Short Sale, did you every wonder where that name came from when they are anything but “short”? It’s an oxymoron example at it’s finest. Short sales are anything but short in most cases. It can take months for lenders to respond to short sale offers. It’s quite a mess out there.
A question I find typical of a buyer’s agent .. How long until we get an answer? If I knew the answer to that question, I’d be blessed by the magical Short Sale gods with the short sale crystal ball (and I’d also be holding the winning lottery ticket). Fact is, I don’t have a crystal ball, I put that away years ago with the Ouija Board.
No one can realistically tell you how long a short sale is going to take to close, or if the bank is going to accept your client’s offer. And remember ALL short sales are contingent on THIRD PARTY APPROVAL, ie, the bank(s) that currently hold the mortgage(s)/lien(s). Yes – any and all lien holders have to agree to the offer and agree to take a loss. So it could be 3rd party approval, and 4th and maybe 5th, 6th … well, you get the picture. Now personally, I’ve closed them in as little as 6 weeks, and the flip side – I’ve had them take as long as a year. Yes, a year.
(Mini Vent Coming) A year’s worth of work AND the kicker .. the bank decided since they had to take a loss, so did the agents involved, thereby cutting the commission by 1%. It makes no sense to me … as agents we’ve brought them a qualified buyer and have worked endless hours helping them find a beneficial solution to all parties. The audacity of one negotiator to outright tell me “if we have to take a loss, so do you” … my response to her (after almost falling out of my chair and dropping the phone) was “is anyone cutting your salary” of course, she did not respond because we all know what the answer is to that one. Did that woman understand that real estate agents do not make ONE PENNY until the property settles? If it didn’t close, the agents made ZERO. She got paid though, her full salary I am sure.
Now, I could have stood my ground and not agreed to this, but then the sale would have died and the buyer and seller would have lost the most, so I ate my pay cut and so did the buyer’s agent. Well, again .. this is another blog in itself .. there are many topics that fall under the short sale category as I am finding many people still are not aware of what they actually are .. but get used to them people, they are not going away any time soon.
I am jumping around quite a bit in this blog because as I type there is so much to discuss about short sales. A “short” sale is when a property is sold at current market value and the seller owes more than what the property is currently worth. For example, they may have purchased the property 5 years ago for 300,000 but today, its worth 250,000 … they maybe still owe 300,000 … like so many people back then, maybe they did 100% financing, so they haven’t put a dent in their principal … hence this is a “short” sale … they are “short” 50,000 and are now asking the bank to allow them to sell the property at a loss to the bank.
Bank may ask seller to sign a Promissory Note for all or a portion of the shortage. Bank may just say OK. Bank may say No. Bank may counter buyer’s lowball offer … bank may just foreclose … See the problem … bank may do what bank wants and what’s best for Bank. Period.
EVERY short sale transaction is different; it depends on how many liens are against a property and the circumstances of the seller and also the bank’s policies on handling short sales. If there is such a thing. They are trying … Every bank seems to handle them differently, but there is some standard of what is required of the seller(s). For more information on short sales and what is required of the seller, please visit my website – and if you find yourself in this situation, know that you are not alone.
Bouncing again … because I find when I talk to clients facing foreclosure, they feel like they’ve failed in some way. You have not failed. Our system has failed you. You are not alone, there are many, many people in your shoes today. We all know and feel how terrible our current economy is and a fine example of why … is this … (bounce)
I had a perfectly good offer in negotiations on a property, an “almost” full price, cash offer. After working with the lender for months, they ended up foreclosing on this property anyway. Sad. They did not have the decency to notify me, even though I called every week for updates and was consistently told “it’s in review.” I found out only via the REO agent who graciously asked me to pull the listing. Nice, huh? And we wonder why this economy has not yet corrected itself. Makes NO sense.
My thoughts… LET THE HOUSING MARKET CORRECT ITSELF. Leave it be, it’s in a cycle, a bad one, but it will recover, it always does. Is it just me, or does the media make you want to toss your TV in the street? And I am bouncing around again, I keep catching myself but there are sooooo many topics to cover with short sales … they (the media) announced how we had the worst July on record .. did anyone stop to think that maybe that was because the tax credit ended and everyone scrambled to close by June 30, so of course July was slow .. smack .. it is almost always slow in July .. most people are on vacation! This July was so bad because, in my opinion, everyone already bought their house — which *maybe* is why we showed such a huge gain in sales in the months prior. Could it be that simple?
Bouncing back … One last note to buyer’s agents … please prepare your client when they are making short sale offers that if they do not have time to wait for the bank’s answer, which may be NO with no counter, depending on the offer and the circumstances, then maybe a short sale property is not in their best interest. A listing agent cannot realistically give you a time frame unless the short sale was already approved and MANY banks will not “pre-approve” a short sale … many will not even talk to you until you present them with an offer and the entire short sale package.
I find many agents avoid short sales like the plague, as agents we take the chance of getting a pay cut for a transaction that takes 10 times the work (or more) of a “normal”sale — the banks make you submit the short sale package over and over, it gets tossed from one desk to another and its my opinion (because that’s what blogs are all about) that it’s the banks fault to begin with we are all in this boat. Sinking. (ARMs, Subprimes, 100% financing … etc .. we were doomed.) Why even take a short sale? For me, it’s trying to help people make a bad situation better. I cannot tell you how many people have cried on my shoulder. It really grounds you as a person. And, if I can help dig someone out of a hole, then I am going to. I may complain, I may gripe because the banks make me crazy, but in the end, when they do close, it’s VERY rewarding on a HUMAN level.
Recently some of the agents in my office have teamed up with a short sale attorney. This is so beneficial to all involved. The seller does not pay the attorney, the seller owes the attorney ZERO. The attorney is now doing the negotiations, thereby freeing up the agents time to help others AND … FREE LEGAL ADVICE to the seller. How does that not ROCK?!?!? Inquire within! We are here to help YOU.
Much more to come on this topic … as there are plenty of short sale “myths” to be written about.
Kim Schreiner, ePRO, SFR, Realtor
RE/MAX Affiliates, NE
The #1 RE/MAX Office in the City of Philadelphia