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Selling Short Sales - Things that are Helpful to know

By Rochelle Venckus

Real Estate Agent with Thinque Realty ER.040035615

April 14, 2007 05:36 PM

Selling Short Sales...Things I've learned & Thought I'd Share

Short Sales don't require brain surgery, as much as time and the patience to follow-up with every time sensitive detail, on the rare ocassions, when you actually get to talk with a representative for the lender. That would be if you are the listing agent; however, let's say that you are not.

Set the Right Expectations With Your Buyers

Condition your buyers that this can be a time consuming project, but if they have more time (30 to 45 days on average) than money, it can also be very lucrative for them. An ideal example would be: if they are a few months away from the end of a lease. Planning a move around the end or beginning of a school year. Wanting to be in a neighborhood/school district that they would not be able to otherwise afford.
Run Comps, before you decide on an offering price. If there are a lot of the same "good deals" in the area and it has been a trend, you may be surprised. Too low and the bank won't go for it or too high and it may not appraise. I use 3 months preferably, due to the current market and 6 months max.
Order an O & E from the title company you use, it will show if and/or when the Election & Demand was filed. You don't want to run out of time!
Ask how many lenders have an interest in the property. Which one or will both need to agree to the short sale amount, this can really impact how long this will take to be approved.
If they have access to funds to cover their own closing costs, they will have more opportunities. Some lenders are allowing concessions for closing costs, but very few.
Inform your clients that while there might be inspection items, there usually is no money to correct them and most of these homes are being sold "as is".
Be familiar with the general costs of some common home repairs, i.e. average cost for 100 square yards of carpet installed. You don't need to be an expert, or provide an exact estimate. But remember this, for someone who has never owned a home before, they have no idea of the cost to repair or replace something and usually assume that other than painting "It will be expensive."

I hope you find this information helpful.

Rochelle Venckus~303.358.6327~ www.rochellevenckus.com

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Jim Little

Ken Meade Realty - Sun City, AZ

Your Sun City Arizona Realtor

Timely post, but what is an O and E?

Apr 15, 2007 10:08 AM

Rochelle Venckus

Thinque Realty - Wheat Ridge, CO

BROKER, REALTOR®, ABR, CNE, Metro Denver Are

An O & E (Owner and Encumbrance) is a report that gives you a brief summary of the status of record title. Usually you would order this report from the title company that you use.

This summary will allow to to see any recorded liens against the property, ownership and copies of the Deed(s) of Trust. It is also the place you would look in Colorado to see if an Election and Demand has been recorded. That is the first phase of foreclosure in Colorado with current law (soon to change July 1, 2007)starting the first day of a 45 day countdown to a foreclosure sale. It is only prior to the foreclosure sale that a "short sale" can be negotiated, because after the sale, based on current law you would now have to pay the Public Trustee and that fee usually is a combinanation of sales price, attorney's fees, daily interest, taxes, etc. The period after the sale is known in Colorado as the owner's redemption period and currently that is 75 days.

I keep saying in Colorado, because we are one of the few if not the only state(s) that still have our foreclosure sales handled by the public trustee, and I am not familiar with how other states handle it.

Apr 15, 2007 01:07 PM

Thank you, I was confused by the shorthand. Short sales and creative financing appear to be the wave of the future, every little bit helps to prepare. I work in Arizona, several things are different here.

Apr 15, 2007 05:32 PM

Rick McCullough

Alert Home Services - Denver, CO

Yes, by preparing your buyer then an Inspector can better serve your client and then they are not expecting a trouble free home,, but managable expenses that would be incurred, Especially 1st time buyers. Your Home Inspector should be able to help alleviate unfounded fears for the clients about costs of these repairs.

Apr 15, 2007 06:25 PM

Donna Oehler

Realty Executives Platinum - Palmdale, CA

A.V. Foreclosure Specialist

Good information!

Apr 24, 2007 08:17 PM

Ben Blonder

Broker/Owner, Keller Williams - Fort Collins, CO

Buyers, Sellers, Investors!

You have to "pre-negotiate" with your short sale buyer. You MUST tell them upfront everything that they need to know, especially when it comes to the Colorado Short Sale Addendum. This form allows either the buyer or the seller to cancel the Contract to Buy and Sell Real Estate, anytime up until the seller has received WRITTEN notice of Short Sale Acceptance.

This gives the seller the option to cancel a lower contract if a higher one comes in (the idea being that the seller needs the strongest offer they can get, to minimize their tax consequences if its an investment property, or just to increase the odds that the deal will get accepted by the bank because the higher offer nets the bank more money). The Short Sale Addendum also allows a buyer to have a contract on a short sale and continue to shop around while waiting for their short sale to get accepted, so they are not tied to it, and if they find something else they like before the actual Short Sale Acceptance occurs, they can cancel their contract.

DO NOT GIVE EARNEST MONEY until the Short Sale Acceptance occurs! In fact, if you havent noticed, I keep capitalizing Short Sale Acceptance. This is because I ALWAYS define that date, SSA, in additional provisions, and then I make most of the dates in the contract a certain amount of days from SSA. For instance, earnest money deadline would usually be 3 days from SSA. Inspection (NEVER HAVE YOUR BUYER GET INSPECTION BEFORE SSA), usually 10 days from SSA. Etc etc etc. I highly recommend defining SSA in the additional provisions section. If you want me to post the "legal language" to use, let me know and I will post it.

ben_blonder@yahoo.com

Jan 10, 2010 01:05 PM

Selling Short Sales - Things that are Helpful to know

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