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Should Short Sale Sellers Continue to Show Homes After Offer Acceptance?

By
Real Estate Agent with Elizabeth Anne Weintraub, Broker DRE #00697006

sacramento short saleOne of the million-dollar questions that I receive from Sacramento short sale sellers is when should they stop showing their homes. The answer to that question depends on the individual short sale, they are each unique, but typically the answer is when the seller has accepted an offer. However, it also depends on the type of offer the seller has agreed to accept.

See, the thing is when a short sale goes into active contingent status, it's basically no different than a pending sale status on a regular transaction. The implied difference between a regular pending transaction and an active contingent short sale is the short sale will take longer to close.

Whether the transaction is a short sale or a regular sale doesn't make much difference because in each there is a seller who has agreed to sell to a buyer and a buyer who has agreed to purchase the home. Now, some buyers are writing multiple offers, hoping to grab the first short sale that gets approved. But I advise my sellers to not accept those types of short sale offers. I know the signs to look for and how to take precautions to lessen the chance that a Sacramento short sale seller will end up in contract with a buyer who is unlikely to perform.

Besides, a back-up offer received in the early stages of a short sale probably won't be in the game by the time the lender approves the short sale, even if the first buyer walks away. That's because some short sales take 3 to 4 months or longer to close, depending on the short sale lender. Very few buyers will wait months just to see if the first buyer backs out. Most buyers actually want to buy a home and close.

As a busy Sacramento short sale agent, I generally receive so many offers on my short sales that I have plenty of buyer's agents to notify if the buyer who is under contract gives up the ghost. But I always give sellers the choice of whether to let buyer's agents continue to show or to change the listing to reflect no more showings. If the seller's buyer appears solid and committed, there is not much to gain from continuing to show the home.

A seller emailed me yesterday to say that twice 2 different buyer's agents called her, demanding to see her home. She explained that short sale approval is on the horizon (because her bank told her so), that her home is listed as an active contingent, the buyer is dedicated and the listing states no more showings. In both cases, the agents insisted that active contingent meant they could show it. No, sorry, guys, it doesn't mean that at all. In my short sales, it means it's in escrow. Moreover, when a listing says no more showings, it means no more showings. But to some agents, "no more showings" must carry some other connotation.

Some buyer's agents ask if I will call them should an active short contingent blow up for some reason. Sure. But there's no special treatment. If the existing contract cancels, isn't it better for the seller to put the home back on the market? Because putting the home back on the market is exposing that home to a greater pool of buyers, some of which might pay a higher price. Making back-door deals isn't in the best interest of the seller. Buyer's agents have access to MLS, and MLS will tell them if a home is available for sale or back on the market.

 

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Elizabeth Weintraub is co-partner of Weintraub & Wallace Team of Top Producing Realtors, an author, home buying expert at The Balance, a Land Park resident, and a veteran real estate agent who specializes in older, classic homes in Land Park, Curtis Park, Midtown, Carmichael and East Sacramento, as well as tract homes in Elk Grove, Natomas, Roseville and Lincoln. Call Elizabeth Weintraub at 916.233.6759. Put our combined 80 years of real estate experience to work for you. Broker-Associate at RE/MAX Gold. DRE License # 00697006.

Photo: Unless otherwise noted in this blog, the photo is copyrighted by Big Stock Photo and used with permission.The views expressed herein are Weintraub's personal views and do not reflect the views of RE/MAX Gold. Disclaimer: If this post contains a listing, information is deemed reliable as of the date it was written. After that date, the listing may be sold, listed by another brokerage, canceled, pending or taken temporarily off the market, and the price could change without notice; it could blow up, explode or vanish. To find out the present status of any listing, please go to elizabethweintraub.com.

Comments(10)

Chris Ann Cleland
Long and Foster Real Estate - Gainesville, VA
Associate Broker, Bristow, VA

Elizabeth:  You and I think alike on this short sale showing topic.  And taking back up offers right out of the gate, I'm with you.  There's a strong chance if the primary buyer walks, that the back up buyer split a long time before.

Jan 14, 2010 12:56 AM
Dave Roberts
Healdsburg Sotheby's International Realty - Healdsburg, CA

Great advice for this challenging market. I wish we could insist the banks work more quickly to reduce the uncertainty involved in the process, but in the meantime your suggestions make a lot of sense.

Jan 14, 2010 01:05 AM
Michelle Bailey
Century 21 1st Place Realty - Boise, ID

I agree with most of what you said.  Here if we mark the home as "contingent short sale" then we are inviting agents to show the property. If we don't want to show it anymore then it's marked "pending".

I prefer to get backup offers on a short sale so there is no waiting around because generally the first buyer does walk.  Because a lot of banks still insist on an offer with the short sale package, I welcome any offer to get the ball rolling.  Before I show a contingent short sale home, I call the listing agent to get more details and ask about the strength of the buyer.  If they tell me they've been patient and are in it for the long haul then I tell my buyer we should skip it.

I'm shocked agents are calling your clients and demanding anything.   That's rude and unprofessional!  If they have an issue with the showing instructions they should call you.

Thanks for sharing!

Jan 14, 2010 04:15 AM
Elizabeth Weintraub Sacramento Broker
Elizabeth Anne Weintraub, Broker - Sacramento, CA
Put 40 years of experience to work for you

Hi Michelle:

No, thank YOU for sharing. It would make life so much easier if we could put our active contingents into pending status prior to short sale approval, but we can't. Honestly, I don't know off-hand if that's a broker requirement or an MLS requirement, but I know we can't do it.

All the banks I work with want an offer with the short sale package, otherwise, the package is incomplete and I find that they won't open the file. Which banks are opening files for you without an offer?

In the rare instance that a buyer does walk, if the bank is Bank of America, the process starts over. So having a back-up offer doesn't speed up anything.

Although, after HAFA starts in April, we'll be able to submit the short sale package in advance, and the files are "supposed" to close faster.

I, too, was a little shocked about those agents. But we have limited inventory and some agents are desperate. Not that it's any excuse to be pushy. To solve that problem, I asked the seller to send me permission to remove her phone number from MLS.

sacramento short sale agent

Jan 14, 2010 04:51 AM
Bill Joyce
Charter~Home - Sacramento, CA

Hi Elizabeth,

I think the frustration for buyers' agents is that the MLS continues to feed these properties to other active home shoppers who are unaware of agent only remarks stating 'No More Showings'.  Buyers are constantly online searching IDX MLS services and Active Contingent Short Sales come up in all their searches with all the other available homes.  They believe the "Active" designation means these are homes available for sale.  Their perspective is 'if it's no longer available, why is it showing up as Active in the MLS'? Home shoppers get excited about homes they see online...and disappointed when told it can't be seen.

It would be helpful for Buyers Agents for Listing Agents to put "No More Showings" in the public remarks so buyers can see the message comes from the seller.

In the end, this is an MLS issue.  It would be nice if there were a way that sellers not seeking additional offers could re-categorize these listings so buyers would not be presented properties they can't view or purchase.

I'm not siding with buyers agents arguing with your seller for a showing, but because there is not a distinction between contingent short sellers that want to continue to market their properties and those that no longer wish to market their properties this is more of an issue for buyers and their agents than sellers might realize.

Respectfully,

Bill Joyce

Jan 14, 2010 05:01 AM
Tammy Lankford,
Lane Realty Eatonton, GA Lake Sinclair, Milledgeville, 706-485-9668 - Eatonton, GA
Broker GA Lake Sinclair/Eatonton/Milledgeville

I call the agent if there's a listing my buyers inquire about marked "contingent" to find out if it can/should be shown.  Usually the listing agent has a good feel for how the deal is going and where they are and if the buyers are patient or not.  But I'd never "insist" on showing if an agent put "no more showings", I'd simply tell my buyers that home wasn't available any longer.

Jan 14, 2010 06:19 AM
Elizabeth Weintraub Sacramento Broker
Elizabeth Anne Weintraub, Broker - Sacramento, CA
Put 40 years of experience to work for you

Hi Bill: I agree completely. The poor buyers see these listings on other websites, many of which don't differentiate between a short sale or an active contingent, and even if they did reflect the contingent status, buyers don't know what it means. So they call their agents, all excited, and make those buyer's agents call the listing agent.

When I send listings to buyers from MLS, I eliminate the active contingents.

Our MLS won't let us put "no more showings" in the marketing comments, though. Otherwise, you can bet that's where I'd put it.

Far as buyers writing offers on those contingent listings, though, they are, in a way, wasting their time. For one thing, once the short sale process is started, most lenders won't look at another offer, even if the seller insists that the agent send it to the bank. When you look at the odds, they are pretty slim. The odds of the buyer walking away are high, though, for many short sale listing agents in Sacramento. I guess it would depend on the buyer's determination to wait it out.

For a buyer, it's far better to be the best offer at the beginning and be the only offer that is sent to the bank, than mess around pinning hopes on an active contingent.

Hi Tammy: I set up a short sale listing status report on my website so buyers and buyer's agents can go there to see if any are about to fall out.

sacramento short sale agent

Jan 14, 2010 06:26 AM
Dale Terry
Yadkinville, NC

Some differences in wording, but a regular sale is a contract between a buyer and seller, whereas a short sale has to also be approved by the bank.   So I would take back up offers, and make sure that I disclose everything.  But with that said, I am only going to do what makes sense for my client.

Jan 14, 2010 07:48 AM
Colleen Fischesser Northwest Property Shop
NextHome Experience - Chelan, WA
A Tradition of Trust in the Pacific NW since 1990!

We are compelled by our MLS to place these properties in "Pending, subject to inspection" status. We have all had major issues about this because it is in direct conflict with our Short Sale addendum which allows for sellers to continue to accept other offers (if they choose). Love it when other agents "insist" with your clients, don't you?

Jan 14, 2010 01:15 PM
Elizabeth Weintraub Sacramento Broker
Elizabeth Anne Weintraub, Broker - Sacramento, CA
Put 40 years of experience to work for you

Hi Home Realty: If the bank doesn't approve the short sale, then back-ups don't matter. If the bank does approve the short sale, then you close with the buyer who signed the contract. So it's not totally relevant whether the contract is contingent. It's still a contract. My objection is when agents don't treat an active contingent contract as a contract. And almost all purchase contracts contain contingencies.

Hi Colleen: Oh, so you have the opposite problem. I feel for you. Does your MLS allow you to add a modifier such as "bring back-ups?"

Jan 15, 2010 01:46 AM