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5 Tips to Get Your Short Sale Buyer to "Walk"

Short Sale Buyers

Today I was talking with a title agent in my Destin Florida market who handles short sale negotiations for agents. He lamented that he had two contracts recently fall apart, with buyers walking.

“Why?” I asked.

“ Well, the agents don’t have the seller sign the contract, so it is just an offer. There is nothing to hold them.”

“Stop doing that!” I told him, “I would never send an ‘offer’ in to a short sale lender.”

Which brings me to my point- " How can you increase the chances of your buyer “walking” from a short sale?" Just follow these tips:

1. Don’t have the seller sign the contract. Then it is not a contract, just an offer, and the buyer can bail without repercussion.

2. Never ask for an earnest money deposit. Why ask the buyer to put anything on the line to show his investment in the contract? Then he can walk free, usually, with nothing to “lose”.

3. Use a 60 day closing and 30 day short sale approval time line. Sure, that will be enough time to get a typical short sale approved- Not! Oh well, if the time frame passes after hours and days of work invested, and the buyer doesn’t “stay”, you can always start all over on a new transaction.

4. Write in the contract that the buyer can “Withdraw at any time”. That should simplify things.

5. Finally, let the contract be submitted to the lender with others, just like an auction , because the short sale lender will abide by contract provisions and honor the "primary" offer first, right? That tactic will make your buyer stick like glue.

Follow these tips, and you’ll be sure to decrease your chances of closing on a short sale.

Or, get a buyer with realistic expectations, a good deposit, one strong offer, and an "executed" contract, and be on your way to a successful short sale closing.

It's Wendy!

Wendy Rulnick, Broker, CRP, CRS, GRI, ABR Rulnick Realty, Inc.

Destin Short Sales & Pre Foreclosure Help.

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Posted by Wendy Rulnick "Its Wendy!" Destin Short Sales on 07/01/2009 07:56 PM

Comments (67)

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Originally posted at: Destin Short Sales- Emerald Coast Florida Real Estate: 5 Tips to Get Your Short Sale Buyer to "Walk"

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67 Comments on 5 Tips to Get Your Short Sale Buyer to "Walk"

JUL

I didn't think one could make a short sale funny--but you did it-kudo's to you.

Many buyers think short sales will be short and easy and then they put an offer in and are surprised that nothing is happening. Your blog puts it in a light to show that the main agenda has to be there or it just gets worse as time passes. Also, your way shows how serious the buyer really is and how long they are willing to wait.

I reposted since you did not get a comment stat for the last one for some reason.

I can't believe listing agents accept offers like this, it just amazes me and I'm sure these are the same agents who are shocked when the buyer walks.

Too many buyer's agents think we can send in multiple offers on short sales. Submitting more than the best offer only delays the short sale process.....I know! I did it and won't again. Great post!

Wendy--I'm with Monika on the humorous side of short sales--there aren't very many, that's for sure!

Hey, I had #1 AND #2 in the same transaction--we asked REPEATEDLY for the signed Contract and never did receive it, therefore, in NC, the EMD is not deposited until which time we have a ratified Contract. Lo and behold, the LA finally decides to tell us, after much time wasted, that there is a second lender who won't be able to make a decision for quite some time. My buyer decided to withdraw their Offer. They said, "You can't do that--we have a Contract!" NO SIR, we did NOT have a Contract--even after my BIC asking their BIC to send us one! So, that'll surely make a buyer walk and DID--pretty efficiently!!

Have not read much before about short sales that made me laugh. All the best.

Hi Wendy! Just wanted to let you know the button-copy worked and you're good to go on the first session re-cap. Okay, I'm READY for the next one!!

Congrats on that little gold star too!

Debe in Charlotte

One sure way to have a buyer walk is when the Buyers Agent does not explain to the buyer that the short sale process is a LLLLOOOOONNNNNGGGGGG Drawn out process that can take months to close. Why, MR or MRS. Buyers agents, are you submitting offers on short sale properties when your buyer has a lease that is due at the end of the month? Why Mr. or Mrs. Buyers agent, are you not ensuring your client understands what a short sale is? Why are you not reassuring them when the Mr. or Mrs. Listing agent tells you the process is moving forward and this contract WILL CLOSE, just give it a little time.

Its gotten to a point where I ensure the buyers agent even understands what a short sale is!!!

I wish some of the agents "throwing up short sales to see what happens and then inundates the poor loss - mit person" would read this! Thank you!

Great post! Short sales can be a huge headache if not handles properly.

So many short sale listing agents keep marketing the property which I hate.

Wendy - Rock on !!! Short sale 101 is all an agent needs to have some success. We have had decent success this year with short sales following the opposite of these 5 tips : ) ~ Chris

Monica - I wasn't starting as funny, but I guess you are right:)

Michelle - Happens every day.

Thank you, Kay.

Debe - We'll try to be ready for YOU.

Troy- Understanding is the key.

Bob and Carolin - Glad you laughed!

Wendy -

You know, here in Chicago, I have seen many Managing Brokers insist their agents write these overly-buyer friendly terms into their short sale contracts.

Do they think the sellers, and their attorneys, will ever let them go through?

Incredible!

Thanks for the share!

DEAN & DEAN'S TEAM CHICAGO

Cristal - That's right - another point- they clog up the system.

Jeremy - Got a tylenol?

Russ- Mine go "under contract".

Christopher and Stephanie - Why does it need to be repeated so often? Thanks.

Cristal - That's right - another point- they clog up the system.

Jeremy - Got a tylenol?

Russ- Mine go "under contract".

Christopher and Stephanie - Why does it need to be repeated so often? Thanks.

Dean - Cool, thank you!

Great advise Most agents would not know these little tips

Good stuff Wendy! These are things that I can share with my referral agents that will bring them value. Thanks!

why do so many agents and I say agents think the contract is between the buyer and the bank? It is a contract between the buyer and seller.

EXACTLY! Sounds just like the disclosure we require the buyer & buyer's agent to sign....how to write up the offer :)

Wendy, love the auction analogy. It's so true and it's one of the first questions to ask a listing agent when you're thinking about making an offer - "How many contracts will you be submitting?" Very humorous way to present astute points!

Sharon

Combat the 'auction' syndrome by putting in your contract that it will be the only one submitted to the bank.

Sharon

Of course if the banks could get their crap together and approve or reject or counter in a reasonable amount of time... it wouldn't be nearly as big of a problem.

Now if you could just get the banks to behave in a rational way - that would be wonderful!

In New Jersey it is against the law to submit (or sign) more than one contract. I feel that if I can get one I am ahead of the game!

Wendy - well your post was rather humorous, alhtough this sort of thing shouldn't be, but the spam comment toward the bottom of the comments is not so funny.

Jeff

JUL

Good one, Wendy. We have an agent here who submits all offers to the bank without seller signatures - doesn't make sense. The seller accepts the offer contingent upon bank approval, not the other way around.

I think that guy above is telling you in his comment that you should buy some cheap UGG boots.

As a buyer's rep, I l-o-o-o-ve listing agents who follow your 5 steps!

Because the lenders who own the paper on these short sales usually do not act in a reasonable period of time, I always write verbiage into the contract that precludes my buyer having to put any earnest money down until there's actually an acceptance in writing by the lender.

Why should my buyer have to let the escrow company earn interest on his money for 8-12-24 weeks while waiting around for loss mit to give a simple "yes" or "no?"

Until banks start coming around and making decisions in a timely manner - I'll keep writing offers that protect my buyers' right to keep their money until there's something to pay for!

Its "short-sale lotto" and the lender who has their act together wins a ready, willing & able buyer.

Wendy: Another one that I can think of is: Don't communicate with the buyer's agent and keep them in the dark

Great Post!

Holy Macaroni...these are lovely tips...no contract...there's a goodie....and let's see make sure the house looks like a cyclone struck it so the buyers will really think they are getting a deal....have a 5th on the 4th, you deserve it !

I have a friend that is purchasing her first home. The home she wants is a short sale and the listing agent doesn't communicate and he doesn't get the seller to sign the offer because "it's the banks anyway."

So far he has lost many buyers in this deal, but my friend is trying to hang on because her best friend lives next door!

Right you are. We have buyers sign contracts, make a regular deposit, and get 90 days for approvals of the workout.

Here in our area, short sales can be difficult because the bank or mortgage company is doing the negotiating and often they are terrible at it. I've heard they are swamped and buried, but I don't know...

Wendy,

I just answered a question on a post as to why I submit to the bank a copy of the check and a "best and final" contract.

Your post will help others enormously - and is lighthearted to boot!

Kent - The only thing we disagree about is the earnest money deposit- I do get it upon seller acceptance, not the lender's. Buyer agents in my area have learned to like that, too, as it does keep the buyer's attention!

Thank you all for your cool comments!

Wendy Nice job! Agree most of the contracts are very very buyer friendly to the point that the buyer doesn't really fell attached at all.

Great stuff. Keep them coming

Wendy, how can a lender agree to a short sale without a sellers signature binding the contract. Do the lenders even notice that the seller did not sign?

I have in the past not collected EMD but I like your thoughts on that. One thing that we always do is eliminate the verbage that the seller will keep marketing property on line 5 of the short sale addendum.

Jeff - Definitely collect an EMD. I've had a bunch of buyer agents tell me they like it, too, so all THEIR work isn't for nothing. When you explain to them that their offer is the ONLY one presented, and you intend to get an approval - which is the TRUTH, then there is much less resistance. If it's a strong offer and a qualified seller, it probably WILL be approved.

Great points! Short sales are difficult...we don't need to make them impossible by not doing what we know we should!

Very cool Wendy. Getting the deposit at time of contract is the only way to go. And like you said it's good for the buyer's agent too. Let negotiate a soliud deal and get it closed.

Wendy, what fabulous ideas for guaranteed failure. Who goes into a contract so loosely, amazing! Great post.

JUL

I have noticed in my area that buyers want to place offers all over town. Nothing holds them back because they all know there is no committment till the short sale gets approved !!!!

Thanks Wendy

another good tip,,, I'm going to call this agent I have an offer with & get there EMD transfered over to my title company happy 4th.

Most Buyers think a Short Sale is "short" which couldn't be farther from the truth. You made some good points for Buyers Agents to keep in mind so they aren't spinning their wheels as they represent clients who may either not be serious about a property, or might not be able to stick it out for the L-O-N-G (I mean short) Sale.

I think it all depends upon the bank. I represented a buyer recently, where we got a 'yes' from the bank on the first loan, 2 weeks into the deal. Another two weeks later, and the second said yes. Then a little delay when the asset manager changed. More time elapsed, and my buyer was still patient. We eventually heard back that the 1st lender wanted us to come in with more money. No surprise when my buyer walked at that point. And I would not want her earnest money to have been held up all that time, just to get a no 8 weeks after getting 2 yeses!

I am constantly having to educate Realtors in my area about how to propery do a short sale. I see agents all the time representing sellers that do not have a clue.

I disagree with #5.

Present it like an auction and confuse the bank.

Take the best offer which nets the bank the most money, which is why you also submit a HUD, mark the property pending and be sure to let the lenders know that you have done this.

In Central Florida, we no longer require the offer to be signed by both parties to force us to mark it pending. IF we are in negotiations with the bank then the offer must be marked pending. If we continue to accept offers, we must have full disclosure to all parties to ensure everyone knows the procedures to be followed regarding back up offers or kick out clauses.

#5 should be.. do your $%#% job and communicate with the buyers or sellers agent. Tell them what is going on, let them know when and where progress takes place so they can be up front and honest with you.

Many selling agents seem to forget, part of the protection they owe to the seller is to facilitate the sale, not just earn a paycheck. So they submit the offer, and sit back and wait for the bank while they go try and get another deal.... You gotta dance with the one your with and make sure they are taken care of.

Just my 2 cents

ugh!!! Great post Wendy...the sad part is that it needed to be written..but you did it well with humor and sarcasm. I am constantly amazed at how little many agents really know about this business or contracts...~sigh~

they need to make this the 10 commandments, er.. I mean the 5 commandments of short sales...

it is SOOOOOOO frustrating dealing with an agent that has NO clue what they are doing.

And then they wonder why the short sale is taking so long!

The last one I did from listing to close was 90 days =)

THANK YOU for your post!!

I agree and we have a team of 25 full time bank negotiators on our side so it really speeds up the process. We need other agents that don't know what they're doing to refer these out to professionals and stop wasting everyones time. Quit blaming the banks and hire professionals or refer out. Thanks for the post!

Great Post! May I post that on my MLS bulletin board?

Brady - I am confused by "Present it like an auction and confuse the bank"?

Ray - Feel free to re-post:) Thank you.

THANK YOU ALL AGAIN FOR YOUR COMMENTS AND FABULOUS INTEREST IN THIS TOPIC!

I do not have any contingencies start on my short sale offers or put any money into escrow until the bank gives a thumbs up to the transaction. That is pretty common out here.

Great post. I would also make sure they do the inspection within 7 days of the offer being signed by the seller. Some other Realtors allow the buyer to have their inspection after short sale approval. That is a bad idea. I only want a buyer that wants the home as is. Waiting 60 days to find out that the buyer is walking because the roof has two layers is a hard pill to swallow.

Mike

Short sales!! UUUGGGHHH! I just got back from re-showing a short sale that was written on April 10,2009! It EXPIRED on June 30th!!!! The Buyers WITHDREW July 1...... And The Bank APPROVED it...... JULY 2!!!!

Thankfully, the Buyers drove down (4hrs away!) for the re-show and decided to sign the extension! This was a ton of work that nearly went down the tube! The Banks really need to get their acts together1

Kathy Opatka

great blog, and very humerous at the same time. Yes, I don't see many humerous blogs about short sales, but this one is good, and so true. thanks again!

Funny. I primarily work with short sale buyers and short sale sellers... it's a lot more complicated then suggested..

The #1 Reason Buyers walk is because they find something better while they are waiting...

Trying to hold buyers hostage for a short sale that might not even get approved by the lender is a great way to represent your buyers... NOT.

And Title Agents handling short sale negotiations for agents sending in "offers" and not contracts? Maybe that's the real problem... No wonder why the system is clogged... (Among many other things...)

This is a great post, also fanny and true!

Great post Wendy. and Funny too! I tell my buyers the word "short" in short sale does not refer to the length of time it takes to get to closing! Be prepared for the long haul or don't waste your time, the seller's or mine!

Kim

Kimberly Thomas, Realty Executives Brown & Pope; Voorhees, NJ

It goes back to the basics block and tackle.

JUL

The buyers have to be trained--on how to be very patient.

Great blog, Wendy! We're seeing great results using the actual winning technique - the same we learned in our CDPE training! Happy selling!

Sorry, the whole issue is no longer funny to me. Banks just don't get it and I don't think they ever will. Someone just posted something about the banks being held liable for loosing contract after contract - that's a thought! Hope someone starts a class action suit.

Paul - I rarely have buyers walk- when offering on my short sale listings - even with long approval periods. That's because we only send in contracts likely to be approved- strong price, qualified seller, and buyer willing to wait at the outset. Our short sale contracts are "contracts" in Florida, so buyer "walking" is subject to default clause actions. I agree, no one should send in unsigned contracts, i.e. offers to the lenders.... Clog away!

Lyn - It is not funny to me either. It is pretty serious.

JUL

Wendy, what I meant by "present it like an auction and confuse the bank"

You are giving the bank to much credit.

submit 1 offer, THE BEST OFFER, and let the bank decide if it is worth moving to the next step.
If you allow the bank to believe there are multiple offers, they immediately assume more offers could be possible, so they fail to act as quickly as they could. They likely also know that you have advised the buyers that multiple offers have been presented, and they have more time to deal with potential offers.

Give the bank the best offer, and make sure they know the property is pending and no other offers will be presented until they respond.

Multiple offers increases the risk that paperwork will be mishandled and or lost. Imagine how they are with 1 offer, and multiply that by the number of multiple offers and imagine the fiasco at the lenders level.

Just my opinion.

Hope that cleared up my previous answer....

JUL

LOL!!! This is a great post! some people are patient and others are so unrealistic that i make sure upfront before I show someone a home that is short sale that they fully understand the term. I don't understand either why agents are submitting all the offers. The house still belongs to the seller, and the seller makes the decision on the offer to send to the bank. How is it that it's been changed? New agents not knowing how to deal with short sales? Newer agents never having done one?

JUL

Nice Blog Wendy. We go too easy on buyers and allow them to walk away.

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