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What Hurdles Do YOU Have to Clear in a Short Sale

By
Real Estate Agent with eXp Realty of California, Inc. CA DRE #01490977

Short sale home for saleShort sales are all the buzz in the real estate world these days, for two reasons. One, there are lots of them, with more coming on the market every day. And two, buyers seem to have a keen interest in buying them as they perceive that they represent a good deal. Not necessarily so, but perception is so often heeded rather than reality.

Agents AND buyers - do you know what hurdles you have to clear in a short sale?

There are lots of hurdles to overcome in the short sale market, or hoops you will have to jump through – this article is about those hurdles so you will understand what you are up against, not to deter you from considering them.

But awareness and education in the real estate biz for consumers AND agents is critical in order to make the right decision. What I have to share with you may vary in your particular market, but there seem to be a fair number of similarities no matter when you go.

GAINING ACCESS – sometimes easy, sometimes not. Sometimes locks on doors get changed without notice; combo boxes are on doors but no codes are listed in the MLS; agents do not return calls, keys don’t work; keys are removed from the lockbox but no one is told; home may have tenants who will not cooperate with showings. Just because you are working with an agent does NOT mean it will be any easier – we have our own frustrations with these types of sales

MoneyPRICING – list prices suggest a great deal but in reality the bank will likely only accept much more based on an appraisal; the low price is to encourage interest and multiple offers. Are you REALLY getting a great deal? Unlikely. Your agent will be a valuable reource, but even the best information may not satisfy the bank.

COMPETITION – everyone wants a deal and many short sales because of their pricing get multiple offers – 5, 10 or more. What chance is there that YOUR offer will be the best, or even get reviewed by the bank? Some banks will only review offers one by one, rather than reviewing ALL offers. And they don’t always counter-offer other than at the full price they want. Your agent can inquire about the status of the listing, the progress so far, and any other details that may help you make the right decision.

LACK OF COMMUNICATION – buyer agents often can’t get in touch with the listing agent; the banks often are non-communicative for days or weeks and the listing agent can’t find out what is going on; buyers can’t find out from their agents the status of the offer because status is not known. As an agent dealing with this sort of deal you may need to be particularly persistent.

BUYING THE HOME "AS IS" – in many cases the short sale home is being sold as is – are you ready to do that? Some homes are in bad shape, have been trashed, are missing appliances and fixtures, and worse. A home inspection as part of your due diligence is essential, but the bank will likely NOT be willing to do any repairs.

What hoops do you have to jump through?EMOTIONAL STUFF – how patient ARE you? What is your frustration level? How long can you wait to get an answer about your offer?  Are you ready to deal with the reality that you may NEVER get a response? Agent s - you will find your patiences tested as well.

TIMING – how quickly do you NEED or WANT to move? Can you really want for several months or do you need to move soon because of a transfer, your rental coming to an end, etc.

Read also: Buying a Short Sale

These are some of the major hurdles you may have to overcome to successfully navigate a short sale. It MAY be worth it. But be aware it will NOT be easy.
 
 
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If you need additional information or have questions about the housing market in general, please contact me by phone or text message at (760) 840-1360 or email me at JDowler@remax.net.

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Posted by

Jeff Dowler, CRS
Certified Residential Specialist / Realtor®


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Comments (28)

Jeff Dowler, CRS
eXp Realty of California, Inc. - Carlsbad, CA
The Southern California Relocation Dude

LIsa - well, you gotta get your feet wet somehow. What is so difficult is that even when you get offers youoften cannot get the response needed to close the deal. I think establishing a good relationship with the right people at the bank will be critical. Good luck. 

Jeff 

Mar 02, 2008 02:15 AM
Jeff Dowler, CRS
eXp Realty of California, Inc. - Carlsbad, CA
The Southern California Relocation Dude

Sally - well that IS the problem. A LOT of patience and the ability to wait is essential. And many buyers will not or cannot do that (understandably). And there is no guarantee it will end up in closing.

Jeff 

Mar 02, 2008 02:17 AM
Jeff Dowler, CRS
eXp Realty of California, Inc. - Carlsbad, CA
The Southern California Relocation Dude

Steve - they just seem to be a moving target. You never know what is going to happen, when or if you will here, how long it will take, etc. Thanks for your thoughts.

Jeff 

Mar 02, 2008 03:04 AM
Mike Mueller
Tech and Social Media Consultant - Walnut Creek, CA

Jeff - Good points almost all.  I'm confused on the first one.

"Lenders change locks on doors without notice to agents"

Correct me if I'm wrong but on a short sale - the homeowner is still in control of the house - the bank has not yet foreclosed and they have no right to change locks. The signage, the lockbox, and the listing are all between the homeowner and the Listing Agent.  The bank is a passive participant at this point.

When the property goes REO - then you point is right on.  Am I confused?

 

 

Mar 02, 2008 05:46 AM
Jeff Dowler, CRS
eXp Realty of California, Inc. - Carlsbad, CA
The Southern California Relocation Dude

Mike - well it's a good question, and I have never run into this until yesterday. But the bank changed the locks on a house I was trying to preview (not the agent) they were in the foreclosure process but the home has NOT been foreclosed yet. This is not common as far as I know (will update the post) and I thought it very odd.

Jeff 

Mar 02, 2008 07:16 AM
Jeff Dowler, CRS
eXp Realty of California, Inc. - Carlsbad, CA
The Southern California Relocation Dude

Linda - Thanks! Those ARE the frustrations that we and the clients all experience. It just does not make sense sometimes. And the buyers and the sellers are the ones that really get left out in the cold.

Jeff 

Mar 02, 2008 08:34 AM
Betsy Byersmith
ReMax Central Group - Sylvania, OH
Realtor, GRI, CRS Toledo, Ohio
This has to be one of the most frustrating part of my business...You have a buyer for a home and you can't sell it to them!!! UGGHH
Mar 02, 2008 01:10 PM
Lynda Eisenmann
Preferred Home Brokers - Brea, CA
Broker Associate ,CRS,GRI,SRES, Brea,CA, Orange Co

Hi Jeff,

Well done. For most consumers it's patience  (that you talked about) that's needed most when it comes to short sales. It's like the "wild wild west" in real estate, and at times it seems like anything goes when it comes to short sales.

Mar 02, 2008 02:48 PM
Holly Galligan
Coldwell Banker Sky Ridge Realty - Lake Arrowhead, CA

Jeff,

I have successfully represented a buyer in a short sale, but currently have a condo listed. There are 2 mortgages and the bank (Ocwen) transfers me to India everytime! If someone knows of a good contact #, I'd love to have it. What happens to the 2nd??

Thanks for the great info! Love that San Diego weather. We get a ton of visitors from your neck of the woods!

Holly Galligan, Realtor ~ Lake Arrowhead, CA

Mar 02, 2008 04:36 PM
Kay Van Kampen
RE/MAX Broker, RE/MAX - Springfield, MO
Realtor®, Springfield Mo Real Estate
Jeff, I have two homes on the market right now that are short sales and I'm frustrated that neither one is being shown.  They are $10,000 under priced.  I'm checking with the bank today to see if I can drop them more.
Mar 02, 2008 11:24 PM
Shannon Whitley
RE/MAX OAK CREST REALTY - Plymouth, IN
RE/MAX OAK CREST REALTY
short sale fun fun, buyers sometimes don't understand that sometimes lendors take awhile to respond to an offer. Some buyers think when they hear short sale bank is willing to take any price maybe 80,000 less than asking. Short sales are not fun, some close and some don't
Mar 03, 2008 07:39 AM
Kristal Kraft
Novella Real Estate - Denver, CO
Selling Metro Denver Real Estate - 303-589-2022

Hi Jeff,

 This is a great post for consumers in need to read and understand.  So many times they think the short sale is going to be, well short.

It's many things, but short is not one of them!  (time wise short)

kk 

Mar 04, 2008 03:14 PM
Jeff Dowler, CRS
eXp Realty of California, Inc. - Carlsbad, CA
The Southern California Relocation Dude

Betsy - well that is so true. I think they are frustrating for everyone involved. And it is not improving from my perspective.

Jeff 

Mar 04, 2008 05:22 PM
Jeff Dowler, CRS
eXp Realty of California, Inc. - Carlsbad, CA
The Southern California Relocation Dude

Lynda - the stories we keep hearing are pretty consistent regarding the timing, frustrations and limited success. Seems that there are more buyers who are starting to shy away given the problems. I keep hearing that many short sales are not even being shown.

Jeff 

Mar 04, 2008 05:24 PM
Jeff Dowler, CRS
eXp Realty of California, Inc. - Carlsbad, CA
The Southern California Relocation Dude

Holly - well, wish I could help. It's bad enough when there is just a 1st, but the 2nd can complicate it even more. Even when the SS has been approved it seems to take an inordinate amount of time. Wish I had some other thoughts for you - good luck.

Jeff 

Mar 04, 2008 05:26 PM
Jeff Dowler, CRS
eXp Realty of California, Inc. - Carlsbad, CA
The Southern California Relocation Dude

Kay - I wonder if more buyers are starting to shy away from these listings. I have been hearing that seems to be the case from other agents out here. NOt sure what is worse - having no showing, or buyers with offers but no response.

Jeff 

Mar 04, 2008 05:28 PM
Jeff Dowler, CRS
eXp Realty of California, Inc. - Carlsbad, CA
The Southern California Relocation Dude

Shannon - well all we can do is provide the best information and advice possible to buyers so they understand the risks, and can make the right decision. But even when you share these stories some think it won't be the same in their case (just human nature, I think). And of course it usually is.

Jeff 

Mar 04, 2008 05:30 PM
Jeff Dowler, CRS
eXp Realty of California, Inc. - Carlsbad, CA
The Southern California Relocation Dude

KK - YOu are so right. I wrote a post a long time ago about "when is a short sale not a short sale." The answer seems to be always. But there are folks who are not informed and really do think it means a rapid closing. NOT.

Thanks for visiting. Have fun with your March 19 event.

Jeff 

Mar 04, 2008 05:32 PM
Neal Bloom
Brokered by eXp Realty LLC - Weston, FL
Realtor CRS-Weston FL Real Estate

Jeff,

Since I have experienced the positive side of short sales I believe by telling the buyer up front and disclosing that they are not guaranteed to be accepted or close on time then they won't be so upset if it doesn't happen. The biggest issue is tying up escrow for 30-90 days and having to wait for the unknown answer.

Mar 04, 2008 10:45 PM
Jeff Dowler, CRS
eXp Realty of California, Inc. - Carlsbad, CA
The Southern California Relocation Dude

Neal - well you are one of the few I know who have had sucess. Your advice is well taken. I always caution buyers about the prospect of a long time to get an answer, and perhaps none at all. It just took me 2 weeks to get an approval on a short sale that had previoulsy been approved at the same number.

Jeff 

Mar 08, 2008 02:46 PM