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Short Sales: For Buyer's Agents

By Wendy Rulnick

Real Estate Broker/Owner with Rulnick Realty, Inc.

March 12, 2008 10:18 AM

Are you the selling agent in a Short Sale market? Arm yourself with information for a successful transaction:

1. Prepare your buyer by going over steps in Buying Short Sales.

2. Ask the listing agent if he has gathered the information necessary to submit the Short Sale package, including: letter of authorization, financial statement, recent pay stub or last quarter profit and loss, recent bank statement, last year's tax returns, hardship letter, and payoff if more than one lender. If the listing agent has not already done so, prepare the buyer for a longer wait. I would also ask what the hardship is. If the listing agent will divulge that information, it may assist you in determining whether it would be a viable short sale situation. The hardship should be loss of income, medical, divorce, etc. where they might be a reasonable expectation for approval by the lender.

3. Decide with the buyer whether to make the contract effective date, depending on your board of Realtors, the date the seller signs the contract, or the date the offer is finally approved by the seller's lender. The contract effective date is normally the trigger from which other actions are based. For example, if it is customary in your market to conduct inspections within two weeks, your buyer may wish to wait for bank approval before proceeding. Conversely, if the buyer conducts inspections early, that shows strong intent to complete the transaction.

4. Advise the buyer regarding potential valuations of the Short Sale property by the lender. If the buyer is going to make an unreasonable offer that you know may not be approved after several months of waiting, it is better to inform him at the beginning. Look at the property in the eyes of an appraiser. If recent comparable sales don't come close to justifying the buyer's offer, this may not be a transaction worth pursuing, for you, the buyer or the seller.

5. Once the contract is signed by the seller, follow up gently with the listing agent. A call every two weeks to check on the status of the offer with the lender should be enough of a reminder, and should satisfy your buyer's anxiety during the long wait toward approval.

Wendy Rulnick, Broker, CRP, CRS, GRI, ABR Rulnick Realty, Inc.

Specializing in SHORT SALES and FORECLOSURES on the Emerald Coast of Florida: Destin, Sandestin, Santa Rosa Beach, Blue Mountain Beach, Dune Allen, Watercolor, Rosemary Beach, Seaside, Niceville, Bluewater Bay, Freeport, Crestview, Navarre, Fort Walton Beach, Mary Esther, Shalimar and vicinity. Call 1-877-487-9639.

www.ShortSaleForeclosureHelp.com

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Konnie Mac McCarthy

MacNificent Properties, LLC - Cobb Island, MD

Broker/Owner - VA & MD "Time To Get A Move On!"

I have had nothing but a bad experiences with short sales up here..our association has finally started making agents disclose the degree to which the short sale has been approved, to help us poor buyers agents out...

Mar 12, 2008 10:30 AM

Wendy Rulnick

Rulnick Realty, Inc. - Destin, FL

"It's Wendy... It's Sold!"

Konnie, I understand. It is hard to control the listing agent. I am primarily a short sale listing agent, but if I were the buyer's agent, I would certainly be concerned about what the listing agent was doing. That's why I wrote this blog entry. Thank you for commenting.

Mar 12, 2008 10:33 AM

Sharon Simms

Coastal Properties Group International - Christie's International - Saint Petersburg, FL

St. Petersburg FL - CRS CIPS CLHMS RSPS

Wendy - I've enjoyed reading about short sales - heard about you through Patricia Kennedy - and wonder if you're going to discuss other offers that come in before the lender's acceptance. In our market it seems as if each listing agent handles things a different way.

Mar 14, 2008 11:58 AM

Wendy Rulnick

Rulnick Realty, Inc. - Destin, FL

"It's Wendy... It's Sold!"

Hi Sharon, Thank you for enjoying! I think it is a quandary regarding how to handle additional offers. My board has no specific rule. I don't think one can argue that the contract is betweent the buyer and the seller, not the buyer and the bank. It is frustrating, however. to have a buyer back out after three months of taking the property off the market and finally getting an approval. Those are the cases that support the argument of marketing for back-up offers. Wendy

Mar 15, 2008 03:55 AM

Sharon Simms

Coastal Properties Group International - Christie's International - Saint Petersburg, FL

St. Petersburg FL - CRS CIPS CLHMS RSPS

Wendy - if the property is off the market, I agree with you. Here, though (unlike selling a foreclosure), it isn't taken off the market and additional offers are solicited and encouraged - so the buyer can be "on hold" for 4 months, only to find someone else at that point makes a winning offer. It would be nice to have standardized ground rules.

Mar 15, 2008 10:36 AM

Wendy Rulnick

Rulnick Realty, Inc. - Destin, FL

"It's Wendy... It's Sold!"

Sharon, Yes, I am encountering different stances in my Association of Realtors. Some agents are leaving properties on the market without disclosing there is an offer submitted. I had a seller ask me today to leave her listing active, even though we have a signed short offer that's been at the bank for four weeks. I have just reactivated it, with the remarks: "Contingency contract. Short sale offer submitted. Accepting back-up offers." My board, I believe, has a technical rule that 72-hour right of refusal offers can be left active, as long as contingency contract is stipulated in the first sentence of the remarks. I have been told, as well, that the contingency does not have to be specified, but if it is not a 72-hour right of refusal, the agent will be required to place the property under deposit if this is reported. I feel I have been above-board following this seller's request. We'll see what happens. I will write about this in-depth in a future blog. I have had a couple of short sales - after finally getting approval three months later- had buyers default or back-out or trump up a reason to not buy the property. All the time, the property being "pending", losing marketing time for the seller by a potentially insincere buyer. It is a difficult situation.

Mar 16, 2008 03:35 AM

Debbie Holmes

John L. Scott - Boise, ID

Gets the job done!

Also make sure the house doesn't have like 10 offers before you show it to your client. I just lost a client because of that.

Mar 16, 2008 03:38 AM

Wendy Rulnick

Rulnick Realty, Inc. - Destin, FL

"It's Wendy... It's Sold!"

Debbie, That is an excellent point. I am assuming listing agents are above-board in their presenting a property as "available", but it would seem prudent to check! Wendy

Mar 16, 2008 03:42 AM

Kimberlee Morgan

Windermere Real Estate - Indian Wells, CA

I have been working with buyers and short sales! What a nightmare! Half the agents dont return calls, others dont even confirm that they have received the offer. I understand the short sale process is different but a little courtesy goes along way. I have to say on a positive note, that some agents do go above and beyone :) Best of luck to everyone!

Mar 19, 2008 07:52 AM

Wendy Rulnick

Rulnick Realty, Inc. - Destin, FL

"It's Wendy... It's Sold!"

Kimberlee, I try to keep the buyer's agent informed every step of the way. You are right, there is no excuse for lack of courtesy- and it harms the transaction.

Mar 19, 2008 10:19 AM

Anonymous

jennifer

We have a signed contact (short sale) by both sellers (husband and wife inmids of divorce) ..the listing agent NEVER submitted our offer to the bank as one the sellers now 'changed her mind' and refuses to cancel her laon modification..or even did another one..i'm not sure...the Husband does want to sell..but she wants to keep the house...but both signed our contacts on 3/37/09

I have no idea what to do but hire an attorney who wants $5000.00 just as a retainer...i am outraged at the sellers agent as he never even notifies us...we did all the owrk title search dep..etc..everything from our side is ready...

what are my options??? i really need help

Apr 28, 2009 02:31 AM

#11

Anonymous

HelluvaEngineer

Jennifer, I hate to hear about your situation. I believe my wife and I may be stuck in a very similar position. Currently I'm not sure our offer was ever presented to the bank. Any chance you can follow up and let us know how things have turned out? I'm also interested in legal options.

Jun 11, 2009 09:29 AM

#12

Wendy Rulnick

Rulnick Realty, Inc. - Destin, FL

"It's Wendy... It's Sold!"

Jennifer-

..the listing agent NEVER submitted our offer to the bank HOW DO YOU KNOW THIS?

as one the sellers now 'changed her mind' and refuses to cancel her laon modification. SOUNDS LIKE SELLER IS IN DEFAULT .or even did another one..i'm not sure...the Husband does want to sell..but she wants to keep the house...but both signed our contacts on 3/37/09 NOT GOOD

what are my options??? i really need help YOU DO NEED TO CONTACT AN ATTORNEY TO RECOUP YOUR LOSS. I would also move on to find another property.

Best of luck, sorry this happened to you.

Jun 11, 2009 11:05 AM

David Popoff

DMK Real Estate - Darien, CT

Realtor®,SRS, Green ~ Fairfield County, Ct

Wendy, I'm new to short sales and thanks for your blog, our office manager seems to think we are going to see more shortsales in the coming year....

Aug 15, 2010 11:09 PM