Short sales are far more complicated than conventional home sales. One of the reasons for the additional complications is the intimate involvement with the bank. The bank is almost as involved in the transaction as the seller. They have to approve the price and they have final approval of the sale. This added involvement complicates the home selling process by adding additional approvals, additional delays and could result in the rejection of many offers the seller wants to take.
To handle the added complications of a short sale, you need a Realtor that is experienced in performing short sales and knows how to effectively negotiate with the bank. Notice I said “experienced in.” I didn’t say “took a class in” or “has a Short Sale Designation or certification.” Don’t make the mistake of letting an inexperienced agent learn what to do and what not to do with your property. If the agent fails, you will probably be headed towards foreclosure.
The biggest short sale mistake I see real estate agents doing all the time is advertising a low price for the short sale property that wasn’t approved by the bank. This wastes everyone’s time. They lure buyers to the property in hopes of getting the home for the listed price or less, only to find out later on that the advertised price was not approved by the bank and the bank wants thousands or tens of thousands more. I consider this either misleading, a form of bait-and-switch fraud, or just sheer stupidity and ignorance. In some cases, when it’s horribly off, I consider it all three.
Another problem agents make is revealing too much information to the buyer. The agent negotiating on behalf of the seller is in possession of a lot of personal financial information and a lot of private information regarding the loan, the short sale and foreclosure. A lot of this information should not be revealed to the buyer.
And finally, another problem I see is negotiating with the bank. Real estate agents know how to negotiate with buyers and sellers, or at least they should know. Negotiating with banks is a whole other matter. When you negotiate with the bank, you must prove that the homeowner can’t afford the loan payments and you must also prove the property’s value. These negotiations are pretty hard because you’re dealing with business facts and figures, and there’s little middle ground to form a compromise. After all, you can’t ask them to only take half of the house.
If you suspect that you may need to perform a short sale to sell you home, be sure to find an agent with experience selling short sale properties and discuss their experience and short sale strategies during the interview.
Bill Gassett, a Short Sale Realtor in Massachusetts shared his experience with short sales in this article. http://massrealestatenews.com/short-sale-realtor-mistakes/
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I had rental property that I had to sell as a short sale. My “short sale specialist” really messed it up for himself. He made a huge tactical error. He suggested we offer more than the going amount for the buyers agent’s commission to the buyer’s agent to encourage interest in the house. The bank disallowed the cost of this extra commission, so the difference had to come out of my realtor’s share. He then had the nerve to ask me if I could pay him the difference under the table! For the record, I DID NOT!
I’m not proud that I had to do a short sale but my bank left me little choice. I had a three year loan that was due and the bank wouldn’t renew my loan. They gave me three months to sell before they would start foreclosure proceedings. The best offer we had on the house n that time frame was 30K below the loan amount. I’m not sure what happy ending the bank hoped for but they had me up against the wall.
I’m sorry you had to do a short sale but I know you’re glad all that is behind you. Too bad your agent tried to commit fraud asking for non-disclosed money. He was obviously not experienced enough in short sales to realize that everything must be cleared by the bank, especially the price and terms. Once again, congratulations on the sale and avoiding foreclosure.
Bill is spot on with his analysis here. The sad truth is many agents are in over their heads when it comes to short sales. Unless you have an agent who specializes in short sales and has a proven track record in negotiating with banks and buyers and CLOSING short sales, I’d advise you to keep looking.
Yes, negotiating with banks and convincing them why it is to their advantage to lose money is a skill all in itself and it can’t be learned in a class.
Wow, never had to do a short sale luckily, but that does not sound like much fun at all. Hard times for many people
Thanks Katty, but I can’t take credit for it. Being neutral has its advantages. Because the agents we send are not employed by us, our clients feel comfortable giving their opinion. Their opinions are always valuable and appreciated but sometimes when they are similar to comments made by others about other agents, they can be revealing in spotting trends and mindsets. This was one such case.
Bill I know its late, just seeing this article but…… I cannot thank you enough for this article. With your permission, I would like to re-post on SFR’s website. Agents think just because they took a class and got a certificate makes them an expert. That is far from the truth. I always give advice to those who are in search of help to ask these “experts” how many short sales have they successfully closed. I also love the Veterans who claim to have so many years in short sales, when they really didn’t start to become popular until around give or take, 10yrs ago! Futher I like short sales, because I know the ins & outs and there is always a solution if you know how to reach the right individual that works directly with or for the investor. Short sales are a win-win situation when done correctly. They get a bad wrap from the “experts” who really have no clue just a certificate.
You could re-post it, but I think you could be much more effective by linking to this article, giving a summary of this article, then sharing your opinions and insight. It’s clear to me that you probably have a lot of personal insight that your readers would find valuable. Be sure to send me a pingback or add a link to your discussion in this comments section. I’m sure some of my readers would love to join that conversation.
It also pains me to hear from “veterans” of the short sale process who think that just because they did lots of short sales 20 years ago, they’re just as qualified to handle today’s short sales. It’s a totally different animal.
You might also want to share these articles with your audience too:
Why Homeowners Chose the Other Realtor
How Being an Impressive Realtor Can Turn Off Potential Real Estate Clients
I’ve got a say that I’m sick-end with my short sale. Which has been going on for 1 1/2 years give or take.
My bank just terminated my chance of selling even they would give me ten grand, plus the govt ‘Obama’ housing bill additional three grand. My bank is tired of waiting for all the proper documentations completed, faxed or a carrier. This never happened, my realtor did not comply in any or our request, specifically mine.
Is there any resource/assistance/rights/resources. I need to speak with someone, a lawyer.
Thoughts are appreciative,
I’m sorry to hear about the problems you’re having with the sale of your home. Banks have had so many problems with all the new and ever-changing government interventions like cities trying to snatch up foreclosed properties using eminent domain, and the Government talking about so many different radical solutions like debt forgiveness and such. As a result, banks are being forced to just sit on the sidelines and wait until these interventions are more concrete. Meanwhile, the loan and loan adjustment processes have ground to a screeching halt. Didn’t mean to get off the subject.
What did the Realtor do or not do? Did you discuss this with that agent’s broker? Was it the fault of your bank, your agent, the buyer, the buyer’s agent, or the buyer’s bank? Remember, in a short sale, everyone must play a role in processing the paperwork necessary to make the deal go through. Your agent may or may not be the source of the problem. He/she may just only be the messenger.
If it was an agent’s fault, you might want to try:
1. Discussing remedies with the faulty agent’s broker
2. File a complaint with your state’s Real Estate Licensing Board or Real Estate Commission
3. Consult with a lawyer. But remember, stupidity isn’t a crime. Pity.
All I can recommend if it was the bank would be to try to complain to the department manager or higher, consult an attorney, or look for an advocacy group that supports victims in your situation. Some are bank specific, area specific or both. Try searching Google for “advocacy $CITY_NAME $BANK_NAME short sale” and see what you can come up with.
$CITY_NAME = name of city, county or area you live
$BANK_NAME = Name of bank, or name of local branch handling loan