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Don’t You Understand the Rules of Selling a Connecticut Home as A Short Sale?

By
Real Estate Agent with Mapleridge Realty, CT 203-206-0754 REB.0759001

Don’t You Understand the Rules of Selling a Connecticut Home as A Short Sale?

That was the final statement sent to me by an agent putting an offer on one of my short sale listings. It was generated out of frustration that my clients would not accept her buyer client’s/husband’s low ball cash offer on the home and sending it forward to the bank. My clients were incensed at the low ball offer, but for the wrong reasons.

Short Sale ListingAny home being sold as a Short Sale in Connecticut will have a great number of emotions tied into the transaction. The primary emotion is over the loss of the home, and the hardship that brought them into the situation. Bad things happen to good people and part of the job we real estate agents have is to explain this to them and hope the Bank is as understanding about the situation and recognizes the misfortune as well.

The pricing of the home also creates emotions as it would be at market value and usually the home was bought for considerably more. The sellers may have failed in their attempts to get a mortgage modification and when the home is given a market price, they recognize that the new owners will have a mortgage that would be within the sellers’ ability to pay, but they are on the wrong side.

Once the sellers are onboard with the reality of what needs to be done, then it’s a matter of getting a value to the bank that has best likelihood of being accepted. Banks want to get a good deal that will close quickly and give them a reasonably good return against the outstanding mortgage. There are no guidelines as to what will be accepted, however, anything within 10% or less of market price will always have a good chance. Coming in with an offer beyond this range will hurt the sellers, as the home will be taken off the market while the offer is processed, and has a good chance of not proceeding forward if the bank counters the offer and the buyers either cannot afford the higher value, or just do not want to pay the Bank’s price.

When Banks get the appraisal done at the beginning of the process, they will then monitor the actions and offer reductions in the attempt to get the house sold.

Our job as a short sale agent in Connecticut is to market the home and get a price that will get the Banks’ acceptance and allow the sellers to move on. Taking any offer and sending it forward, just because, is not a positive and often times can cause the seller to lose the home to foreclosure as that is always the inevitable possibility with the failure to make mortgage payments.

Don’t You Understand the Rules of Selling a Connecticut Home as A Short Sale?

 

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Edward (Ed) Silva
Broker Associate

Serving Central Connecticut Sellers and Buyers

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Richie Alan Naggar
people first...then business Ran Right Realty - Riverside, CA
agent & author

Well all rules and no play make a short sale a dull boy....

Dec 29, 2013 11:16 PM
Eve Alexander
Buyers Broker of Florida - Tampa, FL
Exclusively Representing ONLY Tampa Home Buyers

Yes, unfortunately, I understand short sales too well. At one time 68% of homes sold in central florida were short sales.

I have found that many banks want more than market value...and I have had a couple that wanted more than their own BPO....and the "value" of the BPO is only as good as the person who does them.

My point is that buyers assume that because it is a short sale, that it has to be a bargain...maybe and maybe not.

Eve in Orlando

Dec 29, 2013 11:44 PM
Than Maynard
Coldwell Banker Heart of Oklahoma - Purcell, OK
Broker - Licensed to List & Sell - 405-990-8862

I have had several companies (SS specialists and REO companies) stated that I should get ANY offer submitted as early as possible, so that the SS process can be started. Even a lowball offer, otherwise the process isn't started.

Their claim is getting the original lowball offer will shave months off the closing of a legit offer. Sounds pretty stupid to me that they know this and don't correct it.

Dec 30, 2013 12:26 AM
George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Ed I love it when a conversation starts off that way.  Yes I understand, but do you really understand :)

Dec 30, 2013 12:27 AM
Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

You tell 'em.

You are, of course, quite correct.  Banks can be arbitrary, difficult to contact, etc., but they are NOT stupid.

 

Dec 30, 2013 04:22 AM
Christie Lane Craven
Blackwell Real Estate - Odenton, MD
Your Anne Arundel County Agent

I've been there as well.  I advised my seller to counter the low ball offer and the buyer's agent did seem surprised we didn't just accept it out right and send it along.  We had had a previous offer on the property that the buyer backed out of because the bank took too long, so I knew they wouldn't take anything near the low amount offered and I too felt it was a detriment to my seller to take the house off of the market while the buyer and bank went sloooowly back and forth and if the buyer wasn't willing to come up at all, I wanted to know up front.  Once we had a reasonably priced offer to send to the bank, that one closed fairly quickly and with that same buyer that lowballed in the beginning.  

Dec 30, 2013 04:23 AM
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher
Yeah each state is different and even in New York, the boroughs tend to each have a different culture--whether legal or social. Have a wonderful new year! Laura
Dec 30, 2013 04:35 AM
AJ Heidmann ~ CRS
McEnearney Associates, Inc. - Alexandria, VA
YOUR Alexandria & Arlington, VA Real Estate Expert

Ed - I had a short sale situation very similar to you earlier this year.  The buyers agent insisted that the bank would take an offer that was X% below the list price, irrespective of the exact same unit that sold next door at our list price.  Needless, the agent and her clients went looking somewhere else and a more reasonable offer came in & is settled.  I checked, the agent had 3 completed short sales under her agent number, so I suppose she was going on her wealth of knowledge...

Dec 30, 2013 06:06 AM
Christi Farrington
Dagny's Real Estate - Wilton, CT
~ Your representative in Fairfield County, CT

Ed, thanks for a fabulous post.  You said it so well; go Ed!  Banks are not going to accept a low-ball offer ........ as Lenn said, they're not stupid.

Happy New Year! 

 

Dec 30, 2013 07:08 AM
Elva Branson-Lee
Solid Source Realty GA - Atlanta, GA
CDPE - Atlanta Real Estate & Short Sale Agent

I'm with you, Ed. The seller doesn't want ot waste precious time and energy submitting what won't likely be accepted. I'm glad your sellers had a consummate short sale pro on their side.

Dec 30, 2013 07:26 AM
Ed Silva, 203-206-0754
Mapleridge Realty, CT 203-206-0754 - Waterbury, CT
Central CT Real Estate Broker Serving all equally

Richie, I don't know that these short sales can ever be considered dull. Exasperating, frustrating, confusing, distressing all fit better.

Eve, I am tending to believe it is dependent on the alignment of the stars and the outside temperature around the negotiator on any given day.

Than, after getting one or two kicked back with a counter and having the sellers go into foreclosure while they bank plays  with a too low value, I will take my chances on an offer near market.

George, don't forget the tone of condescension, that is always a positive.

Lenn, getting a short sale to completion is a challenge and there's no point to putting a reason to foreclose in their hands

Dec 30, 2013 07:34 AM
Ed Silva, 203-206-0754
Mapleridge Realty, CT 203-206-0754 - Waterbury, CT
Central CT Real Estate Broker Serving all equally

Christie, I wanted to get this buyer closer to a good number and they just wanted a bargain, and sent garbage in an email as an exit.

Laura, it is a guessing game when we start a short sale.

AJ, this agent has a reputation as an agent that just wants to close and has been known to sell their sellers cheaply to do that.

Christi, that is true, and Happy New Year to you as well.

Elva, Thank you, but common sense will always have an advantage

 

 

Dec 30, 2013 07:40 AM
Joan Whitebook
BHG The Masiello Group - Nashua, NH
Consumer Focused Real Estate Services

A lot of agents are not familiar with how short sales work.  You certainly have a lot of knowledge and your clients are lucky to have a person as yourself knowledgeable about short sales.

Dec 30, 2013 12:02 PM
Geoff ONeill
John L. Scott Medford - Medford, OR

I'm happy to take short sales from Agents who would rather not deal with this.  Every short sale is different, but cannot be closed without cooperation from all parties.

Dec 30, 2013 12:07 PM
Bill Reddington
Re/max By The Sea - Destin, FL
Destin Florida Real Estate

Sorry but there are no rules in short sales. The latest here is a lender putting a low price on a property and then countering more then the listing price. As I say nor rules!

Dec 30, 2013 01:10 PM
Ed Silva, 203-206-0754
Mapleridge Realty, CT 203-206-0754 - Waterbury, CT
Central CT Real Estate Broker Serving all equally

Joan, having been involved with them for 4 years with numerous successes, you get a feel for how to proceed.

Geoff, a seller can tell when they sit with the agent where they want to put their trust.

Bill, I agree, it comes down to caution and common sense and then you get your scenario and all is lost.

Dec 30, 2013 09:22 PM
Elizabeth Weintraub Sacramento Broker
Elizabeth Anne Weintraub, Broker - Sacramento, CA
Put 40 years of experience to work for you

I tell sellers we are looking for the best buyer, not the highest offer nor the pushiest demanding buyer, just the best buyer. The best buyer is the buyer who will do what the bank wants and pay market if necessary, and most of the time, yes, it is necessary. That's not to say a lowball buyer can't buy a short sale but I am not advising my sellers to waste time on those odds. I like the odds stacked in my favor and my seller's favor, not against us, and that's the thing self-centered lowballers refuse to comprehend, the odds for a seller.

Dec 30, 2013 11:04 PM
Aaron Hofmann
Atlanta Communities - Smyrna, GA
aka Mr. Smyrna Vinings

Clearly there is no reason to tie up a home on a low-ball offer and go through the short sale approval process to have it thrown back at you and the buyers not willing to budge. You're just starting all over again and have less time to find a real buyer.

Dec 30, 2013 11:50 PM