Short Sales: Members Have Their Say
Lenders Shouldn’t Stall on Pricing Short Sales
I agree that lenders need to set the price of the short sale property. I placed an offer that a seller accepted, but it took the lenders more than 60 days to make a decision. By that time several banks were taken over, bailouts were flying around, and the stock market took a dive. The buyer backed out of the sale, leaving the seller in a worse condition than before.
Central Florida Real Estate Connection, Inc.
Shedding Light on Short Sales
I have to comment on the letters in your October 2008 Buzz (page 6):
Short Sale Listings Stay Active: It is in the best interest of all parties to keep the property in active status. Some short0sale negotiations could take several months. It would be a disservice to the seller if the listing agent put the property into pending status just because he or she has one offer on the table. Most buyers have a deadline for closing and many times end up walking before the bank has responded to the offer. The buyer isn’t “obligated” to the offer and is free to submit multiple offers on short-sale listings until something sticks.
A better solution would be to make a personal phone call to the listing agent to determine the status of the short-sale process (i.e., has the BPO been completed? and of course how many offers are on the table?). And, yes, with instructions from your seller an agent may disclose how many offers there are and even the amount of the highest offer on the table. Let's face it: There is no sense beating around the bush; full disclosure of the situation will allow everyone to make informed decisions about whether to show a short-sale listing or even write an offer on it.
Short Sales Bad for Business: First: yes, it is a buyer’s market. Welcome to the real world! If a seller isn’t distressed and doesn’t need to sell then they shouldn’t. They cannot compete with bank owned properties and short sales. That is simple supply and demand. Second: I agree that the commission offered should remain guaranteed. The MLS shouldn’t have made exception to this rule. We guarantee our 2 percent commission offering on all of our short sales, take it or leave it. I don't offer 5 percent or more, subject to change, like I’m now seeing in the MLS.
Let Lenders Set Short Sale Prices: I had to laugh when I read this. Before you can even call the mortgage company to speak with them they will require the seller signature on an authorization to release information. That document alone in most cases requires 10 days to three weeks to get processed and acknowledged. Then the file must be assigned to a loss mitigator who will analyze the borrower's financial package. After the first offer is received—and only then—will the loss mitigator order the BPO. This process alone could take several weeks, if not months. My company has closed about one-third of the short-sale transactions in West Volusia County in the past 12 months.
Prime Real Estate Inc.
When handling short sales, I recommend the following: Educate your buyers on the both the benefits and pitfalls of making an offer on a short sale. Working with a sales associate who is inexperienced in negotiating short sales can result in longer turnaround times in getting a bank approval or no approval at all. On the other hand, the benefit of working with someone experienced in negotiating short sales can result in a very good opportunity for your buyer to receive a property that has a market value much higher than what he or she is paying.
You should ask questions to determine a sales associate’s experience level. For example: Have you been trained on how to do short sales? How long have you been doing short sales? How many short sales have you successfully negotiated? Can you explain the short sale process to me?
Everything is negotiable including your commissions. Even if the listing indicates a lower commission, you are partly responsible for what you earn. Foreclosing banks typically will pay a real estate commission as a part of the closing costs for a short sale. Be sure to include the commission you want in the contract and the worst that can happen is you will receive a counteroffer.
Our office has received specialized training with two years experience and more than 50 closings on short-sale properties. We’re glad to help sales associates in the Northeast Florida area and will pay a referral fee if an agent refers a seller/property.