One of the grossly misunderstood topics in Real Estate is the short sale transaction. There are a large number of Realtors who unfortunately do not possess the knowledge to properly educate their clients on what should be expected of them when trying to make a short sale purchase.
The problem is further exacerbated because there are an inordinate amount of Realtors who are now listing short sales who have no business doing so!
Having poor seller representation in a short sale is far worse than a traditional sale because the home owner is relying on this person to help them navigate out of a financially difficult time. Without a short sale approval the most likely outcome is a foreclosure which is the very thing a seller was trying to avoid by going the short sale route.
As the volume of short sales has grown so has the amount of Realtors who are looking to cash in. Money all too often gets in the way of sound decision making.
The code of ethics in Real Estate clearly states that you should not get involved in a type of Real Estate transaction in which you have no expertise.
This is the reason why there will be short sale lawsuits against Realtors! When I am representing a seller in a short sale and receive an offer from a buyer’s agent, most of the time the offer will have significant changes that need to be made in order to protect the seller’s interest.
Below are 8 reasons why you will more than likely NOT be buying one of my clients short sales if you don’t agree to modify your offer:
Low ball short sale offer ~ If you think a short sale is an automatic invitation to submit a ridiculous offer to the seller you might as well not even bother. The majority of the time you will see my short sales priced right at market value or even slightly below market.
The property is already a bargain to begin with. Both buyer’s and seller’s need to understand that once a short sale offer is submitted to the lender they will be sending out either an appraiser or Real Estate agent to do a broker price opinion (BPO). The contract price needs to be within reasonable proximity to market value or the offer will be rejected.
Inappropriate escrow funds ~ In Massachusetts the typical deposit when buying a home is $1000 at the offer and a balance of 5% upon signing a purchase and sale agreement, as we are a two contract state. These figures are of course negotiable but don’t expect you are going to be putting up two nickels the seller can rub together. The whole point of having escrow funds is to ensure a buyer does not walk away from the transaction. You need to have enough funds to prevent that from being easy to do.
Doing a home inspection after short sale approval ~ This is not in the slightest bit negotiable. A buyer will do their home inspection up front in the normal time frame for doing an inspection which is typically 7-10 days from the offer being accepted. Do you really think we are going to wait a significant amount of time to get short sale approval and then you are going to be able to walk because you don’t like the the fact there are no GFI plugs in the bathroom or the water heater is at the end of it’s life expectancy? Sorry friend it does not work that way.
If you are buying a short sale and are worrying about losing $400-500 you shouldn’t be looking at one. Additionally, if there are issues from a home inspection you can negotiate a possible credit. Once short sale approval comes the lender doesn’t want to hear about any problems.
As a buyer the other thing to consider is the fact that you would be out of the market for months when you could have discovered an issue that might cause you not to move forward without waiting all that time.
Leaving the purchase and sale signing date until after short sale approval ~ You are either going to purchase the home or you aren’t. We will not be waiting until after short sale approval to have a contract in place. Everything will be negotiated and agreed to up front.
Not getting a financing commitment right away ~ If you are going to purchase one of my short sale listings you will apply and get your financing before short sale approval. When the lender approves the short sale they will more than likely ask for a 30 day closing. We will NOT be waiting to find out if you are able to get financing that quickly or if at all!
Submitting an unrealistic closing date ~ Short sales should really be called “long sales” because most of the time they take longer to complete than a traditional sale. If you are buying a short sale you need to take this into consideration. If you are not committed to waiting then don’t get involved with a short sale. My short sales on average take about 90 days for short sale approval. The closing date should read “30 days from short sale approval”. You can not put an exact date when we don’t know when it will be!
Not agreeing to wait 90 days for short sale approval ~ The buyer we will be looking for is going to be committed to the property. If you think that you are going to find your self restless 5 weeks later because we don’t have an approval yet then a short sale is not right for you. Don’t forget you are purchasing a home that is probably a pretty decent value. It is worth the wait! It clearly would not be in the best interest of the seller if a buyer bailed on the transaction a month or two in and they had to start the process all over again.
Asking to take over the short sale because you are an investor ~ Sorry my friend if you are an investor please feel free to make a realistic offer but don’t think you are going to take over the negotiations with the lender. Don’t think you are going to make a low ball offer and the seller is going to accept it while you look for an end buyer to sell to and make a handsome profit. No I don’t think so! The seller hired me to complete the short sale. I don’t feel like defending myself in court on why I let an investor take over the obligations I was hired to perform.
Folks these are the kind of things that go on every day in short sales because seller’s do not do their home work in picking a short sale Realtor to work with. Don’t make that mistake. When you need to short sell your home do your research and hire a pro! These are all great reasons to reject short sale offers.
Who you work with to complete your short sale will have the greatest impact in helping you reach your financial goals. Completing a short sale remains a much better alternative than letting a property go to foreclosure for a number of reasons centered around credit and your ability to buy another property in the future.
I am successfully completing short sales through out the Metrowest Massachusetts area as well as parts of Worcester County. As of this writing in four years, knock on wood, I have a 100% success rate for short sale approval!
I work hand in hand with a local short sale Real Estate attorney who knows how to get short sales to the closing table!
If you are outside of the Metrowest Massachusetts area or even in another state and need to do a short sale please feel free to contact me and I will be happy to refer you to a Realtor in your location that handles short sales and knows what they are doing! I have referred short sales to numerous Realtors all around the country.
About the author: The above Real Estate information on 8 reasons why you will not buy my short sale listing was provided by Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at firstname.lastname@example.org or by phone at 508-435-5356. Bill has helped people move in and out of many Metrowest towns for the last 25+ Years.
Thinking of selling your home? I have a passion for Real Estate and love to share my marketing expertise!
I service the following towns in Metrowest MA: Ashland, Bellingham, Blackstone, Douglas, Framingham, Franklin, Grafton, Holliston, Hopkinton, Hopedale, Medway, Mendon, Milford, Millbury, Millville, Natick, Northboro, Northbridge, Shrewsbury, Southboro, Sutton, Wayland, Westboro, Whitinsville, Worcester, Upton and Uxbridge MA.