Ah, Short Sales! There is so much public confusion when it comes to short sales and that should be expected since there is also a lot of confusion in the industry as to short sales. Sometimes I read on message boards where buyers are frustrated with time frames and their agents aren’t exactly clear on the procedure and what to expect. This blog is written not only to the public but also to other agents in the industry as a helpful guide of questions to ask before submitting an offer for a short sale property.
- What kind of experience does the listing agent/team have with short sales? A Short Sale Certification doesn’t cut it! I have sat in numerous “short sale classes” and none have prepared me for what I see out in the field. Every bank, every bank negotiator, every hardship and every investor is different! Just because an agent sat through a 3 hour continuing education class does not mean they are now ready to handle a short sale. When you or your agent asks the listing agent this question you should hear a definitive response such as “we have closed $10 million in short sales”. (The combined total of the Walker Derby Team has closed close to $100 Million in short sales)
- How many short sales have you closed in the last 18 months? Simple question and make sure you aren’t hearing how many they have listed or under contract, you want to know how many have successfully closed.
- What is your percentage of successful short sale approvals? This question really piggy backs on question #1 and #2. There has to be extensive short sale experience and closings to answer this question. The Walker Derby Team has a 90% success rate in short sale approvals.
- Who is the service provider? This is probably one of the most important questions to ask after you find out the agent’s experience in handling a short sale. Some service providers are amazing with short sales. For instance, Wells Fargo is really an innovator in processing short sales in a timely fashion. We have a 100% success rate in Wells Fargo short sale approvals and all of them have happened in under 60 days from submitting binding contract (many under as little as 40 days). Small banks are also fantastic in handling short sales. In December of 2009 we obtained final short sale approval from a smaller bank in 17 days! Of course where there are good success stories, there are also some providers that struggle with the efficiency of short sales, mainly BOA. I have Bank of America short sales that have taken 5 months to approve (right now that is a healthy average) however I also have some BOA short sales that we have been working for 7 months with still no answer! I could go into a lot more detail on this so I will hold off and do a separate blog about this very subject.
- How many liens are on the property? What this means is how many loans are on the property (1 or 2) and whether there are any liens on the property. One loan is much easier to get short sale approval with over two loans. Two loans with the same provider are easier to obtain approval rather than two loans with separate providers (ie. 1st loan is with Suntrust and 2nd is with EMC). The first loan will offer the second loan a “settlement offer” which the second loan may or may not accept. If they do not accept then your deal is dead. Liens such as HOA liens (for nonpayment of HOA dues or HOA violations) are rarely approved by the first loan so the seller may have to pay out of pocket for those. Same with liens with the local city for ordinance for lack of property maintenance or upkeep
- How do you handle the contract? Binding or multiple offer? According to the National Association of Realtors, a short sale contract is a BINDING contract and contingent upon final bank approval. That contingency is no different than a financing or appraisal contingency. If the listing agent is submitting multiple offers to the bank and not selecting one to go binding then RUN AWAY! I cannot make that any more clear! There are a lot of great and successful agents out there making this rookie short sale mistake and I assure you, the buyer and seller will gain nothing but frustration from agents that work short sales in this manner. If the EXPERIENCED short sale listing agent feels it is an acceptable offer and the seller signs off on it then it is a BINDING contract, it is removed from active standing and it is submitted to the bank. Multiple offers do nothing but lengthen the timeframe and make the banks a bit more greedy.
If you ever have any questions about the short sale process, we are just a phone call away!
Tags: Acworth GA short sale, Atlanta GA short sale, Austell GA short sale, Buying a home in Georgia, buying a house in ga, Canton GA short sale, Dallas GA short sale, Douglasville GA short sale, Hiram GA short sale, Kennesaw GA short sale, Lithia Springs GA short sale, Mableton GA short sale, mls listings, Powder Springs GA short sale, pre-foreclosure, Real Estate purchase, Roswell GA short sales, short sale, Short sale qualifying, Smyrna GA short sale, Villa Rica GA short sale, Vinings GA short sale, Woodstock GA short sale
it is obvious that you know about what you are talking about. I will be contacting you to to sell my home next week, thanks!
I fully agree with author opinion.
This is my first time i visit here. I found so many interesting stuff in your pages especially its discussion. From the tons of comments on your articles, I assume I am not the only one having all the enjoyment here! Keep up the good work.
I am very glad to see such information which I was searching for a long time. This made me very glad… This site has given us a useful information.
[...] Questions you should ask before submitting an offer on a short sale [...]
great post as usual!
Foreclosure Houses are those properties that are put up for sale or auction by the banks which have taken charge of these properties after the homeowner, to whom the mortgage loan has been extended for purchasing the house, has defaulted in making mortgage repayments to the bank.