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Had to fire a short sale client

By Jackie Nary

Real Estate Agent with Keller Williams Elite Realty

October 07, 2009 06:07 AM

I got a new listing the other day. The client hired an attorney on the east coast of Flordai after reading his blog on Active Rain. This client has a second home that he bought for his parents to live in. (5BR home) As usual in this market, it is way upside down. He has it rented, but the rent is not covering the expenses. Anyway, I met with him and his wife, went over the listing agreement and short sale issues. He met with the attorney and they came up with a game plan. The next day I met with the clients to sign all the listing documents. The attorney had his own short sale addendum and other documents to be inculded not only with the listing, but the future sale too.

I normally have a clause in my listings that allows me to be in control of the listing price and make adjustments as I see fit. He would not allow that. His attorney said we needed to start the listing at way over the value and we would drop it as time goes on. Come to find out, we were $100,000 over the most recent comparable sale. The client said we would be dropping 7% once a month. I would be February before we get to the price point we need to be at today.

I informed both the attorney and the client, that I could not sit around and wait 4 months to finally get to where we could possibly be a price point that would generate some interest, then sit for possibly another 4-6 months waiting for the bank to approve.

I am in the business of selling homes and working though the short sale process, not playing games with the lenders and the clients attorney. The bank will work off of the comps in the area to determine the value of the home. The fact that it was on the market for 4-5 months at an unrealistic asking price does not really matter.

So hard lesson learned, make sure you are dealing with a realistic seller before agreeing to the short sale. I don't get paid until I close this deal. I now have invested 9 hours of assistant time doing paperwork, listing entry, lockbox, photos, visual tour etc, now updating the listing to show terminated and I have nothing but a story to write.

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Jeremy De La Garza

Corpus Christi Realty Group - Corpus Christi, TX

Corpus Christi, TX

Good for you, we can not work every deal and must know when to decline or cancel a listing when needed. Good luck in the future, Jeremy

Oct 07, 2009 06:09 AM

Jon Budish

Resident Realty - Fort Collins, CO

They need to have their attorney sell their house for them, then everything will be perfect.

Howard Goff

Keller Williams Realty - Vancouver, WA

I will be so glad when short sales are gone.

Oct 07, 2009 06:22 AM

Satar Naghshineh

Satar - Amiri Property and Financial Services Corp. - Irvine, CA

What was the logic behind the attorney listing it over 100k? Why weren't you willing to just keep it on the market for a few months while you met your price point?

Oct 07, 2009 12:18 PM

Jackie Nary

Keller Williams Elite Realty - Bonita Springs, FL

All I could get from the attorney and the client is, "they had reasons that they could not share with me". At the reduction schedule they proposed, it would have been the end of February by the time we got to the price that we needed to be at in today's market. I don't list homes to sit on the market. I want them under contract as quickly as possible so we can get the short sale started and possibly hold a foreclosure sale date. To have a home sit on the market for months on end doesn't do anyone any good.

Oct 07, 2009 12:25 PM

Ok, I think I figuired it out. If the house is being rented, the owners want to collect as much rent as possible before doing a short sale. So it does the owners good. I would contact the sellers and see what they are trying to accomplish.

Personally I would take the listing as I don't spend any money or time on them anyway until it comes time to get the ball rolling. If anything, you can get free buyer leads. Just my opinion.

Oct 07, 2009 12:41 PM

Walter Getz

1st Choice Mortgage Resolutions - Rochester, NY

Could also be the tax ramifications he would have to pay up by doing the short sale. Remember, you said it was in investment property, it does not fall under the Federal tax protection in place for homeowners who sell their owner occupied homes. The attorney was trying to buy the man time so he wouldn't have to fork out any tax monies on the sale of the property for another year.

Doesn't sound like that pod was very well put together.....Thanks for sharing!

Oct 07, 2009 05:31 PM

Walter - Good point! However, I work with a CPA that will write off the tax consequences on an investment property as a business loss. Depending on how they hold title, it helps to counter their own personal gain.

Oct 07, 2009 06:07 PM

That could be, however then the attorney should have suggested he wait to list. Even if he went under contract quickly, what are the chances it would close this year? I don't know how the attorney gets paid, but the longer the listing, perhaps, the more the pay.

Oct 07, 2009 10:02 PM

It would be interesting to understand the logic of the attorney and the clients. I would do the same thing as the attorney suggested if I wanted to net my clients as much rent money I could. The benefit of listing it early will be to establish a market presence with systematic price reductions in order to make the short sale more prone to being accepted. In other words, the clients can show that they had their property listed for x many days and this is the best offer they could find during that time.

Anyway, as you can see, I am a problem solver where you probably just wanted to vent. Men are from Mars type of thing! ;)

Thanks for sharing.

Oct 08, 2009 09:44 AM

Wendy Rulnick

Rulnick Realty, Inc. - Destin, FL

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

Jackie - I would probably can him, too. They must agree upfront that I control the price. If not, good luck!!

Oct 08, 2009 11:00 AM

Satar. appreciate your response, however, when I list a home, I list it to sell, not to pad my clients pockets with rental income they aren't going to send to the bank. He can get that rent without being listied and taking up my time. Venus :)

Oct 08, 2009 11:21 PM

Knolly Williams

Success With Listings - Austin, TX

Great post Jackie! How have you been. Looks like you're making it happen.

This is the reason it is so critical to pre-qualify your short sale prospects first - using the Pre-Qualification Questionnaire and phone interview technique I taught you :). ALSO - make sure you have the listing agreement and short sale docs in hand BEFORE you go out to the property as we discussed in class :). You are right on - short sales take enough time as it is - you don't need ANYTHING that will add additional time and headaches to the process.

Oct 10, 2009 10:18 AM

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Jackie Nary

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