Top 5 Mistakes Short Sale Sellers Make

By
Real Estate Broker/Owner with Mint Properties, Tni LeBlanc (805) 878-9879 CalBRE #01871795
http://actvra.in/dH2

Top 5 Mistakes Short Sale Sellers Make

As a Santa Maria Short Sale Agent, I see short sale sellers make critical mistakes time and time again.  Here is my list of the top 5 mistakes I see:

1)   They wait too long to put the home on the market.Many times sellers believe that they will work out terms with the bank and their loan modification will be approved.  However, if your back up plan is a short sale, you need to leave enough time for an agent to get an offer and present it to the bank.  Less than a week is generally not enough time to get a lender to stop a foreclosure sale -- it can be done -- but you are taking a big risk.  If you want a short sale, you need to give your agent enough time to present a short sale application to the bank.  There are routine delays with short sales; banks lose documents and packages have to be re-faxed.  Don't wait until it is down to the wire.

2)  They let the house fall apart. You should do all you can to make sure that your home does not fall into disrepair.  A house with uncut grass and full of deferred maintenance is generally not appealing to buyers.  And you still have to sell your home to a buyer.  You can lower the price to compensate and attract a bargain hunting buyer, but ultimately the lender has to approve that price.  And in my experience, a short sale lender’s estimation of value tends to assume that your home is in above average condition.   Indeed, one of the most common reasons a short sale will fail is “the bank wants too much for it.”  Now there could be other reasons that the bank wants too much (including the existence of mortgage insurance) but often the short sale lender will not want to take a hit on the price just because you decided not to repair that roof leak.

3)    They make the home difficult to be shown. Many short sale home sellers are not happy about selling their home.  Some are angry because efforts at a loan modification with the lender have failed.  However, making the home difficult to be shown will not help the situation -- in fact, if you don’t have an offer on your home, it could put you in a jam down the road.  If the bank determines that you are deliberately delaying the short sale, and you have not been making payments, often they will simply continue the path toward foreclosure.  Also a listing that is difficult to be shown gains a reputation among agents, so don’t assume that agents will begin eagerly showing your home again after you’ve spent months running them around about showing appointments.

4)   They take too long to present the short sale application to the bank. Short sale sellers must remember that the buyer is waiting for the short sale to be approved as well.  They have to put much of their personal life and their entire financial life on hold to buy a home in today’s lending environment   They have concerns on their end as well, including when they are going to move, interest rate fluctuations, and the cheaper short sale next door that just hit the market.  As a short sale seller, you should do your part and have your hardship letter and financial documents ready.  Ideally, you should have all material for the short sale application ready to go when you put the home on the market.

5) They select the wrong short sale agent. Short sales are different than regular listings.  They generally take twice as long, present unique issues, and require a specialized skill and approach.  Some agents have never successfully closed a short sale, or they simply hate them.  That is understandable because short sales require a certain level of experience, determination and tenacity.  They are not easy listings to close and I believe you must be passionate about short sales to be successful at them.  Accordingly, it is important to select an experienced short sale agent that can make it through the long haul, and is prepared to fight it out with the bank for you.

Before deciding whether to short sell your home, it is essential that you obtain legal and tax advice, and consult with an experienced local short sale agent.   If you are considering a short sale of your Santa Maria, Orcutt, or Nipomo home and would like a short sale consultation, please call my office to schedule a meeting or a telephone consultation at (805) 938-9950.

Tni LeBlanc is an independent Real Estate Broker, Attorney, and Short Sale Agent. She is a Certified Distressed Property Expert (CDPE) and Certified HAFA Specialist (CHS) serving the Santa Maria, Orcutt and Five Cities area of the Central Coast of California.

*  Nothing in this article is intended to solicit listings currently under contract with another broker.  This article offers no legal or tax advice.  Those considering a short sale are advised to consult with their own attorney for legal advice, and their tax professional for tax advice prior to entering into a short sale listing agreement.  Mint Properties is not associated with the government, and our service is not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not agree to change your loan. If you stop paying your mortgage, you could lose your home and damage your credit rating.

Copyright© 2011 Tni LeBlanc *Top 5 Mistakes Short Sale Sellers Make*

 

Posted by

Tni LeBlanc, Broker
(805) 878-9879 mobile/text

tni@mintprop.com
www.MintProp.com
CalBRE #01871795

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Re-Blogged 21 times:

Re-Blogged By Re-Blogged At
  1. Anna Banana Kruchten 07/09/2011 03:27 PM
  2. Cristina Salcedo 07/09/2011 10:48 PM
  3. Christine Hooks 07/09/2011 10:51 PM
  4. Chuck Carstensen 07/09/2011 11:16 PM
  5. Lora "Leah" Stern 914-772-4528 07/09/2011 11:36 PM
  6. Jonathan Dalton 07/09/2011 11:58 PM
  7. Steve Matsumoto 07/10/2011 12:12 AM
  8. Shannon Coe 07/10/2011 09:55 AM
  9. Bob Hertzog 07/10/2011 02:14 PM
  10. Gene Riemenschneider 07/10/2011 08:33 PM
  11. Trisha Bush 07/10/2011 11:29 PM
  12. Cindy Jones 07/11/2011 06:59 AM
  13. Randal Jenkins 07/11/2011 09:42 AM
  14. Ellie McIntire 07/11/2011 01:03 PM
  15. Beth Atalay 07/11/2011 05:13 PM
  16. Al Raymondi 07/11/2011 11:02 PM
  17. Petra Norris 07/12/2011 08:06 AM
  18. Rebecca "Becky" Joens 07/12/2011 09:11 AM
  19. Barbara Altieri 07/21/2011 08:42 PM
  20. Chris Ann Cleland 07/24/2011 06:24 PM
  21. Judy Greenberg 08/08/2011 08:55 PM
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Show All Comments
Rainmaker
449,083
Beth Atalay
Cam Realty and Property Management - Clermont, FL
Cam Realty of Clermont FL

Excellent post, I've re-blogged it.

July 11, 2011 05:14 PM #89
Rainmaker
133,488
Debbie Espinoza
Stage Presence Homes, San Diego Real Estate - San Diego, CA
GRI, Broker, SRS,ABR ePro, SFR, CNE

Geat post Tni! Short sales are a total different animal in the real estate world. Great care, tenacity and mutual cooperation of seller, lender and agent are needed to even attempt one.

July 11, 2011 06:00 PM #90
Rainer
377,230
Bill Reddington
Re/max Southern Realty - Destin, FL
Destin Florida Real Estate

All true...most times the hard part is getting the paperwork from the sellers.

July 11, 2011 06:53 PM #91
Rainmaker
275,599
Steven Pahl
Keller Williams Tampa Properties - Tampa, FL
Real Estate Consultant Tampa, FL 813-319-6423

I didn't read all of the posts, but you need to add either a reason #2.1 or #6. 

They strip the house of every imaginable item from cabinets, appliances, doors, molding, electrical outlets, water heaters, AC and furnaces...etc... either in anger or to sell the items for what ever they can get thinking somehow that this will "benefit" them and get back at the "mean ol' bank".  They also damage walls, trash the carpets, bust up tile floors, put glue in locks, plug drains, cut water pipes, break windows all in ignorance and anger.

July 11, 2011 09:40 PM #92
Rainmaker
128,113
Mike Henderson
Your complete source for buying HUD homes - Littleton, CO
HUD Home Hub - 303-949-5848

I think the two biggest keys are getting the package ready to go as soon as you get the offer and having the buyer realize the work they have to do.

July 11, 2011 10:29 PM #93
Rainer
209,057
Gerard Gilbers
Stingray Performance Marketing - Waldorf, MD
Your Marketing Master

Great points. Ignoring the problem does not make it go away, it only makes it harder to resolve.

July 11, 2011 11:49 PM #94
Rainer
22,976
Jeff Crane
HomeSmart - Scottsdale, AZ
Jeff Crane

great post, but #5 shouldbe number !

July 12, 2011 01:28 AM #95
Rainmaker
267,526
Paddy Deighan JD PhD
Aston McLaren Inc - Vail, CO
Paddy Deighan J.D. Ph.D

and # 6, they get too emotionally attached to the house and the price!!!!

July 12, 2011 02:11 AM #96
Rainer
19,913
Robin McGinn
RE/MAX Impact - Illinois Homes for Sale, West Suburbs - Bloomingdale, IL

Uncooperative sellers in a short sale usually receive bad advice from coworkers, friends, family and the media.  They qualified for the home at one point, now it's about "sticking it to the man".   The bank is not obligated to remodify or refinance your home if you don't qualify to do so.  

If the bank is willing to work with you on a short sale, dear seller, cooperate fully and move ON with your life!  Time is of the essence.    Be HAPPY someone else wants to love your home you once fell in love with.  Be done with it with dignity and work hard to get back to that "happy place"!! Life is too short to waste time on negativity.

July 12, 2011 06:43 AM #97
Rainmaker
598,268
Petra Norris
CDV TransAtlantic, Inc. - Lakeland, FL
Realtor, Lakeland FL Homes for Sale

Tni - Another great article. This is a must read for any seller who is facing financial distress.  You absolutely hit the nail on its head on all points. You certainly are the Santa Maria Short Sale agent in my book.

July 12, 2011 08:00 AM #98
Rainer
111,539
Rebecca "Becky" Joens
White Diamond Realty, Inc. - Hernando Beach, FL
SFR

Good post, Tni... worthy of the feature and a reblog in my book! 

July 12, 2011 09:10 AM #99
Rainer
75,794
Bruce Fecteau
Century21 Beachside MV - Mission Viejo, CA

Nice post...

#5   Success with a home sale is almost always about the "AGENT" first.

Best of luck this year with your business!

 

Bruce Fecteau       Realtor    Century 21 Orange County        http://www.century21-orangecounty.com

July 12, 2011 12:07 PM #100
Rainmaker
470,438
Harrison K. Long
Coldwell Banker Previews, Irvine, South OC - Irvine, CA
business, REALTOR , GRI, Broker

Tni ... I like other readers here appreciate your article and especially your closing encouragement  that before deciding whether to short sell your home, it is essential that the owner/seller get legal and tax advice.

July 12, 2011 05:30 PM #101
Ambassador
1,662,516
Margaret Rome, Baltimore Maryland
Broker/ Owner HomeRome Realty-Author "Real Estate the Rome Way" 410-530-2400 - Baltimore, MD
Sell Your Home With Margaret Rome

I am late to this party..over 100 comments.   I am in the middle of a short sale negotiation right now. The most important thing is having the right listing agent who knows how to communicate with the bank. I would use you for may agent for sure.

Margaret

July 12, 2011 10:39 PM #102
Rainmaker
390,545
Tni LeBlanc
Mint Properties, Tni LeBlanc (805) 878-9879 - Santa Maria, CA
JD, MA, REALTOR, CalBRE # 01871795

Thanks John Juarez!  Experience is important it allows you to help short sale sellers avoid some of these common pitfalls.  I see these mistakes time and time again.

Mike - I agree. Short sale sellers can help to make their short sales easier!

Charita - Right!  

Thanks for stopping by Gareth!

Thanks Richard!

Jayne - I agree it can make a big difference if these issues are addressed right up front.

Kimo - Not quite sure I understand what you mean.  Do you mean that a home should be beat up and that will help the short sale?  My answer to that is a resounding no!  Most BPO agents are not even going to take into conisderation a listing's below average condition.  They are paid very little and the BPO companies make the job three times as hard to indicate repairs are needed or condition is below average.  That is part of the problem.

Hi Ruben - Broker Bryant wrote an excellent blog article on this subject on AR lately.  I won't re-invent the wheel on this one.  Enjoy!

Denise - Some sellers in financial distress feel exactly that way.

Thanks Jim - Yes, an experienced short sale agent should be helping a seller to avoid some of these mistakes.

Thanks Marge!

July 17, 2011 05:36 AM #103
Rainmaker
390,545
Tni LeBlanc
Mint Properties, Tni LeBlanc (805) 878-9879 - Santa Maria, CA
JD, MA, REALTOR, CalBRE # 01871795

Ellie - Now that is also an important one as well.  Those monthly fees add up quickly and rarely is there the will or ability to pay them at the end.

Thanks for stopping by Marsha!

Thank you Tammie!

Lyn - Wow that's pretty bad.  One of the advantages short sale sellers have over foreclosures is that their homes are not vacant and neglected.  Usually.  They shouldn't give up that edge in a competitive market.

Thanks Tere - and I love your name!

Sylvia - Unless that relative has short sale experience I think that could be a tremendous mistake for a short sale seller.  Experience really does count for short sales.

Caryn - That is exactly right.  Some agents know what they are doing and you don't think twice about putting your buyers into their short sales.  Others, not so much.

Marte - I still get those calls.   <sigh>  But I do hear more and more stories of agents turning those type of clients down -- many are tired of expending tremendous effort not knowing that they have enough time to get anything submitted to the bank.

Thanks for the re-blog Beth!

July 17, 2011 12:22 PM #104
Rainmaker
390,545
Tni LeBlanc
Mint Properties, Tni LeBlanc (805) 878-9879 - Santa Maria, CA
JD, MA, REALTOR, CalBRE # 01871795

Debbie - They are, aren't they?  Glad you liked the post.

Bill - Yes, that is a tremendous hurdle on some files.  Especially when people are self employed.

Steven - Ouch!  They have a word for that.  It is called "waste," and borrowers can be liable for that.  I'm sure the neighbors don't appreciate having a foreclosure -- so why make sure it is the lowest sale in town?  That's definitely going out with a bang.

Thanks Mike - You know selecting the wrong buyer could have been one too.  Selecting a short sale buyer is different form selecting a buyer for a traditional sale.

Gerard - Absolutely.

Jeff Crane - LOL.  You're probably right.

Paddy - That does happen doesn't it.  I don't understand why (aside from tax consequences of the loss) short sale sellers get wrapped up in what their home sells for -- but they do.  Sometimes it becomes an ego thing.

Robin - It is too short for that.  But, I do understand that people have feelings about not being able to keep their homes.  I get calls from people all the time that are angry because the thousands of dollars they made in down payment are all gone plus more.  I get that, I do.

Thanks Petra - I do hope to help people avoid these mistakes by writing about them.

Becky - Thanks for the re-blog!  I appreciate it.

Bruce - A good agent is worth their weight in gold for sure.

Harrison - Yes, legal and tax advice is absolutely essential before proceeding with a short sale.

Thanks Margaret!  Yes, regular communication with the bank is essential.

July 17, 2011 12:36 PM #105
Rainmaker
467,803
Cara Marcelle Mancuso
Long Realty - Dove Mountain, Marana AZ - Tucson, AZ
Call a Marana neighbor, I'm THERE!

Found this in a convulted way - I love the "strings" in active rain - Len referred to your posting, and Cindy Mino reblogged her posting - which I found this morning.  I had to come to the source of inspiration.  No surprise to see the feature - great information to get out to everyone if not as a reminder, then as a resource.  In order to work short sales - you must KNOW short sales!  Partner up, if nothing else, in order to give your clients the best service possible.

July 22, 2011 01:28 PM #106
Rainmaker
390,545
Tni LeBlanc
Mint Properties, Tni LeBlanc (805) 878-9879 - Santa Maria, CA
JD, MA, REALTOR, CalBRE # 01871795

Cara - Isn't AR wonderful?  I love when I find things in convoluted ways as well.  Yes, you must know short sales to do short sales well.  There are so many pitfalls!

July 23, 2011 12:29 PM #107
Ambassador
1,859,405
Nestor & Katerina Gasset
International Properties and Investments LLC - Wellington, FL
Realtors, Wellington Florida Homes For Sale

Hello Tni,Great post here,deifinitely a big help.Stay the best and expert Santa Maria Short Sale Agent.Best wishes! 

July 22, 2012 10:24 AM #108
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Rainmaker
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Tni LeBlanc

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