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Lessons learned from a short sale listing agent

By
Real Estate Agent with eXp Realty LLC 200311024

Today’slesson from a shortsale listing agent is: don’t take the listing until youhave all thepaperworkin hand.

One of the lessons youlearn as a new agent is not to be too eager totake anyand all listings and buyers. I understand you are hungryto put acommissioncheck in your pocket, but this is exactly why you need to be pickyabout whatlistings and buyers you accept.

Todaywe are talking aboutshort sale listings. One of the biggest mistakes I seefrom agents whentheytake a short sale listing is to hurry up and get it into the MLS, spendhundreds or thousands of dollars marketing a property, only to neverreceive acheck.

Now, short sales are hardenough, but you shouldn’t make your job evenmoredifficult by trying to gather the information you need for the bankafter youget the offer from a buyer. You see, what tends to happen,is once youhavethat offer, the seller seems to disappear. I’ve seen many cases wherethe paperworkfrom the seller takes 3 weeks to get to you and during this time youare tryingto keep the buyer’s interest in the property.

Now, had you told theseller, I can’t take the listing and get this onthemarket until I get all this information back, you will beamazed thatwithin 24hours they are calling with all that information. So don’t spend yourmoney onmarketing until the seller is willing to do their part or it could costyoumore than a commission check, it could cost you your savings.

Comments (54)

Todd Clark - Retired
eXp Realty LLC - Tigard, OR
Principle Broker Oregon

Rebecca - Hope it helps!

Apr 26, 2009 11:56 PM
Anonymous
Margaret Kees

Great point about the paper work.  It takes the lender(s) long enough to get their response together.  However, I think another equally important point is perhaps there are just some listings that are just not worth taking.  I'm in the middle of one now that if I had known one or two things I would not have taken the listing.  My newest short sale listing is going into foreclosure now largely because my seller has spoken to the second mortgage holder and let them know they were moving out of the house.  The second mortgage holder has notified the first mortgage holder and the foreclosure proceedings have started.  Most likely the second mortgage holder will put in a competitive bid at the foreclosure sale and buy the house from the first mortgage holder who will then be made 'whole'.  The second mortgage holder will then sell the property and get more money than they would have in a short sale.

Apr 27, 2009 01:12 AM
#36
Martin E. Kalisker, Esq.
Natick, MA
Real Estate Law From A Practical Perspective

I think you hit the nail on the head - - agent's should not list or be near short sale properties without having adequate experience and training.  This is a great opportunity for an office to groom agents to become mentors and leaders. 

We are dealing with people's livelihood here.  The short sale is the next to last straw for most (foreclosure is the last).  They are putting there home, their finances and their futures in your hands!  If you can't do your job properly, they have everything to lose - you only lose the listing.  Which is worse?

Many E&O carriers are beginning to have some risk-adjusted premiums for their brokerage clientele.  This is a good thing.  This will cause our Realtor community to step up to the plate and offer courses like the Loss Mitigation Specialist certification, and offer training to our agents in this growing area of business.

Of course, "fish stink from the head".  If the broker in charge isn't supervising his agents, or he himself is not knowledgable about short sales and REO protocol, then the education and training needs to start at the top.

Apr 27, 2009 01:57 AM
Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

Good advise.  A lot of people are scared to be honest with us about everything going on as they are embarrassed.  They don't want to lay out the entire sad financial picture.  The other half is they cannot be honest with themselves.  They don't want to put the entire problem down to look at.

Apr 27, 2009 03:19 AM
Daniel Poulos
The Elite Lending Team at Milestone Mortgage - Jupiter, FL
Paving the Way to Home Ownership for 30 Years

Great info, Todd.  Seems the biggest reason agents don't get paid is buyers who walk after all the work is done and the bank has issued an acceptance.  There is a free, cooperative service for Realtors to get those properties resold ASAP at www.RealEstateRoadkill.com

Apr 27, 2009 03:20 AM
Roger Johnson
Hickory, NC

Before I take a short sale listing, I get the authorization to talk with the lender directly, and from there, tell the lender that ALL communication from here until otherwise noted is to be through me.  Solves problem one of trying to find out what the lender/seller said to each other.  A request a short sale package and everything is taken care of before the listing is signed/finalized.

Some have said use a short sale negotiator to get the deal done.  If there is enough money to do that, I'd recommend it, too.  Unfortunately, commissions don't cover the basics in some areas.  Here, I've worked on a $40K, a $50K and currently a $15K offer on a short sale.  Commissions of $500-$1500 a side hardly gives room for an added party to participate in the deal

Apr 27, 2009 03:41 AM
Susan Manning
Realty Executives - Temecula, CA

What's the point of taking the listing unless the seller cooperates?  I insist the seller has the complete package at the time I take the listing.  Otherwise, I reschedule the appt.  I also send an email ahead of time listing the items that I need so that I have a record of the communication and consent from the seller in writing just in case.  I may even start having them sign the email for the future. 

Apr 27, 2009 04:37 AM
Christina Burks
Kim Roulias Realty - Garland, TX

Great post! I have a short sale listing right now and I told the seller's I couldn't list it until I had all of their paperwork and information...thinking this might take a while, I was prepared to wait. To my surprise, I had everything that was needed the next day! I love working with people who are prepared :) However, after getting numerous offers on the property I have realized the waiting game is with the bank! This is my first short sale and I'm just curious if anyone has a miracle solution to speed up the process with the bank?? I've been waiting 6 weeks and counting...

 

 

Apr 27, 2009 07:47 AM
Lyn Sims
Schaumburg, IL
Real Estate Broker Retired

Todd, great advice and it also goes to the motivation of the seller.  If the seller cooperates, well then you've just got the next step with the bank.

Apr 27, 2009 07:55 AM
Anonymous
Ladwina Lancaster

I agree with you 100%. Our short sale team has had to go with that strategy because sellers don't realize how important the paperwork is. They all take too much time when it comes to filling out the forms. I understand that the amount of paperwork that they must complete is staggering. I know they are overwhelmed. Since they are anxious to get their property listed, this strategy seems to move them much faster than anything we can say.

Apr 27, 2009 08:00 AM
#44
Kent Dills
Broker, Dills Real Estate - Bellingham, WA
Real Estate 817-495-8028, Bellingham, Washington

Answer to Christina Burks' question about speeding up the short sale process:

Disclaimer - can't take the credit for this myself as I just learned it from another agent.

Here's the trick, you don't list the property until the bank has ordered and received the BPO.  The trick to getting the BPO ordered IS TO PUT IN AN OFFER.  Regardless of what was said in a post earlier in this tread, you have to have an offer to get the bank to order a BPO. 

Half of the waiting game on short sales is waiting for the bank to get back their BPO/valuation.  That done, negotiation can take a week or two with closing another 3 or 4 weeks.  Shortens up the average cradle to grave time by about 4 or 5 weeks.

That's just my experience and I've currently got 16 short sale listings, lost of approval letters on firsts and seconds, 6 pendings, closed one today! 

Best of luck to everyone - short sales are complex but with effort and patience CAN ABSOLUTELY be done!

 

Apr 27, 2009 09:00 AM
Anonymous
Anonymous

Todd:

Great post! It only touches on the basics of a Short Sale but it is still good Information. I have been doing “Shorties” as I call them for years. I do a two step listing. I go to the home do my basics and obtain the Lender Information as well as the Listing Agreement. I have a Short Sale Addendum to the listing Agreement. The Addendum states will it will be advertises as a Short Sale and what Conditions must be met. I send the Listing Agreement to the Lenders as Well as the Letter of Hardship and last two Seller’s pay stubs etc… and get them to agree as well on a separate Agreement, which is Addendum #2 to the listing ( Lenders Addendum to the Listing for a Short Sale. This works out really well for me. I do a lot of Shorts and I works. By the way I’m usually a critic of most Blogs but, hey way to go. See ya at the TOP! I give you an IQ Score of 175.

Anonymous because you would not believe who I’am.

Apr 27, 2009 11:56 AM
#46
Elena Martinovici
MY HOME GROUP 602-321-1273 - Phoenix, AZ
Associate Broker- Phoenix , Arizona

That is good practice !  However another way this can be done is to have the seller send directly to the bank or banks all required documentation and the hardship. I have done that before and it worked fine. I only handled the offer and CMA.  I called the lender to confirm they have what they need;put the seller in the driver's seat of their own financial, that way you could have less liability if the bank ever questions the financial.  I would actually prefer to do it this way but some lenders require everything in a package and some sellers don't want to take the time to do that work .

Apr 27, 2009 01:56 PM
Jen Basnight
The Real Estate Group - Chesapeake, VA

I agree.  Have the seller get the entire package to you prior to listing.  Keep in mind though, most recent Bank Statements, Financial Statements, etc.  will be required by the lender when the offer is submitted. 

Apr 27, 2009 02:28 PM
Sharon Alters
Coldwell Banker Vanguard Realty - 904-673-2308 - Fleming Island, FL
Realtor - Homes for Sale Fleming Island FL

Ditto what Elena said. I just had this conversation with my broker today. Assisting Sellers with the financial package - telling them what to put in it etc., is very controversial. If it comes from the lender, that's different. It is outside the scope of our license to be advising what to put in a package.

Apr 27, 2009 03:01 PM
Anonymous
Anonymous

Just got word! Sold -Pending 5 Shorts over the phone, took4 days from start to acceptance from all parties. That's listing to Contract to Pending 4 days. You can not beat that with a stick. Commission earned $35,000. Closing next week. Not Bad for 4 days worth of work!

Anonymous because you would not believe who I’am

Apr 27, 2009 03:04 PM
#50
Kelsey Barklow
Hurd Realty - Johnson City, TN
423/948-9154

You are so right, Todd. It took at least three weeks for my sellers to get all the paperwork to me. Also they moved out of state so it was even more challenging. Great idea to get all the paperwork prior to entering the listing into the MLS. I will do that if I ever choose to list a short sale again. Thanks for the post.

Apr 27, 2009 03:59 PM
Anonymous
Kim Thomas

Great posting. I would add that you tell the sellers to consult with their CPA and attorney about the potential ramifications of the short sale and put it in writing that you have advised them to do this and make them confirm that they will do so in writing and keep this in your file.  Additionally, with respect to financials -do not give any advice, as that is outside of your area of expertise and could open a world of trouble for you if something isn't kosher.  If the bank will accept it directly from the seller have the seller submit the financials.  We truly must be careful when accepting these deals and really shouldn't advertise as short sale "experts" unless you've handled many of these without any negative consequences for you or your sellers/buyers.

Apr 28, 2009 02:30 PM
#52
Kimberly Thomas, Broker-Associate
www.KimThomasHomes.com - Voorhees, NJ
Keller Williams Realty - Voorhees, NJ

Great posting. I would add that you tell the sellers to consult with their CPA and attorney about the potential ramifications of the short sale and put it in writing that you have advised them to do this and make them confirm that they will do so in writing and keep this in your file.  Additionally, with respect to financials -do not give any advice, as that is outside of your area of expertise and could open a world of trouble for you if something isn't kosher.  If the bank will accept it directly from the seller have the seller submit the financials.  We truly must be careful when accepting these deals and really shouldn't advertise as short sale "experts" unless you've handled many of these without any negative consequences for you or your sellers/buyers.

 
Kim Thomas
Apr 28, 2009 02:35 PM
Mike Henderson
Your complete source for buying HUD homes - Littleton, CO
HUD Home Hub - 303-949-5848

Great post.  I haven't made this mistake yet, after reading your post I won't.

Apr 29, 2009 07:12 AM