Clueless on Short Sales in Annapolis
I'm talking about Listing Agents.
And on a larger scale, I am talking about many other Anne Arundel County Agents.
To be fair, this isn’t simply a problem in Annapolis or Anne Arundel County. As best I can tell, this is endemic to short sales in Maryland within the Baltimore, Washington, Annapolis triangle.
Working for buyers, I have spoken to many short sale listing agents and made offers on multiple short sales in the last three or four weeks.
Not one of the agents on the other side knew what kind of loan their sellers had. I don’t mean to suggest that no agents doing short sales in this area are experienced and knowledgeable, but it is clear that a majority are not.
So why does it matter if the agent doesn’t know what kind of loan the seller has as long as the deal is being “professionally negotiated?”
It matters because this very basic information is critical to understanding the short sale process, what tactics to be used in contract negotiations, how to obtain lender approval, how to minimize or eliminate seller/borrower liability and the ultimate probability of getting to closing with the short sale instead of being foreclosed on.
If the agent doesn’t even know what kind of loan the seller has and further what significance there is to that information, how can they effectively represent a seller in a short sale?
Personally, I believe that when a Realtor takes a short sale listing without the experience or resources necessary to ensure success that it should be viewed as a violation of the Realtor Code of Ethics. Sadly, based on recent experience, it appears to be the norm rather than the exception.
Unfortunately, distressed sellers are rarely armed with the information necessary to evaluate the competence of prospective listing agents in these circumstances. I suspect the agents simply tell the sellers, as they often do in their listing comments that the short sale is being “professionally negotiated” (whatever that means), and thereby feel absolved of responsibility.
Getting the property under contract is, by the way, only the beginning and usually the easiest part of the process. Nonetheless, these agents seem to feel that all they have to do is get the property under contract, sit back then wait to get paid.
Having closed in the neighborhood of 70 short sales while representing sellers since 2007, I have learned that price is just one part of the short sale puzzle. Often, contract terms between buyer and seller are even more important when working to get these deals closed.
For the listing agent not to know the type of loan that their seller has, from my perspective, is simply appalling. If you think that’s too strong a term, I actually have a stronger one in mind.
Agents frequently don’t know if the short seller has an FHA loan, VA loan, Freddie or Fannie loan.
I’ve had agents tell me the second “went away”. ..What?
“They aren’t pursuing the borrower”… Oh, so there is a release? Can I get a copy of it? “uh,I just got this from an attorney, you’ll have to ask them”…Seriously?
I’ve had agents tell me “this is an FHA short sale and the BPO was done last week”…Really? BPO’s are not done on FHA short sales, they must do an appraisal. At which point, I am greeted by Silence.
Then I ask, has the seller made application to be in the FHA pre-foreclosure program?... “Uh, well, I don’t know. XYZ company is doing the negotiations.”
I’ve had too many of these kinds of conversations lately. But I strongly feel that this shows a breakdown of responsibility on the part of agents, their brokers, and the so-called “professional negotiators.”
Some agents have tried to cover up their lack of knowledge by offering incorrect information until they realized that a smoke blowing exercise was not going to appease me. At this point they usually fessed up to “outsourcing” the “negotiations” with the lender which explained why they didn’t really know about any of those “details”.
And if you think the fact that an agent has some kind of short sale “designation” is insurance against this, guess again.
I remember when I started doing short sales, dealing directly with the banks on behalf of sellers, back in 2007, my greatest and constant fear was that the homeowner would wind up being foreclosed on. There were very few “third party negotiators” in the entire country back then and we dealt d
irectly with the banks on behalf of the sellers.
At that time most agents wouldn’t touch short sales due to the time required and complexity of the process. The last thing on earth a real estate agent wanted to do was to try to negotiate a short sale with a bank. Now most feel they don’t have to. And they don’t…don’t handle the negotiations, that is.
This “freedom” from having to take on the responsibility of negotiating directly with the bank has led to an unf
ortunate consequence: The concern that the homeowner might wind-up being foreclosed on and the consequent care that was engendered by responsible agents seems to have vanished.
It’s a shame and a disservice to the sellers and is likely to wind up giving a big, black eye to real estate agents. I understand how hard it is to find listings today. I can see why the majority of realtors jump at the opportunity to list a short sale when the alternative is having no listings. But this could really backfire for our profession and damage our reputation as licensed Realtors for decades to come.
In order for brokers, agents, and third party negotiators to serve short sellers properly, It is absolutely incumbent upon the agent to invest the time and take the care necessary to handle them properly. It’s incumbent upon the brokers to make sure their agents handling these actually have sufficient knowledge to do so. And, it’s incumbent upon the third party negotiators to know that they are doing business with an agent that has substantial knowledge of the short sale process.
Currently, based on my informal poll, this is not happening.
By the way, if you doubt the veracity of any of my statements in this post, just pick up the phone and call a few short sale listing agents who have recently listed a short sale and ask them what kind of loan the borrower has. Ask them if it’s an FHA loan, VA, Fannie or Freddie? Ask them if the borrower qualifies or has made application for HAFA? If they say it’s FHA, ask them if the borrower has applied for or received an Authorization to Participate?
If you happen to be a potential short sale seller, here’s a tip for you: ask the agent to show you the MRIS print out detailing the actual short sales they have closed representing sellers and ask them how the negotiations were handled. Don’t be fooled by the “I’ve done lots of them” response. Note the emphasis on representing seller. Representing buyers doesn’t provide the experience you as a seller need from your listing agent.
Unfortunately there are way too many agents who are:
Clueless on Short Sales in Annapolis
The Davis Resnick Group LLC
Info@DavisResnick.com www.DavisResnick.com 410.224.0667 Champion Realty, Inc.
The Davis Resnick Group has been assisting distressed homeowners since 2007 with options to foreclosure. Davis Resnick closes better than 90% of all short sales representing sellers.
When Experience Matters Most, Count on The DavisResnick Group.
Comments(2)