Part one :
I do a lot of short sales... well, not hundreds but a few at the time that I devote a lot of personal attention and have closed a few ( the ones that don't close is most times because the buyer walked away right before the approval came back). I know a lot more about the process from experience now than some agents that have not had any done but are working with buyers. Nothing wrong with that .. buyers agents do a good job and we need them. here are a few points to keep in mind:
- However since this is Phoenix 2009 if you work with a buyer in certain zip codes you will find nothing but short sales and REO's .
- Some REO's are so bad they can't be financed and need a lot of basic repairs to make it livable.
- Most short sales in in good condition,some, like mine are in pristine condition and have the best upgrades on the block :)
- I would like to stress that agents representing buyers that are looking at short sales need to have had a few done themselves and be less hissy about the process and towards the listing agent.( it is what ir is and we have to work with what we got ) If you come across as being a complainer than I will not want to work with you or your buyer as I know you will not be dedicated to the process and might move on to something else just before we get it done after hours of work that I have to put in for your buyer .... if the home is in good condition is Worth the wait as you will get them a home in a much better condition than a trashed ABANDONED REO'Sfor about the same kind of money .
- Just make sure you write an offer that can be backed up by a BPO value for the area. I have to write a blog about this subject.
- Do not ask me if the seller is Negotiable ( my answer is a smart one: sure he will sell it for 1$ but I don't think the bank will take that .. What is he negotiating at this point? Oh yes he does want to take his refrigerator and washer/ dryer and maybe the microwave... and personal belongings like the flat screen TV. Do not encourage the buyer to get greedy. These people are walking away with nothing and migth need those items ( if they decide to leave it I will tell you) We are trying to prepare an offer that bank will accept based on recent active and sold comps that are similar or the same like this one in size location and amenities.... keep in mind your "prize" for the wait is the upgrades in the home or the condition of the home. Please come across as being well educated in the subject and ask relevant questions.
- If I tell you that this is a pre approved seller it means just that: the bank has looked at the sellers financial situation and that he is approved to do a short sale but the price and offer still needs to be approved. Remember is not always the price; is the price and terms. Could be terms as well as proof of funds etc... Show me how good the client is just like you would on a normal transaction and remember now you have another set or sets of eyes looking at this offer and your buyer's buying power.
- Send a complete offer and do not give me a definite time frame to respond; I will keep you informed and on the look ... ok ( I agree 90 days with no answer or fallow up is not acceptable) but I usually can tell in 14 days or sooner what the response will be; now if we need to have the second answer as well ( when there is a second lien holder they usually want to see the approval from the first before they agree to put anything in writing ) then there are another few days as most answer in a short time ; some in 3 to 4 days after the first has approved.
- Also just so you know some Fannie an Freddie deals take a long time to respond even if they are foreclosures ( REO) . .they are GSA's .. gov owned and work at the speed of government.
- As a general rule if the house had a notice of trustee date scheduled it will move even faster to get approved by the bank... a lot faster ..
- Educate your buyer and by all means do not discourage them if that is the house they like just because you want a faster paycheck.. Remember the buyers will be happier with the home that is in the better condition.
- I work very hard to get them approved and do not take just any listing. I take a limited # so I ca n service them better. Some I don't have a lockbox on for a reason: I want to meet the buyers and try to answer questions that come up right then and there.
If I promised 3 % on the deal I will do my best to honor that and will go back to the lender and negotiate for that to be paid as well. I am representing the seller and not the bank; my job is to sell it before the foreclosure takes place.
I will write more in part 2 coming soon
Elena Martinovici
Designated Broker- Phoenix , Arizona
Short sale, BPO and REO
Elena Martinovici ~ Designated Broker
Professional Marketing Realty~ Short Sales and REO Brokerage
"Sold Homes Done Right! "
Mobil: 602.321.1273
e Fax: 602.218. 4343
www.sonoranhomes.net
Blog: www.activerain.com/sonoranhomes
Elena: It's be easier to do short sales if the lenders really wanted to sell them. Their impossibly arcane processes and thousands of sad tales here on AR show they don't.
Fortunately we don't have too many short sales or REO's here in ANchorage, Alaska. However, I did come across one very nice short sale and I thought the price was a steal. But to be honest, I was really intimidated by the process so thank you for your post and keep them coming. I'm sure we will be seeing more short sales before the economy turns around.
Elena, This is an excellent synopsis of what Buyer Agents need to remember when doing short sales.
Sometimes its hard to sit back and wait and sometimes the Listing Realtor is "not" doing all they can, but if a short sale works out, the buyer is usually getting a wonderful deal. Since you have the reblog button here, I am going to reblog this.
The information is relevant to everywhere.
Elena, great post, and very relevant for me as I seem to be doing more of these. Thank you for a very succinct outline of what to and not to do. I am going to re-blog it.
I am grateful for the info on short sales and this I am adding to my list of reminders. I have not had one yet but am storing all the patience up that I will need. Sounds like a looong process. Thanks
Elena -
Good stuff, thanks for sharing!
Unfortunately, part of the problem in completing a short sale transaction is the other agent (buyer or listing) who doesn't fully understand the process - but PRETENDS to!
We find out very quickly, however!
I feel for you folks down in Phoenix - most Chicago Neighborboods these days have only 4 out of 10 in distress. But still very much a part of our lives here.
Call or drop a line anytime!
DEAN & DEAN'S TEAM CHICAGO
If you are representing a buyer looking at short sales it is just as important to have an experienced selling agent in short sales. If they only dabble in them and were lucky enough to have gottena few listings you could be in for a challenging process. I have done many of them when I was in AZ and you can really tell the difference between an experienced short sale listing agent and a newbie to the short sale industry. Althought we cannot control who gets the listings, we can find out what we are in for so that we can prepare our buyers for the ride.
When we bought our house here in MI, the listing agent was not incredibly familiar with the process. It took over 8 weeks to get an answer from the bank and then we had to stay on top of her everyday to get things in and signed. It finally went through after threatening to cancel the deal.
One word of wisdon. Don't do your seller or buyer a dis-service - If you do not know how to proeprly represent Short Sales, refer them out
Great post. Thanks for sharing it.
Good information on short sales...I do short sales from a seller side as well. I will say, at least in our MLS that the commission offered is not negotiable. If you put a 3% cobroke or a 2.5% cobroke or any other number for that matter, you can not pay less than what you put. The bank does not matter in that respect because the bank will not tell you how much per side, but rather how much total commission they will pay. If it's Fannie Mae, they can not negotiate the commission if it's 6% or lower according to their newest guidelines!
Elena, great post. Currently when I get a short sale offer from an agent that I think is inexperienced in a short sale, I ask to meet with the buyers and explain the process. When I'm allowed to do this, I can get a feel for how committed the buyers are and how I will advise my sellers to proceed.
True Story:
I was quite saddened for a couple whose home was a "short-sale". My couple offered a generous amount, very close to asking and the bank turned it down. A couple weeks later the Seller called me and said he would talk to the bank and his attorney. Unfortunately, my buyers had found a different property to purchase.
A few months later, I saw the house price reduced $75,000. The bank really screwed the Sellers.
Most articles about short sales are written from for those who want to represent a short sale seller. Thanks for the heads up on the buyers side. My team does short sales and we always encourage back ups, because the buyer gets impatient, or the selling Realtor doesn't have the knowledge you presented so well.
Whether I'm the listing agent or the buyer's agent, I know that short sales are going to be MUCH more work for me. I also know that there is a higher risk the deal will not work out.
Like you, Elena, I still embrace them willingly and have (over time), I've learned the right questions to maximize the odds that a short sale will close and everyone will walk away happy.
Elena,
We have a Buyer's Agent checklist that we require the agent to send in with their offer. It lets them know what to expect during the process. Patience is required for a short sale, but often times it results in a great deal for the buyers.
I agree. Our area is not flooded with them but I have closed one. It is all about the patience of the buyer. I went though three before I found one that had the patience. And the banks make it very difficult. The bank I had to deal with would not speak with me ever. Everything was by e-mail at the leisure. I had to jump through hoops to make it happen. Good lesson.
You are so right don't bid way below market price other wise the deal is not going to go thru
Elena, this is a nice list of things that consumers (and some agents) may not know about short sales. 'Look forward to reading more of your posts on ActiveRain!
I have no experience with short sales, but everyone i talk to has the worst stories about them. Its nice to hear someone admit that they can make it to closing!
Great post. I am doing some Short Sales here in Manhattan New York, and I am probably one of the first agent that is doing it. Lots of buyers and buyers' agents come to me with all kind of questions. I have these type of standard answers to them!!!
Educating buyers is part of our job as a buyer's agent. It amazes me how many of them listen to the media and think they can get a $650k home for $325k and it is supposed to be in tip-top shape and it will happen tomorrow and all of the other fantasies that are out there.
Good post!
Good article for the buyer's agent in a short sale. I think Gabe is on to something with requesting to meet the buyers (if you're the listing agent). I think that, too, would solve a lot of problems before they start.
Nice work on this one Elena. Very informative. :)
I stay away from short sales, they are a nightmare. Less money for much more work.
Portsmouth NH Real Estate
excellent article. The more we educate the buyer agents on how to maximize the chances of getting an acceptance together, the better the situation for everyone, buyer, seller, agent and bank. Keep it up!
Good post. I am doing my first short sale here in Massachusetts and am representing the buyers. If the deal goes together, they will be getting a great deal for them. But it takes a lot of patience since the banks move at their own speed, just make sure your buyers hang in there.
The deals are worth the wait for the buyer, but I am constantly teaching agents what they are getting into. I'm going to start selling a packet to agents on what they are up against. :)
Elena, this is a good list on short sales for both consumers and agents Although, I haven't done a short sale, I'll bookmark it for future reference.
Elena, thank you. Very good analysis and something that I want to take parts of to show my buyers as a third party story for them to help their expectations. Very much appreciated.
Elena,
Congrats on the feature! I am closing on my second short sale in a few days. It does take a lot of patience on the part of the buyer:)
Hi Elena:
In Prescott, I've been succesful asking:
10 Questions to ask the Short Sales Agent Before Making an Offer
Thanks for sharing!
:) PS
I usually tell my buyers of short sales hang on to your hats! i let them know it will be the most bring deal for about 6-10 weeks then we will either have to move faster then the wind or we will say we wasted our time. then i ask them to sign a buyers agency agreement and explain to them how bad short sales can be so they don't fire me after trying one.
Thank you for all your responses . I am impressed. My post is featured!!!! I wrote this blog at 11:30 PM last night and was half asleep. I usually take an hour os so to write but this one was onely 15 minutes . It was way to late.... So I better go back and correct my spelling NOW.
Thank you ! I primise i will write more on the subject.
ELena - thanks for the helpful information. You sound like a short sale agent who knows what she is doing and will follow-up, provide information, answer questions and more, something so many agents here don;t seem to do. Any tips on getting the banks to respond more quickly? Or to respond at all?
Jeff
Great post, we look forward to part 2.
Great post and I agree with Dean. So many agents on both sides of the table still do not understand short sales and what it takes to close them.
Jeff,
once you get the offer Call them isf possible every day ( do what they ask you to do ) maybe send the package the 4th time because they can't find it on the desk??? or don't feel like looking for it : yes i had that answer too from a negotiator ) and remind them the market has not stabilized yet.9 if it hasn't ) in AZ I always remind them that they will get a lot less if they do a foreclosure and can't go after the seller once the trustee sale has taken place ( in most cases ) since this is a non deficiency state. only 7 including AZ are.
Christine, Jim , Kely end everyone that is from an area where short sales are a new item.
don't be intimidated by the process :
The key is to go take as many seminars in both short sales and REO's ( I just became a Certifed REO broker ) ; still waiting on those listings to show up : ) I was going back and forth within myslef with the question do I want to do them or not ( do I want to be seen as a" bottom feeder ") .... but now there is not much else so if you don't do or understand them you will have nothing to do.
It helps to understand the process, the legal side of it and lots of other stuff you can learn from others before you mess up (always learn from others if you can) Your local board has those classes and you can use for continuing education and if they don't suggest they they start offering those since chances are you will have to do them soon in your area as well.
Elena,
You sound like you are a professional and are on top of the situation. I am sure if I worked with you I would probably feel good about the transaction. The problem I have is that not many agents are as good as you. Still, I enjoyed your post and it had some good reminders for me and my buyers.
It is also strange that in the last ten days, four of short sales that my buyers had offers on finally got some movement. two were working on being ok'd by the bank three months after buyer/seller ratification, one was two months and last one was six weeks. If they all close that will be 5 short sales I have settled this year. That is 100% on short sales settleing. Sure took way to long, but I am happy to see that it might happen.
Hello, Elena...this was a very interesting post! Short sales are a hot topic right now and I think it would be great to see more tutorials on them :-)
I love the bullet points. Short sales being a trend right now it is so important for a buyer to realize they are usually getting a good deal as far as the money goes but they have to invest the time...
Matt wrote :
Elena: It's be easier to do short sales if the lenders really wanted to sell them. Their impossibly arcane processes and thousands of sad tales here on AR show they don't.
Look what Brian Bernard had to say :
If they all close that will be 5 short sales I have settled this year. That is 100% on short sales settleing. Sure took way to long, but I am happy to see that it might happen.
Short sales do work : every once in a while you will have a few that don't because the bank comes back with a higher value. if the bank is wrong is the listing agent's job to provide them the information about comps and other market forces... like there are 12 listings just the same and the rate of absorption is .50 a month so at this rate it will take 24 months for there to sell ... EXPLAIN WHY and do not submit a wayyyy to low offer then what the market is at or it will not get approved.
Elena, I like your style. All you have said is so true. Things are changing daily in this business.
Elena,
Thanks for your first hand experience. I tend to stay away from short sale, but they are becoming a very real part of our real estate market. In Maui, there are not as many short sales, but that is slowly changing as we continue in this market. Good luck and thanks for you insight.
Steve
Great post Elena - When I'm working with buyers we Have "the Talk" about short sales and the process. Still I'm continuously reminding them: " What we're not paying in dollars - we're paying in patience" and at the end of the day - you're getting a great deal.
Thanks again - I'm looking forward to part 2.
Bonnie,
Thank you. The best buyers are the ones that might be renting on a month to month or about 3 months from end of lease term. That gives them flexibilty on time. investors looking to have it rented could be a good bet as some short sales might already have tenants that are willing to stay and BAM! they now have someone making the payment fro mday one and don't need to do extensive repairs to the home before it can be rented.
Thanks Elena for the great tips and reminders for selling short sales. I have to agree with other that have commented here in that so often it's the banks that make a short sale hell for everyone. We're all hoping that they start to get it and work with their toxic assets - or maybe they don't have to work at getting them off the books. They can just wait and sell them back to us! Looking forward to your future posts too.
I am convinced that SHORT SALE is a real estate oxymoron.
Good post, and you must do you best work past 11:00 p.m. :-)
I am currently working on my 1st. short sale. We received work back today (10 days). They told us that they have to counter back no matter what to show that they tried to get more and we have to make the decision to counter back or leave it the way it was offered. We have very little short sales here in my area but more foreclosures.
I have my fingers crossed that its not a bad story.
June,
Good luck with the offer. when you counteroffer ( if you do ) submit your best comps for support :)
Elena...
The problem with short sales is that the banks are insane. We had an all cash offer on a property that completely redeemed the loan, but since the foreclosure process had started ...we were referred to the short sale department ... who dragged it out so long that the bank foreclosed and sold it as an REO $50 less than our offer.
Elena,
Great post! Short sales can be very frustrating. Lenders need to streamline the process or at least come up with a process that doesn't take 3-4 months. I understand they're overloaded with files but they need a better system.
I do a lot of short sales (listing side) and I have a great story. In Oct 08 I was negotiating an offer on a short sale listing with the lender and they rejected it after 2 months because they said it was too low. So no other offers came in and the house was taken a few months ago by the lender. The lender just put the house on the market 2 weeks ago and they are asking $15,000 less than the offer I presented to them. Great business decision!!
Hi Elena -- Great post, and it helps to be part of the solution, not part of the problem.
Elena, I love short sales. Once you understand the process they really aren't that difficult. The key of course is submitting a justifiable offer, a complete financial package and persistence.
Elena - great post and words of advice. Thanks for sharing!
Thank you, it's helpful for the buyer and the buyer's agent to understand the process. Too many buyers want to make the same type of offer on a short sale as they would on a traditional sale and their agents don't know any better. The buyers and most agents "don't get it". It's all about the math!
Elena: On the buying side it's all about managing expectations. Buyers with time frames set in stone may not be the best candidates for short sales. I always ask them, "If this is not approved in the time frame we've allotted for approval in the contract, what will you do? Where will you live?" There are buyers out there perfect for short sales with open ended moving time frames, and those that should avoid them....like relo buyers or buyers with a lease ending in 45 days.
I love this quote:
"I would like to stress that agents representing buyers that are looking at short sales need to have had a few done themselves and be less hissy about the process and towards the listing agent."
I do alot of short sales and before they became common in this market it was almost laughable how same agents, who were used to being control freaks, would grasp as straws to sound like they knew what they were talking about with the first wave of short sales.
There is less hissyness now, but in 2007...wow. Ignorance was not bliss.
Richard, I have a few of those stories myself one in particular the were supposed to get 135 K. They dragged too long buyer walked and now is for sale listing with the second agent as a REO for 104 K and no one is buying yet. One of these days I wanna call the negotiator back and remind him of the deal he had on the table.
Chris, Thank you. I try to help as most people need the help desperately.
Bryan, I know you do. I been reading your blog and i know u charge a fee. I just can't do that yet but I know it makes sense. All the extra paperwork you have to handle and hours on the phone with the Bank...
Jesica, Thank you.
Patricia, yet is it all about the math . U have to put on the accountant hat and be good with #
Chris, yes you have to have the right buyer. Like I mentioned earlier in a response to someone best candidates are investors or people that are in a month to month lease or 3 months from end of lease.
J. Philip, I was new once too and I asked a lot of questions and went to seminaries and got educated on the subject. Yes I don't know why some agents even bother to show a short sale then they start complaining how the buyer can't wait and who the lender is and bla bla bla bunch of venting I have no patience for. Tell me what you can do to help the process( be part of the solution and not an added stress ) duhhh ... I don't make the rules. I try to go around them and push against all ods but sometimes it just is not possible.
Elena, I too am a "short sale specialist" and currently 5 of my 17 total listings are short sales. It's amazing how many agents are not taking educated on how these sales work. If the agents don't know how the process works, how can they possibly inform their clients on how it goes? You gave some excellent advice!
Hi Elena,
Great post. Thanks for taking the time to write this. I hope lots of agents will heed your advice!!
Great Post! Wow, I wish the listing agents I worked with doing short Sales read this blog! You sound like you now exactly what you are doing. It is too bad that a lot of Realtors (most?) are clueless when it comes to Short sales and I agree with the above posts that the lenders are Not very cooperative in the process!
Im not trying to be a flamer here, honest to God, but specialists in short sales dont have that many problems and they recognize whats up so they do not feel frustrated. You just KNOW the holders of these trust deeds are SWAMPED BEYOND BELIEF! You think we have a lot of forclosures now?? Wait and see what we are in store for this next 12 months. I have several good friend who are WAY up in management in two of the nations largest lenders and they are predicting a wipeout. Feel lucky to be able to talk to the right people at all.
Short Sale work is an art and a science. Everyone and their cat, brother and fifth cousin is trying to break into it. This causes a lot of stress on the VERY FEW who are in charge at these servicers. If you know how to prep these things, how to do the correct paperwork and packaging and who and when to contact, they appreciate you and you get more business. In fact, short selling is the number one way to make the most money you can in the shortest time. So good that you should do it for your OWN ACCOUNT. I know one couple who have personally made 989,000 profit in the last 8 months. It wasnt easy, as each transaction can have multiple parties to be spoon fed. The banks, the seller/s, the attorneys, workers in the offices, etc. But come on, a million bucks in 8 months? I live in OR but have been a licensed real estate broker in CA for 30 years. Just as I graduated from a school for short sales, I got my OR real estate brokers license. I now see that having the license is a liability if one works their own account and may give it right back up if I hook some short sales to buy and sell for myself. There are HUNDREDS of servicers owning REOs and holding defaulted trust deeds. I have a list of almost 600 of them. You develop the proper relationship, serve them well, treat the contact person like a god and you will make a fat bunch of moola.
Most people who have a frustrating time with almost every transaction are probably making mistakes and they dont know it. The managers wont correct you and help you. They dont have time.
Here is a very nutshell description of a short sale for the uninitiated:
People bought home for 500,000 and put 75,000 down. New loan is 425,000. Many things can casue a problem. Value can drop. People can lose job. ARM can take a huge raise, credit can be harmed for some reason, general lending guidelines can change. Regardless of reason, people cant refinance to lower payments. They are in default and owe several payments. Lets say the house value dropped to the loan amount of 425,000 so there is no equity, no reason to sell it other than to not have a forclosure on the record but no one is buying regular listings---they are all after fire sales.
You properly contact the lender and tell them you have a buyer or you are the buyer. You will make up the back due and cash them out within 60 days. You want them to stop the entire process at that point with no more payments. You offer tham 250,000 for their 425,000 note. SOME WILL TAKE IT! Ive seen discounts to 15 cents on the dollar.
Now you have a purchase contract with them for only 250,000 plus back payments and some costs. Say the entire thing comes to 265,000. You add 100,000 for yourself and blast market it to the customer list you have building who are standing by for great deals. They get a 425 house for 365 and you made 100K in 35 to 60 days.
There are other scenarios but thats a basic one and assumes no major problems.
Now all this sounds terribly unfair to the original owner. Is it?? NO WAY. They had nothing to look to but a forclosure and would receive nothing but a destroyed credit report. Part of your negotiating with the lender was to have the paid off balance NOT shown as a derog---just the original lates and then show paid off. The IRS has made a break on this, by the way. Usually if a home is taken back the owner has whats called 'relief of debt' and can find themselves taxed when they made zero money from it! This wont happen in the short sale. So your old owner walks out but with only partially harmed credit, no recourse, and no taxation. Some people are slipping the sellers some money to walk away without destroying anything but that can be fraud, as most lenders do not want the old owner to profit period since the lender was taking a loss.
Its late and Im tired so may have not explained some part of this correctly but thats the idea. Buy these and flip them yourself. List REOs but profit on shorts. Someone is going to profit and the result to the seller is the same. Why give it all away? Spread good will. Keep every 2nd or 3rd one yourself and help your clients buy the others. If you want details about where to go to learn everything possible about shorts, email me. I will give you sources but dont want to post them here, as I think its against TOS for advertising even though I have nothing to do with them.
mvonrenchler@yahoo.com
There's a lot of good information to be aware of when dealing with short sales in your post. I look forward to your next one.
Marvin, you wrote
" Now you have a purchase contract with them for only 250,000 plus back payments and some costs. Say the entire thing comes to 265,000. You add 100,000 for yourself and blast market it to the customer list you have building who are standing by for great deals. They get a 425 house for 365 and you made 100K in 35 to 60 days."
I have yet to see a home in Phoenix market now that is worth $ 425 be sold by the bank at 250K . It either is not worth that much when compared to what is on the market as REO's and other short sales or this is a bank I haven't heard of.... all distresssed propertieds are sold with at least a BPO or 2. How do your get the ban kto take that low offer ? if you know of any banks doing that forward me the names :)
Christine,
I will have it up soon. Thank you
Amber,
Good luck with your short sales ! write your experiences here. Always good to know more.
I am a relatively new agent and one of my first experiences has been a short sale situation (not as the listing agent). It seems that in my area, most agents work as broker's agents and that is how I've been representing my customer/buyer. I did a lot of studying about short sales and went to great lengths to educate my customer about how long it might take; I said at least 2 months if not more. I kept in constant contact with the listing agent and my customer, but encouraged my customer to keep looking just in case the offer was not accepted. At 2 months almost to the day, the seller's attorney asked to speak to my customer's attorney. The buyer was very angry and told me that since he had to wait 2 months, the seller's attorney could now wait until after the holiday for the call (5 days). He got very agitated and hung up. I think that I have lost the customer and the deal.
I think that from now on, I am going to only work with buyers as a buyer's agent because at least I will be able to have a contract with the buyer. It's very difficult to work with buyers when you keep having to remind them that you work for the seller, even in the best of circumstances.
Hello Elena,
Thanks for the great post and tips. As someone who works the Greater Phx market, I am all too familiar with the large number of short sales and REO's. Looking forward to your second post...
I have educated my buyers, but in short they will offer what they want. I had two buyers that submitted very good offer and the bank would not even respond to the offer for weekss.... In the North Bay California, I think the buyers have caught on. They wait till the short sells go off the market, soon to be a bank owned at a price that the bank will REALLY take. So the the buyers know where to come in and know what it will take to get this property.. Short sells in this area for the most part are a waste of everyones time. They rarely close and take a lot of work on the selling agents side. I had one offer used for the seller to TRY to modify their loan with the lower offers. Obvious lower than they paid for the property. Trying to explain why the listing agent never... calls or emails you back even though they say they will. Not a good experience. I will not even show a short sell any longer unless on the market a long time and the listing agent goes the extra mile to insure the price is REAL>>> sorry it is what it is...
Short sales are a nightmare. I have been doing them in St. Louis for about two years now. Even if your sellers have absolutely everything submitted it takes weeks to get a response. My latest was just kicked out for further review (after 6 weeks) because the BPO and HUD I submitted were "too old". If they could do something in less than 6 weeks, the information I submitted with the offer would have been just fine! Watch out on short sales that are FHA or VA, there is no motivation on the part of the lender since they are guaranteed their money if they can foreclose. I have another short sale that is a VA loan and the lender has informed me that even the cost of foreclosing will net them more than any offer I can submit based on the local market.
Oh and I gues I should change my name when I comment!
Denise Tower
Elena,
God bless you for working so hard on this business. It's hard, frustrating, can feel like you are not getting anywhere... yet, you have real people and their lives in front of you every day.
Elena,
I'm currently working with a buyer who is looking to only buy investment properties that are short sales and REO's ...Thanks for your valuable insite. I'm not only book marking you. I'm gonna print this post. Will be looking forward to the follow-up. TX.
Elena,
It's all about information and communication, isn't it? We do need to educate our buyers on the pros and cons of the short sale process. It is frustrating for everybody involved, and I have a feeling that maybe some bank employees might not understand the process very well either! I wonder how much training you get as a brand new person in the loss mitigation department? That has to be a tough place to be. The more we all learn the better off everybody will be. Thanks, everybody, for the helpful comments! Maybe we aren't EARNING a lot these days, but we sure are LEARNING a lot!
Linda Schulte, Keller Williams North Atlanta
Great information! Since I work with both Buyers and Sellers in Short Sales, I feel more informed when talking to my Clients. However, there's still educating that needs to be done for other Agents and having the info written down like this will help.
Elena:
I try and stay away from short sales in Georgia but I try to do what is best for my clients. It has just been pain and misery for both me my clients. In fact I wonder if these humanoids working at the banks really even care.
I steer my clients away from short sales. To many problems and things can go wrong. In this market while waiting on the bank the property value can drop dramatically, the lender can pull out, another buyer step in with more money. I have had clients put in offers on short sales four times in the last year. None turned out well. If the banks started working more with us and making guarantees it would be best for everyone.
Diane, I lost you half trough your reply.... I am not sure if you were representing the buyer the seller or neither one of them
Heather, Thank you
Denise, if you do your own CMA on a listing that is a short sale you can find out if the price is real or not... in My area if you wait for the home to get from short sale to REO it will take a while and most are all trashed when they hit the market some that have nice upgrades get broken into when they go trough the process of getting from trustee sale to a REO listing and now they can't be financed any more with a conv loan + if there is a pool the pool will be a green pool of moskitoes or empty , it it stays empty in thesummer it will have to be resurfaced. Al ot al ldepends what price you are looking at. Here it now makes sense to buy an investment home that is a short sale.. in most cases homes are rented and people want to stay and there will be a positve cash flow . if you get that as REO then you need extra money to fix it and rent it ...
Marzena, Thank you. got to do what I got to do.
Angela, thank you. If your buyer is an investor and maybe even looking for more than one home at the time than you have the perfect buyer for a short sale. He can wait bbecause he is looking at # not just a home to move into. Look for the ones that have tenants( or that are going to be fairly easy to rent : good school district ) with a rent payment to give him a cash flow over expenses or where the owner might want to rent back for a while.
Linda, I wonder sometimes about the background some of the negotiators come from ( some are former loan officers or have worked in collections , a lot do not understand the process very well, some understand the process but can't make the decisions.. .one time I had this young woman @ Countrywide on the phone trying to sound all tough she told me so what prices on homes have gone down 50 % .... home is 3 years old now and owner had lived in it .. .don't prices on cars come down once you take them off the lotand drive them around..... my God I am glad I was sitting down cause I would have fallen down . I told ( more like yelled ) her you go tell this to Jo blow down the street or your friends that you talk to on your off from work day , the ones with a 4th grade education like yourself you are not talking this nonsense to me wasting my time are you? ( she must have come from auto collection dept ) And then some are very intelligent .... I just hope they would pay them more... maybe hire some Realtors for a change that understand that value is what someone is willing to pay for something not what you ask for it.
Ed, I tough by now in Phoenix everyone knows how short sales work .... I might need to have a printed sheet and attach to my MLS docs side.
Greg, If they are nice I am nice if they get nasty I get tough. I will hound them down and will fax them facts about the company ... oh by the way you said your company did not take money from tarp.. here is the proof and by the way your CEO just got paid 1.5 mill in bonus... wonder how much you'll get of that ???? and guess what? they soften up. Aslo in AZ might work easier due to the non deficiency law. basically the can't get any more than thy can get after the REO sale is done... and by doing the short sale hopefully will minimize the losses ....GA might be different and when they feel like they can go later on after the poor owner they will try to do that and take it to the auction instead of giving that right away during the short sale negotiations. ( if you're nto sure what I jsut wrote emai lme directly and I will explain.
Gene, I had only one fail ... had started working with buyers first and they worked out fine ,,, it justtook a long time, now most banks respond faster . as a general rule the smaller banks or local banks will work easier than a " too big to fail " those you have to be very advanced to towards the auction date for them to move faster.
Are you sure you want to do any business? I think that what this post is about is 'your personal framework' to do a short sale 'thru you'. I know if I read this and then showed one of your listings I think I would just take a pass on it based on your written attitude regarding the whole process. Good luck to you!
I'd actually like working with you. Like the process or don't like the process it is what it is.
Lyn. If you think I am tought thant wait until you see what the bank has in store for you. I merely want to prepare the agents for what is to come and weed out the week offers and offerors. Everyone has the mentality that you can just submit any thing to the bank that you receive. as a good agent you have to prequalify the contract before yougive this to a seller to sign as it will a contract with a very lng ride and if the buyers fall trougth at last minute , u got nothing . so you ahve to have the right offer not jsut any offer. my accepting a week offer that is not going to get approved will sure put the seller in the trustee sale situation.
Mike, Thank you. I don't like the process either .. .I think is crazy and changing everyday ... But we have to do the best of it and make it work .
I have been involved in many short sales, and I have to disagree with you take on short sales vs. reo's. The great majority of the time, the buyer is better served pursuing reo's than short sales.
I love it, not, when people reply with no name... this is in response to the last person that sent a reply on my post. Maybe, depends what area and neighborhood you're looking at. If out of 5 listings that are similar 2 are REO's and trashed out and 3 are short sales in good condition which one would you personally like to buy ?
I understand where you're coming from and your outlook on short sales. However, I have to also agree with "no name".
You have a short sale listing in good/great condition for 350K. However, a couple of streets over is the same home with no kitchen, needs some drywall work and plumbing fixtures for 260K... what are you going to offer on? Most buyers know that they can go to IKEA or local home inprovement, get items they need to do the work themselves for about 20k (guessimate). Which, if you were the buyer in todays market would you offer on? Sorry, but in reality the customers that I have know that they are going to have to put in some "sweat equity" and don't care because in the end they end up with a property that they have equity in. Plus they get to personalize the property to their taste.
Sandra, that could be true in your example,
However it depends on the market. I was refering to homes that are priced similar when comparing REO's and Short sales. I do a lot of BPO's and I know what most short sales are now priced in the same range as REO's :)
Elena, great post. I am working with a short sale on the seller's side and just heard today that the first lien holder has chosen not to postpone the foreclosure proceeding even though we have a contract on it and they would be paid in full. Of course I can't get anyone to give me a reason. I don't like short sales now and probably won't do any more but I did learn a lot from this one.
Kelsey,
I wonder why they are doing that ? maybe someone has sent them a BPO with a value that is a lot higher than what you have ? try to find out if the BPO was done, what bank is it ? was this a purchases loan or a refi ? Also in the even of the foreclosure does the bank have a right to come after the seller with a personal judgment to get the rest of the money they haven't recuperated after the sale ? if the answer is yes I would advise you to tell your seller to retain a lawyer, if not for now then for the time when they will come afther them. Have that offer as proof in court that would show had they taken the short sale they would have recuperated a lot more money.
Good info Elena. Many agents still do not understand all the complexities that go on to make a short sale go through. Short sales are everywhere here in SoCal and if you do not gtsome education on the process you are better off staying away from them as they can be verty time consuming and frustrating if you don't know what you are doing.
Keep up the good work!