Buyer's Agents Are the Biggest Roadblock to Closing a Short Sale

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Buyer's Agents Are the Biggest Roadblock to Closing a Short Sale

Buyer's agents are the biggest roadblock to closing a short sale. Buyers, if you've been writing offer after offer on those short sales without success, perhaps it's time to fire your agent. I'll probably get a lot of grief for saying this, but that's the way the cookie crumbles or the pooper-scooper scoops, pick your metaphor.

As a busy Sacramento short sale agent, it's getting to the point where 2 out of every 3 offers I receive for my sellers are garbage. They are not real offers. I'm not talking about the expired preapproval letters, outdated earnest money deposits, or missing short sale addendums, because those are screw-ups that can be fixed. I'm talking about offers from those buyers who have little motivation to wait for the bank to approve the short sale.

Why don't buyers want to wait for short sale approval? Because their agent told them they don't have to. Their agent told them to write as many offers as they can because when they all come back approved, they can have their pick. Why would an agent suggest this maneuver? So the agent can get paid faster. Some agents can't wait months for a commission check because they're not closing deals on a consistent basis. But this is not in the buyer's best interest. This practice is in the agent's best interest. According to the Realtor Code of Ethics, agents are supposed to put their buyer's interests above their own.

If a buyer cannot afford to buy more than one home, a buyer could be breaking the law when writing multiple purchase offers. Does the buyer's agent point out that fact to the buyer? Probably not. Greed and stupidity often go hand-in-hand.

The whining that I get when I call agents on this deception is: "My buyer just wants to buy a home." Well, guess what? My seller just wants to sell a home. Maybe we should put the two of them together? You think?

Some days I am ashamed to be part of this profession. Buyers do want to buy a home, and some want to buy a short sale home. Maybe agents should get out of the way and let them do it.

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Elizabeth Weintraub is an author, home buying columnist for The New York Times-owned About.com, a Land Park resident, and a Land Park real estate agent who specializes in older, classic homes in Land Park, Curtis Park, Midtown and East Sacramento. Weintraub is also a Sacramento Short Sale agent who lists and successfully sells short sales throughout the four-county Sacramento area. Call Elizabeth Weintraub at 916.233.6759. Put 35 years of real estate experience to work for you. Broker-Associate at Lyon Real Estate. DRE License # 00697006.

The Short Sale Savior, by Elizabeth Weintraub, available at Amazon.com.

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Posted by Elizabeth Weintraub, Sacramento Short Sale Agent, Land Park, #00697006 Lyon RE on 07/22/2010 10:17 AM

Comments (34)

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Originally posted at: Elizabeth Weintraub • Sacramento Short Sale Agent • Land Park: Buyer's Agents Are the Biggest Roadblock to Closing a Short Sale

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34 Comments on Buyer's Agents Are the Biggest Roadblock to Closing a Short Sale

JUL

2010

Elizabeth, I am guessing that this is true. The great majority of buyer's agents know little or nothing about how short sales work. The best thing for them to do would be to work hand in hand with a Short Sale Listing Agent like you... and then watch how smoothly things go.

Thanks, Elizabeth, for a great post. And the sooner that agents start taking responsibility for our part in the disfunction of the short sale process, the sooner we will be able to right the ship. That goes especially for listing agents, too. I suggested this piece. We need to get the word out.

Elizabeth - I have to agree with you. I think this is more of the reasons why it's important to have a good reputation as an agent that others can trust. Sometimes you just can't tell.

I recently had an offer on my short sale; after a while when we finally got approval from the lender, the agent wrote an elaborated email saying how they found out there are problems with his clients credit and they just could not go forward. Funny thing is, at the same time, another agent in my office posted a sale from the same agent for a similar priced home. Yes, you guessed, it's the same buyer ....

Such is life in short sale .... But we march on just so that our sellers do not get their houses forclosed on ..

This is so true. There are agents out there that should not be a part of these short sales. They don't educate their buyers on the outcome and ramifications of offer after offer.
Both of my short offers right now are playing the waiting game. Are you finding quicker bank response? B of A I am not but some others I hear have cleansed the system so to speak.

Thanks, Carolyn and Brian.

Hi Sylvia: Why would that agent write an offer for a buyer who can't get a loan? I guess it's for the same reason they write offers for buyers who have no intention of closing. But I don't know what that reason is.

Hi Ken: I am finding that Bank of America is responding very quickly -- some in 3 to 4 weeks. I had a HAFA Chase deal approved last week in about 10 days, but that's because the file was transferred from Chase and the sellers did a fast turnaround on the paperwork. Wells Fargo is now in Equator, so maybe that will help. SLS was fast as well. Aurora is poky and unpredictable. CitiMortgage is pretty good lately, running on average 6 weeks. IndyMac is horrendous as always.

Thank you for saying it, Elizabeth! Thank you! I am so tired of Buyer's Agents that don't even see Short Sale Contracts as binding. They see them like lottery tickets. They mean nothing unless you scratch off a Short Sale Approval. A contract for the purchase of real estate should not be treated this way.

Recently a client asked one of my agents if she objected to writing multiple offers for her. In Georgia we have a due diligence period of a negotiated number of days in which a buyer can void the contract for ANY reason and get their EM back. My agent refused. She explained to the client that she'd be happy to write as many offers as it takes to get a home under contract, but unless the buyer was satisfied with the way we conduct ourselves at Lane Realty she could find another agency. You shouldn't keep "shopping for a better deal" once you're under contract.

Elizabeth - Ok, as much as I absolutely adore you, I'm going to go out on a limb here and politely disagree with you. I think the biggest obstacles to MY buyers purchasing short sales have been the banks and their short sale negotiators. In just about every single one I've done (I did my first on in March of 2009), the negotiators (some had more than one per transaction) have been really difficult to work with.

I recently had one BofA short sale that went through three negotiators and took six months (and this was through Equator) and the problems with this transaction most certainly can not be blamed on the agents (either of them). I had another one with OneWest/IndyMac that almost didn't close because of the uncooperative, pain in the @$$ seller throughout the entire transaction and who pulled an assinine stunt right before the final walk-thru. Don't even get me started on the one before that, a BofA/Wells Fargo short sale where Wells Fargo held the transaction hostage and tried to exhort money from my borrower outside of the HUD1 statement. I could go on but I think I've made my point.

Nope, BA's are not to blame based on most of my personal short sales experiences. However having said that, I still think that some of my borrowers should fire their BA's and get another one but that's a whole other post.

Elizabeth - I really think "short-sales" are best handled by agents proven to handle them well. In your learned opinion, how long should a buyer reasonably be willing to wait, for bank approval? Would it be 3 weeks, 6 weeks, 2 months, 4 months - or how long? I note your response to Ken, but if you were to write a contract for a buyer, what timeframe would you write in the contract for bank approval?

Chris Ann knows what I'm talking about.

Donne, I don't believe you do because you get involved only after the offer is in escrow on the mortgage side. You don't see what us agents go through to get to that point. However, I am curious as to what stunt the seller pulled at the last minute on that short sale you just funded and closed.

Tammy: On a regular transaction? They still want to keep looking? Oy.

Myrl: It depends. I generally write contracts for my buyers with a 90- to 120-day waiting period. Then, when the short sale approval arrives in 60 days, I am a hero. I also know that the listing agent is looking at that date in paragraph A of the short sale addendum. So when I'm in a situation where I know that more than one buyer is trying to buy that short sale, my buyers get it because we give the seller 4 months. Lots of agents don't even know enough to put a date in the short sale addendum. They leave it blank, of all things, which then makes the SSA worthless.

Elizabeth - Ok, you made a very valid point, I'll give you that. As for the pain in the @$$ seller, he stripped the home of items that were not listed in the MLS or in the purchase contract as being excluded from the sale. Furthermore, he most certainly did NOT leave the property in the same condition it was in when the offer was made and accepted. I know you understand the significance in that requirement.

Elizabeth, It's all about education and experience and that also means letting the buyers know that short sales are not a typical 30-45 day close. I have had a house listed now for 6+ months and have had many offers but after 2-3 weeks, the buyer finds something else and off they go! Anyway, I have had some great success getting short sales sold with buyers agents that are both professional and competent!

I closed a short sale this month. I was representing the buyer and I was her third agent. The buyer asked if it was a good idea to write multiple offers and I flat out said no. We found a home she liked, I qualified the listing agent and we wrote an offer. We were in contract April 27th and closed July 9th, two weeks before our COE deadline. If the listing agent knows what he/she is doing and the offer price is at market value then the process can be a smooth one. Shame on those BA's, a seller's home could head to auction because of this irresponsible behavior.

That sounds logical, Elizabeth! I think perhaps some buyer agents fear that elongated timeframes, allow room for other buyers to swoop in, present a little better offer, and ace them out. Those that work with you as a short-sale agent are fortunate they have someone that not only knows the ins and outs, but has the fortitude to put up with all the shenanigans from everyone involved. I'm not that good:-)

JUL

2010

I agree Elizabeth and the 2nd worst thing is the listing agents, who don't know how to put a package together.

We (our TEAM) now have our own form...the buyer must wait 90 days or no return of EMD. I got sick of buyers walking.

We just had our first BofA approved in 30 days. My first time using Equator.

Missy has the right idea. We will not return EMD until there is a resolution or the 90 day wait period. These sales are a lot of work...and the buyer's agents often haven't a clue. So they can't explain anything to the buyers.

Just sit back....we'll keep you posted. And, that multiple offer scenario with multiple properties is a recipe for disaster.

Thanks for the great post!

I'm in the camp that blames the banks.

I'm a buyers agent, and my duty is to my client, not the listing agent, the seller, nor the bank.

I never advise my clients to make more than one offer. However, if they want to continue to look and decide to place another offer, then I must and will follow their instructions, even though it amounts to a lot more work for me.

When that happens, I do tell my clients that if an agent asks me if my buyer has another offer in on another short sale, that I am required to treat them honestly, and will have to disclose that we have submitted another offer.

I personally find this post offensive as a buyer's agent. I have never had clients write on more than one property at a time.

I think the biggest roadblock to closing short sales are the banks that take months to respond. It is very difficult for a buyer who wants a new home to sit back and wait without knowing whether their offer will even be accepted and so many may want to consider looking. If the bank made an offer to a buyer and they took 3 months to decide if they want it I bet many banks would go looking for a new buyer too.

I also think not all listing agents handling short sales have a clue what they are doing so we as buyers agents don't even always know whether the short sale is being done properly from the listing end.

Stacey-Ann, The thing is Cynthia has a valid point. You need to qualify the listing agent before writing on that short sale. If the listing agent doesn't know how to do a short sale, your buyer could be hosed.

And Bill: You are not required to let your buyers turn into flakes. You have the authority to fire them. If a buyer were to tell me he or she wants to write on another property, I would suggest they cancel the first offer to stay out of trouble. It's much cleaner that way.

I bet this does happen a lot. I had a buyer ask me the other day to write two offers on different properties. I warned her that she might be buying two houses and that I would only write one for her.

Hi Elizabeth, Since I haven't done a short sale on either side- this is surprising. I don't think I would want to write multiple offers, unless my buyer wanted to buy multiple homes.

Suggested and reblogged - right on the money Elizabeth. We use a "standard" Counter Offer for terms that scares the flakes away.

JUL

2010

Elizabeth, I do not understand why this post is not FEATURED! You are so right on here. I wish it were a requirement that agents be trained and tested (a real hard test) prior to being allowed to work either side of short sales.

JUL

2010

I'm glad you wrote this post. The other day I commented that in the past year I (personally) have never had any buyer that I represent bail on a short sale during the waiting phase. To me, all that means is that most agents do not explain thoroughly to the clients about the road ahead. SO, I fully agree with you. And... I like the photo you selected for the post as well.

JUL

2010

Hi.....uh oh, I had to disagree and wrote my own post on the subject of annoying listing agents. I also suggested this for a feature (to make up for it?). I love you, and would love to work with you as a listing agent on a short sale, clearly YOU know what you are doing......but so many agents don't. So....

Most buyer's agents do not understand the short sale process. This is not because they don't have the mental capacity for it, but because they're never done one!

Short sales are detailed, negotiation heavy, and require creativity most times to get them closed!

Without the experience forgoes the understanding.

JUL

2010

Hi Elizabeth! I couldn't agree with you more! Also, there are the buyers' agents out there who don't pass along our weekly updates to their buyers and the buyers wind up thinking that the process has not even yet begun and tell their agents that they want to WALK! They have no clue where we are in the process and become quickly discouraged if not updated--it's VERY frustrating!

We were recently nearing completion on a short sale and the buyer did the same thing--RIGHT when the BPO had been delivered to the bank (I had let the buyer's agent know THAT day), the buyer walked. Now, why would they walk THEN if they had been properly advised by THEIR agent? There's only one explanation and that's that their agent did THEM a disservice!

I love working with buyers agents who KNOW what they're doing with short sales!

JUL

2010

In a word Yup.......all the objections, less than cordial, professional, polite comments, demands, etc, are always under the guise of "I am a buyer's agent...." which is not a license to be rude...unprofessional...demandng....

Sad but true. When a buyer's agent is working without sufficient short sale experience or knowledge, they are merely wasting everyone's time, especially the buyer's time.

I eliminated a couple of agents from my network because they simply wouldn't work the short sale offers in a manner that gave them any chance of lender approval.

That said, there are far too many listing agents with no short sale experience who throw stuff in the MLS with no hope of success. Far too many.

Fact is, there is a dearth of agents with real short sale knowledge and experience.

I have always told my buyers up front that they need to be patient and wait. It's not going to close in 90 days. If it does, we will be lucky. I don't want to waste anyone's time.

my team members have only been faced with 2 or 3 short sale listings.....there are many buyers who do not want to wait the 6+ months to close....that's the only issue....closing time....our MLS provides a place to disclose whether it's a short sale subject to approval by the bank...

Elizabeth--AMEN!!!

As a listing agent who knows how to do short sales I have found that some of the buyer agents are my biggest problem, not the banks (although they aren't a walk in the park either). We explain the process thoroughly to them at the beginning and that it IS a legally binding contract with a contingency for approval. If they buyer's agent doesn't seem to "get it" we warn our seller before we go under contract. Sometimes those who don't get it still slip through. I've found that if I can keep the buyer on board we almost always get the deal closed. When there is a good buyer's agent who understands short sales that is easy. When it's someone who e-mails and calls every day wanting a new update from the negotiator and gets the buyer all worked up and continues to show them other properties...it's hard.

As a buyer's agent we also have to prequalify the listing agent and make sure they know what they are doing if our buyer is considering their short sale listing. I think it is completely negligent to take a short sale listing if you do not know what you are doing...but I have seen many listing agents in our area who do that.

I can't imagine the type of disaster you wind up in when neither the listing agent or the buyer's agent knows what they are doing...

AUG

2010

Sometimes, just sometimes the buyers agent understands the short sale process and alllllll the delays that go with it. Sometimes, just sometimes the listing agent is the problem, not the buyer's agent.

I realize my limitations and use a short sale team through our Keller Williams agency. I love the marketing side, and I know that short sales have a lot of nuances and loop holes. So, it's just easier to team up!

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Elizabeth Weintraub, Sacramento Short Sale Agent, Land Park, #00697006 Lyon RE

Sacramento, CA

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Lyon Real Estate #00697006

Address: 2801 J Street, Sacramento, CA, 95816

Office Phone: (916) 233-6759

Cell Phone: (916) 233-6759

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Broker-Associate at Lyon Real Estate, midtown Sacramento. Selling since 1974. Home Buying Columnist at About.com. Sacramento short sale agent.

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