(This is a continuation of a post I wrote about the status of today's short sale market. You may want to review Post 3 of 4 here before continuing with this one.)
Another issue to keep in mind when helping a buyer purchase a short sale is that buyer's mortgage. If they lock in their interest rate, that rate lock (typically a 30 day lock) will quite possibly expire and cost the buyer more money to extend by the time the short sale transaction goes through to completion.
So a buyer needs to be prepared for a longer than normal transaction time, a complete renegotiation of price and/or terms once the banks start the process of deciding what they'll accept, added costs of rate locks being extended or if not, then rates going up. Short sales are not for the faint of heart!
Is a short sale worth the trouble? It CAN be. Is a buyer guaranteed to get a fantastic deal when buying a short sale property? There are NO guarantees. For instance, my buyer who closed last month was counting on the $8000 tax credit. At the time, there was no word on the extension of the first time buyers' tax credit, so all we knew was that if we couldn't close by December, he would lose out on that tax credit. That money was a major advantage to him buying, so if things had delayed any further, he would have benefitted far less by buying at that time. Fortunately, the tax credit was extended and we ended up closing in a good time frame after all. But it wasn't without some last minute craziness and panic on both the seller's side and the buyer's side.
And short sales do not only apply to lower price ranges either. An agent in my office recently had a $750,000 short sale property. The owners had paid over $1 Million for it but had fallen on hard times and needed to sell. The biggest problem for them was that the $500,000 to $900,000 price range is probably our quietest segment with the least number of potential buyers. The last I heard, they had dropped their price again toward the $700,000 mark.
So the lesson here is that short sales are constantly changing. If you are a consumer (seller or buyer), make sure the agent you hire has experience in this part of our market. They should either have lots of experience in short sales or an advanced designation focusing on short sales, or both.
As an agent helping sellers with their short sale, be sure to have a game plan. Help your client gather their financial information quickly and completely. Be ready to make lots of phone calls and stay on hold for a long time. That's what it takes to speak with those who will help push things through. Do not stop at the automated voice. Try to forward through to a live person. BE POLITE. No matter how indifferent the person on the other end of the phone may sound, they will be less likely to help you if you lose your temper. They hear that reaction all day long. It has to result in them turning a deaf ear to "just another person yelling at me." If they tell you to call back in ten day, call back in three. You will likely never speak to the same person twice, so they do not know the difference. Once, I was told to call back in two weeks. I called in one week and was told that the thing I was waiting for had happened three days earlier which was a week and a half earlier than their two week estimate! So I kicked myself for not having called sooner. Persistence and patience is key. Document your conversations so you can tell future negotiators and phone answerers what you have sent and not sent... Also so that you can report to your seller, the buyer's agent and the other lien holder (if applicable) on the status of the process.
If you are a buyer's agent helping someone purchase a short sale, take some steps before ever making your offer to ensure the listing agent knows what they are doing. Be careful not to cause friction by asking the more blatant question "So how many short sales have you done?" Instead ask these questions, as suggested by the Short Sale Panelists I heard on Tuesday.
•1. Where are you in the short sale process?
•2. How many liens are on the property?
•3. What's your plan to satisfy those liens?
If the listing agent answers with intelligence, chances are greater that they will handle it properly and the transaction will go through. As a buyer's agent you are less involved in the process, but it is important to stay in touch so your client is confident that the steps are progressing as quickly as possible. One thing you might do to help...if the listing agent is having trouble getting in touch with the negotiator, sometimes it helps to have the loan originator for your buyer give the lien holder a call. This might serve to show them that your buyer is serious and there is a risk of them walking away if this transaction does not move forward.
Of course we are all at the mercy of the bank's employees who will forever be faceless, nameless beings who do not have to worry about ever meeting us or our clients. This sense of anonymity creates a thick layer of insulation which can foster slower response times from these folks. If they don't know the buyer and seller as human beings, they'll be naturally less likely to care as much about the transaction going through. Their paycheck simply requires that they put in a certain number of hours. We agents, at 100% commission, have learned to do whatever it legally takes to get a transaction pushed through. We do not get paid until the house closes. The seller is highly motivated because his credit rating and perhaps his/her family's peace of mind are at stake. The buyer is motivated because they have spent lots of time looking and picking out this house, spending money on the home inspection and appraisal, have the risk of a rate lock expiring, moving plans to coordinate which can affect their family, school starting, work at the new job, etc. So the people with the least to lose are the ones in control. Keep this in mind and adjust your attitudes accordingly and your chances of short sale success will be maximized. Best wishes to you whether you are a seller, buyer or agent!
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