Questions to Ask a Short Sale Listing Agent as a Buyer or Buyers Agent

by Bill Gassett on April 7, 2010 · 61 comments

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Questions to Ask a Short Sale Listing Agent as a Buyer or Buyers Agent

Failure or success in a Massachusetts short sale

There is no doubt that a short sale is not your run of the mill Real Estate transaction. Anyone who has ever been involved with one as a listing agent knows there are a lot of hoops to jump through! On a national level there is a very high percentage of short sales that never make it to closing.

If you have ever gone online and done any research on short sales you are bound to see articles and blog posts written blaming the lender for any number of things. In many circumstances the Realtors, sellers, and buyers that are complaining have a right to be angry.

There are however, a number of cases where the reason the transaction does not fly is because of the sellers REALTOR! Unfortunately there are a number of Realtors that have never  done a short sale before and have limited knowledge of the process yet are taking listings from home sellers that do not know any better. What is so sad about this is that the seller will usually be at foreclosures door step without getting a successful short sale done.

If you are a buyer or a Real Estate agent representing a buyer I am going to give you some interview questions you should ask the short sale listing agent in order to determine if you have a legitimate shot of getting the short sale completed.

If you are a Massachusetts homeowner and need to do a short sale I would encourage you to read picking a Massachusetts Short Sale Realtor and need a Massachusetts Short Sale Realtor besides the questions below.

Are you going to be negotiating the short sale for the sellers or is there an attorney or short sale specialist involved?

If the answer coming back on this one is the Realtor is going to be representing the seller you MUST find out if they have ever successfully completed a short sale transaction before. If the sellers Realtor has never done a short sale before you might as well have your buyer move on to another home! The probability of the sale ever getting to the closing table is slim. If they have completed a short short sale before ask them their success rate. In other words of the short sales they have listed, how many did not close?

Have you requested the short sale package from the lender and has the seller filled it out?

In order to complete a short sale every lender requires various documents that must be filled out and returned to them. They include:

  • A completed authorization form allowing communication directly with the lender.
  • The lenders name, account numbers, and customer service phone number.
  • A hardship letter discussing the exact reasons why you are not able to pay the mortgage going forward. This letter must be dated and signed.
  • A copy of the listing agreement from the Real Estate agent.
  • Proof of income ~ The lender is going to require a financial statement including copies of your two most recent bank statements, copies of your last 4 pay stubs, or if you are self employed, a copy of your most recent profit and loss statement. Lastly, you will need copies of your last two tax returns.
  • Also are there any other debts on the home or condo such as past due water and sewer bills, condo fees, outstanding taxes, IRS or other liens.

Who are the lender/lenders servicing the loan?

This is a basic question that they better know the answer too. You need to ask them their experience with this particular lender. There are some lenders that are very difficult to deal with most notably Bank of America (BOA). If BOA is servicing the loan you expect to be on the longer side of getting to the closing table. It is not crazy to think the transaction could take 6-12 months. I know you are probably thinking to yourself how is this possible? Believe me it is!

How many loans are on the property?

If there is more than one loan the transaction is more than likely going to be harder to complete. The agent is now going to need to have negotiation skills beyond just dealing with one lender. When there are two lenders both need to be satisfied. There are some lenders that will only allow a 2nd mortgage holder to get X amount of dollars. The agent representing the seller needs to know how to get past any difficulties that could arise between disagreements with the two lien holders.

How is the listing agent going to handle submitting offers to the bank?

Clueless Massachusetts short sale Realtor

This is an extremely important question to ask. The correct way to handle a short sale transaction is to have the seller sign an offer that makes sense and submit that to the lender. It should be no different than any other sale. The seller owns the home and they either accept or reject an offer that comes in.

If the listing agent tells you that they will be collecting offers and submitting all of them to the bank you might as well tell your buyer client not to get involved. This is a very big red flag! It shows that the agent is clueless and has no idea how to correctly represent a seller in a short sale. Without a signed offer neither the seller or the buyer has a contract. There is no obligation on the buyers part and the seller could be left with nothing. The bank does not want to be in a position of reviewing multiple offers either.

The other mistake I see short sale sellers agents making is submitting any offer to the lender for approval whether it makes sense or not. One thing you need to understand is the lender is not going to accept a short sale if the accepted sale price by the home owner is way under market value. The offer amount submitted to the lender needs to make sense! The lender will send out an appraiser to verify the value and if it does not meet the parameters it will be rejected.

How far away is the owner until foreclosure proceedings?

You obviously need to find this out for the sake of your buyer. There is no point in them spending money on inspections, lenders fees and other things if the sale is going to end up in foreclosure. Someone representing a seller in a short sale is going to need to make sure that foreclosure proceedings are put on hold.

These are just a few but very important questions that could help you determine if you have a shot at getting short sale approval. Ideally I would tell you that if an attorney with short sale experience or other type short sale specialist is handling the sale you probably have a better shot at getting the deal done.

Enjoy the short sale video below and work with a short sale Realtor who knows what they are doing!

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About the author: The above Real Estate information on questions to ask a short sale listing agent as a buyer or buyer’s agent was provided by Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-435-5356. Bill has helped people move in and out of many Metrowest towns for the last 24+ 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.

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{ 59 comments… read them below or add one }

Kevin Vitali December 7, 2012 at 8:56 pm

Bill- I recently asked an agent if they had a completed short sale package ready to go with an offer they asked me what that was!!!

Talk about scary.

charles February 18, 2013 at 3:04 pm

I am a first time home buyer, I found a home i like and put a offer on it, it is a short sale home. Its been 3 weeks since i put an offer on the home and it has disappeared from the mls and all listing sites and the for sale sign in front is now gone. They were asking 129000 we offered 125000. When looking up the home on any site it now says not for sale. Our realtor hasn’t said anything to us. Im in no hurry honestly and dont mind the wait just curious if this is normal is does this mean the seller changed their mind on going thru short sale?

Bill Gassett February 18, 2013 at 5:21 pm

Charles – you should ask your agent what is going on. It could be simply that it is now marked under contract and has fallen out of MLS. You should be certain however this is the case.

Brian Talley March 26, 2013 at 10:51 am

Great resource you have here Bill! I’ve just finished moving out of Florida where short sales and forclosures are at insane levels. Your information here is some of the best advice though that I’ve found. Thanks for sharing!

Bill Gassett March 26, 2013 at 11:16 am

Thanks Brian. We don’t have nearly the amount of short sales here in my area of Massachusetts that you do in Florida. There are enough short sales to keep busy though. It is gratifying to be able to help so many people to get out of a financial jam.

Allen Deaver October 2, 2013 at 1:01 pm

Bill thank you for your informative blog on Short Sales. As an agent who has done many of them in the paste they can be very challenging. For a short sale to be successful it takes cooperation on all parties involved, the homeowner contacting the bank early and lots of patience. Lucky in the Kyle Texas area a rapidly growing city south of Austin we do not have as many short sales as in the past. But they must be done by an agent who is familiar with the process. I recommend an agent who has a SFR designation.

Bill Gassett October 2, 2013 at 2:58 pm

Allen you are spot on! In order to be successful with a short sale it is a must to have cooperation from all parties involved. When problems arise you also need to have someone who is competent in the short sale arena. I find that so many agents have no idea how to properly handle a short sale and that’s where the problems arise to begin with.

Linda Gray November 13, 2013 at 11:40 pm

I am trying to buy a short sale. Wasn’t advised that there was a 2nd mortgage until 6 weeks after signing contract by seller’s agent. What should I do?

Bill Gassett November 13, 2013 at 11:47 pm

Hi Linda – do you not have your own agent? This is a question they should have asked for you. Don’t despair though because having a second mortgage holder does not mean you won’t get approval. It will take a little longer so be prepared for that.

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