for the deal.

• If you haven’t offered on a short sale property before –that’s OKAY!  But let the listing agent know so that they can be more educational for you during the process.  If they don’t have time, get an agent from your office to mentor you through the process and then you’ll be good for the next one.  Don’t have anyone nearby that is willing to do it but your buyers really really REALLY want that listing?  Refer it out – your clients will appreciate the maturity and experience that you demonstrate by knowing when you should seek help.

• Please also treat the house with respect – it’s not a foreclosure and it’s not always vacant.  Don’t assume that an 8pm showing on Wednesday night is okay when you call at 6pm.  Short sales are an option so that the home owners can move on with their lives with a sense of dignity and responsibility – let’s help them do that.

LISTING AGENTS

•  Please please please treat the house with respect!  (This is a reoccurring theme).  It’s still a listing and although some short sales are lacking some basic maintenance due to the home owner’s financial situation – they are still privately owned.  Take full pictures, disclose its short comings and present it in its best light.  A short sale listing should not look like it was an embarrassment to take.

• Please list to market price and do so aggressively.  Your sellers need an offer quickly and pricing it way above market will only prolong their misery.

• Please respond to showing requests in a timely manner and please let your seller know that there is a showing.  As much as the buyers have to demonstrate some restraint the sellers have to show some willingness and you are the first point of contact.  Set the tone and all the parties will appreciate it.

• Please PLEASE do not take a short sale listing if you are not properly educated.  The risk involved for your clients is grave and a foreclosure is not quickly forgotten.  If you have not listed a short sale before then refer to a mentoring agent in your office.  If you are unable to, then refer the listing all together.  Your client’s financial future is at stake and this is not something that you can “try” and “see how it goes”.  Get educated and get someone to assist you through the process that has the experience and education.  Your clients will appreciate and value your expert assessment of your skills and the care and consideration you gave them.

•  Please recommend a lawyer to your sellers who are experienced with short sales.  It makes a huge difference during the process and not all real estate lawyers have done short sales.

SELLERS

•  Clean your house!  I know it’s hard to continue to put effort into your house when it has a foreclosure notice or an auction date.  Maybe you have already moved out or in the process of finding a new place.  When there are so many memories and it’s hard to be in the house at all, it’s even harder to clean.  BUT – it needs to be done.  You need the highest market offer possible and having a clean house is a great way towards that.

•  Be open to what your listing agent is telling you.  A market price adjustment is not an attack on how you kept your house or what you did to it.  Look at the information he/she has and realize that they are working in your best interest.

• Make sure you provide your listing agent with all the documentation items that they have requested.  They are not asking you to provide the information because they want you to have yet another unpleasant task – the banks require that information as part of the short sale and not providing it will only create delays.  They are bound by Massachusetts Privacy Laws to protect your information and take great care with it.

• Understand that the buyers are excited about their new adventure just as you were at one point and will be again soon with a successful short sale.  This is a new chapter in their lives and they might be overly excited.  Give them a minute, they will realize the situation.

• Understand that they buyers have been fed so many different pieces of information from the media that their low ball offer is not based on an educated opinion.  Give them a chance to come around and realize that a “short sale” is not an “Ocean State Job Lot House Day Sale”.

• Please don’t yell at your listing agent when you want to yell at the bank.  We’re a tough bunch and we can take a lot but we really do care about you and your situation.  And if you have to yell at us…please remember to apologize.

What a relief to get all of that out!  This blog is not meant to be an instruction to Short Sales nor is it in reference to any listing currently on the market, expired, sold or foreclosed.  This blog was meant to make just one short sale transaction easier at a time and add to the recovery of our housing market!  Remember – the housing market is seen as setting the stage for almost every other sector of our economy – let’s get it back on its feet!  For more information on short sales visit www.dontforeclosenow.com.