In a previous post, I relayed the story of sellers who are gaming the system and did not intend to sell or move out. This is not an isolated case, and others have also told about their own experience in being interviewed for, or taking a short sale listing.

These sellers may use the short sale tactic to delay being foreclosed or evicted while they find another way to keep, or stay in the house.

RED FLAGS to watch out for, and I invite others to add to this list for future reference. 

While discussing the short sale listing:

• Sellers don't want a lockbox
• Sellers don't want a for sale yard sign
• Sellers won't give you a duplicate key
• Sellers won't give you the code to the security system and insist that they want to be at the house for all showings
• Sellers give very strict times to show, like only on Mondays between 6-7 pm
• Sellers won't give you letter of authorization to contact the lenders
  • If you do have the authorization, you should check frequently to see if the sellers are doing a loan modification. That's a dead give away that they won't or don't want to sell.
    
• Sellers delay providing essential information to complete the short sale package that will necessitate their personal financials (tax returns, pay stubs, bank statements, income/expense statement)
• Sellers are too picky about how to write the hardship letter, the photos and property description
• Sellers make it hard for you to take photos because the house is a freaking mess
• Sellers will argue about your list price, insisting that the price be at, or close to what they paid for it even though you show proof of current market value
• Sellers will argue about your commission even though you tell them the short sale lender will make the final decision about it

And when you do get the listing:

• During showings, and if the sellers are there, they talk so much about "problems" with the house to discourage would-be buyers
• Sellers do not make any attempt for up-keep
  • If they do want to sell it, they would make it presentable and appealing to buyers
• Sellers don't make themselves available to look at, much less discuss offers

When you have offer(s): 

• Sellers insist on countering offers, sometimes, over the silliest details
  • For example, they will want to uproot certain plants (that Myers lemon tree in the back of the house) because of "sentimental" value
• Sellers won't accept an offer AT the list price --- that's a HUGE RED FLAG --- and nitpick the offer
  
• Sellers don't provide a complete disclosure package regardless of how many times you explain they need to provide this info. Their only reason: it's an AS IS sale, take it or leave it
• Sellers say they need to consult with this or that person who aren't on title

When you are in touch with the short sale loan negotiator

• Sellers won't respond to request for updated financials the loan negotiator needs (the file wasn't opened for 2 months, the previous financials are old) because they say they already gave that information once before, and don't want to do it again

When you are ready to close

• When the short sale is approved by the lenders, and it's time for the buyers to have appraisals and inspection done, sellers aren't available at the requested times
• Sellers don't show evidence of packing to move out
  
• Sellers don't want to move, and ask if they can rent the place
  • Or worse, Sellers don't want to move, and want Cash for Keys
  • They dare you to evict them
• Sellers keep asking for postponement of closing, and going through the drama of not finding a suitable home to move to
• And....when checking with the lenders, you find out that:
  • the sellers filed for loan modification
  • the sellers filed for bankruptcy

What have you run into?