Short Sales-Is there a Pot of Gold at the End of the Process?

By
Real Estate Agent with Integrity Real Estate Group

There seems to be a lot of discussion recently about the validity of short sales in the MLS and whether those listings are imaginary listings clogging up the MLS and detracting buyers from "real" listings. 

Short sales aren't new.  We had them in the 80's and the 90's in Northern Virginia.   What is new is that the banks are allowing the current owners to walk away from the settlement table without having to pony up a dime of their savings or be on the hook for any amount of what they owe on the property.  This is amazing and may have led to more people throwing up their hands and saying let the lender have it than try and work out a way to stay.

The short sale listings that we have today are a strange no man's land somewhere between a seller-owned listing and a foreclosure.  The lenders are overwhelmed and the administrative staff don't know how to deal with the questions.  The homes aren't far enough along in the process to foreclose on or the lender doesn't want to go to the expense of foreclosure and everyone pushes it back on agents to help bail them out.   And some agents thinking that there is money to be made go ahead and throw the listings on the MLS and hope for the best.

These are the same agents who will scream FOUL when an offer comes in and the lender doesn't respond in a "timely manner."  They will blame the lender and say they can't get anyone to respond to their calls.  After awhile the potential buyers give up and walk away.   My suspicion is that few of these agents took the time to educate themselves on what it takes for the lender to accept a short sale contract in the first place.

Short Sales for Agents

So how do we as an industry deal with this new strange entity?
 The first is education.  Almost every association in our area is offering courses on the short sale process.   Most large brokerages are also offering training sessions on how to deal with short sales.  Get educated!  It is the first thing you need to do before you attempt to write and offer or take a short sale listing.

Second don't take a listing unless you have the short sale package from the lender and it has been completed by your seller.  Make sure they have done everything that is required in the package from the lender (each one is different) and make sure your seller has signed the authorization for you to talk with the lender directly.  Get as many contact names and numbers at the lender as possible.  If you don't get a response from the first one then go to the second one and so on.  If you haven't done this then forget it.  Don't list the home in the MLS.  You aren't even close to ready to deal with an offer.

If you have done the first two pieces then you are ready to establish a value for the property.  We do CMA's every day.  Short sales are no different.  You are looking at the same criteria just paying closer attention to the foreclosure prices and other short sales in the neighborhood versus the traditional sales.  Now with a completed short sale package, contact points at the lender and a reasonable value you can market the listing in the MLS.

Is this ideal?  Absolutely not but it is certainly better than a large portion of short sale listings that we run up against in the MLS.

 

Should there be another way?  Absolutely but short of letting a house go to foreclosure the lenders don't seem to be willing to step up to the plate and agree to a definitive answer to a seller who has fallen on hard times.   So as agent's we need to be proactive and do all we can to make sure that before the house goes on the market that we have a house that we can honestly sell and that has all of the required paperwork completed.

Pot of Gold

Take the time and effort to educate yourself and your short sale listings will make it to closing.   The pot of gold at the end of the rainbow will be yours...it's called a commission check!

  

 

Posted by

                                   Real People*Real Lives*Real Estate

If you are interested in learning more about the Northern Virginia Real Estate market including Alexandria, Arlington, Fairfax and Prince William Counties give Cindy Jones and Integrity Real Estate Group a call at 703-346-2213.

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Topic:
Real Estate Market Trends
Location:
Virginia Prince William County
Groups:
Virginia Foreclosures Short Sales and REO (and Pre-Foreclosures)
Tags:
short sales
northern virginia real estate
foreclosures

Comments 9 New Comment

Show All Comments
Rainmaker
89,195
Deanna Casalino
Fort Myers Florida Homes,
Right Choice Realty
NO pot of gold and hopefully you don't lose your buyer on top of it!
March 17, 2008 04:55 PM
Ambassador
1,807,203
Cindy Jones
Pentagon, Fort Belvoir & Quantico Real Estate News
Integrity Real Estate Group
Deanna-we have agents in our company who are successfully closing short sales in under 30 days.  Why?  Because they have done the upfront work it takes to get the sellers ready.  It can be done with the right education and persistence with the lenders.
March 17, 2008 05:28 PM
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895,064
Missy Caulk
Realtor - Ann Arbor Real Estate
Missy Caulk TEAM
Cindy, this was a very encouraging post on dealing with short sales. I like your perspective.
March 17, 2008 06:49 PM
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1,807,203
Cindy Jones
Pentagon, Fort Belvoir & Quantico Real Estate News
Integrity Real Estate Group

Missy-thanks.  I have one short sale listing ready to go now and it has taken a lot of persistence to get everything together.  We can make them work if we just stop slapping them in the MLS.

March 17, 2008 07:40 PM
Rainmaker
219,651
John MacArthur
Licensed Maryland/DC Realtor, Metro DC Homes
Century 21 New Millennium
Cindy - Wonderful post. I do think that many agents misconstrue what is in the sellers best interest. This is not a situation where the bottom line to the seller has any impact. The goal is to sell the house. The goal is to give the bank enough empirical data to accept an offer. It would seem prudent that all true short sale listings include the statement.....all offers presented. After all, if you get one that the bank will take, you have done your job in protecting your clients best interest. It is not a time to haggle with a buyer. Take the offer and send it along for approval.
March 17, 2008 09:57 PM
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Cindy Jones
Pentagon, Fort Belvoir & Quantico Real Estate News
Integrity Real Estate Group
John-thanks for the added benefit of the "all offers presented".  I didn't include that in my listing and I will go back and adjust it.  My partner and I have worked hard to try and help the seller get the lender to make an adjustment to their loan so he can stay in the house.  If they adjusted their interest rate back to where it was last fall he could make the payments.  They don't seem to want to play which is a shame.  I just want more agents to think before they slap a listing in the MLS.  We can lead the lenders to water but if they would rather have a foreclosure on their hands then there isn't much we can do.
March 18, 2008 07:26 AM
Rainmaker
148,836
DeAndrea "Dee Dee" Jones
The Northern VA Real Estate Lady
Home Buyers Marketing II, Inc.
I need to go to the library and get the book.  I have a short sale right now they have done the 1st two steps but the listing has had only 2 showings in weeks.  I have had two open houses that generated traffic but people dont want to touch it when they hear its a short sell.
March 18, 2008 03:33 PM
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Cindy Jones
Pentagon, Fort Belvoir & Quantico Real Estate News
Integrity Real Estate Group
As long as the sellers have done their part then the chances are the right buyer with a smart agent will walk in the door.  Market it the same way as any other listing and the buyers will come.  We've had 3 showings in 3 days.  It helps if they go in the house next door which is a short sale under contract and it needs work.  My listing doesn't.  A buyer could move in right after closing and not have to do anything.
March 18, 2008 05:50 PM
Rainmaker
169,323
Heather Fitzgerald
REALTOR Greenwood Indiana Real Estate
REALTY WORLD-Harbert Company, Inc.
Question for you-2nd mortgages.  If a homeowner does not file BK, and has a second lien on their home and the 2nd lienholder settles for the typical  $1000.00, THE HOMEOWNER is still responsible for the remaining balance, correct?  I.E. promissory note...., etc.
March 19, 2008 06:39 PM
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Cindy Jones

Pentagon, Fort Belvoir & Quantico Real Estate News
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