I've heard my colleagues complain about and flat out decline listing a short sale. The question I always have is...WHY? What's the big deal? The major complaints - They take too long, The bank cuts your commission, I get ridiculous offers, etc. Before you turn down a nice commission check, here are a few things to consider:
Now I must admit that working short sales is a different animal from your traditional listing. For starters, you must take off your realtor hat and accept the role of a professional consultant. You must display confidence with your client that you know what you are doing, that you have knowledge of the process, and that you know how to communicate and negotiate with the lenders.
On the lender side, you must be PATIENCE! Lenders are swamped these days and they do not always remember who you are or what client you are representing. It's not a bad idea to remember that they hold the purse strings so the quicker one figures out how to communicate with the lender, the better your deal and the quicker it closes. I've also found that the more patient, understanding, and helpful you are to the loss mitigation officer, the less likely they are to cut commissions. I always try to get the commission terms included in the lenders short sale packet so I can negotiate up front and they cannot come back later with a reduced amount. Some will, some won't, but it's certainly worth a try. Remember, you are there to help both the lender and the borrower - not show how great of a realtor you are.
As it relates to the time to close a short sale, take a look at how long homes are staying on the market with traditional sales these days and compare it to a short sale. Then, tell me the difference. In my experience, I get a response back from the bank and open escrow while the traditional listing is planning another open house. Remember, with a short sale, you are going to list the home competitively but typically at the lower end. The owner really should not give you any grief as they cannot take a penny out of the deal anyway....it's all up to the lender and what they will accept. And here's the beauty, if the bank does not accept your offer, they will typically counter you offer anyway. A response from the bank usually takes 30 to 45 days. Hopefully you buyer won't but if they do not stick around, advertise the property as, "Price Has Been Approved By The Bank." You should pick up several buyer candidates by doing this but more importantly the house should sell quickly now that you have a firm price.
My response to the third biggest complaint by agent regarding short sales, "I get too many ridiculous offers" .....So What! Make sure to put in the MLS that "Only reasonable offers will be considered and responded to." If you think an offer is too low and ridiculous, either pick up the phone and let the agent know that they need to resubmit, write a counter offer, or adhere to what your instructions state in the MLS. You've already said you would only respond to reasonable offers. What you should look forward to are the number of buyers that will call you simply because your listing has the words, "Short Sale" in it. Everyone wants a deal!
Why so many realtors get freaked out about a short sale, I have no idea. After all, a short sale is simply presenting a case to your client's lender showing that your client needs help and you have arranged for a buyer to purchase the property. Believe me, the bank would rather take a smaller amount rather than go through the foreclosure procedure and end up adding to their mounting inventory of homes. And for your client, you save them a major hit on their credit report. If however, you still feel that working short sales are not your thing, call me - I'll be glad to help your clients out of a tough situation and I'll pay you a referral fee.
All the best,
Pete Mitchell
Broker
Saddleback Valley Real Estate & Mortgage Services
949-244-2555
Homes@PeteMitchell.com
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