Buyers, is your agent prequalifying short sale listings?

By
Real Estate Agent with Realty Executives

This week I had a new client tell me about his horrific experience waiting for a short sale that he thought he had an offer on only to see that the property was a pending sale with no communication or returned phone calls from the listing agent or broker after waiting for about five months for a response.

Unbelieveable. But is it?

Most buyers in our market here in SW Riverside County who have been looking for a house for any length of time realize that it's tough getting an offer accepted and into escrow.  But wait, isn't it a buyer's market? Well, not really.  This is a conversation that many of us agents have.  What kind of market is it?  Well of course it depends on if you are a buyer, seller, investor, or looking for a place to rent.  But in any case its super important that you have an experienced agent who knows what is going on the market, can represent you in the best light possible, but most importantly who doesn't waste anyone's time. 

So what am I getting at? Well, my point is this: A buyer's agent should be prequalifying the listings before you even start to look.  Especially when it comes to short sales. 

What questions should they be asking? Well, why don't you start with a few of these: Do you have the complete package from the seller ready to be presented to the bank? What banks are they? How many banks/loans/liens are on the property? Do you have offers on the property? How many offers will you be presenting to the bank? If the seller accepts our offer, will they be willing to take the property off as an Active listing and put it into Backup status? Has the property had a bank approval previously? Has a termite inspection or any other inspections been done on the property?  Is the seller currently paying on their HOA dues? 

All of these questions are important to find out either before the property is shown or before an offer is written.  Something you as a buyer must consider is whether or not you want to waste your time on a property that the listing agent is going to keep open as an active listing and treat it like an auction or rather move on to a property where you know that after waiting for approval from the bank, your offer will be the one that is being considered.  Honestly I feel the listing agent is working for themselves and the bank rather than the seller which is the party they have the contract with when they auction the property in this manner.  Who's interest are they serving when they do this?

Its unclear to me where our MLS board stands on this issue and its a debate that is a hot topic in our market here in Temecula Valley.  I would love to hear your feedback and comments on your short sale experiences as a buyer out there.  Thank you for stopping to read my blog, I appreciate it!

Posted by

Susan Manning

Comments (5)

James Lowenstern
Castles UnlimitedĀ® - Newton, MA
Castles Unlimited. Newton MA Real Estate

The banks are not moving on these properties and they become the shadow inventory we hear about...banks are not in real estate and they know nothing about anything except grabbing tax dollars for bonuses.  Good luck ever getting a short sale to close...we get about 50% to close and we consider ourselves lucky.

Feb 10, 2010 05:38 AM
Associate Broker Falmouth MA Cape Cod Heath Coker
https://teamcoker.robertpaul.com - Falmouth, MA
Heath Coker Berkshire Hathaway HS Robert Paul Prop

Now to get the buyers to believe the prequalifier. I have told four different buyers that the bank won't respond to an offer below X. They all wrote their offer below X. None of them have the property.

Feb 10, 2010 05:42 AM
Susan Manning
Realty Executives - Temecula, CA

Finding out who the banks are ahead of time is important for this very reason.  If I hear the bank is Wells and Citi, I tell the buyer it could be a long haul.  If its Wachovia or First Franklin, I know it may be much easier. 

Feb 10, 2010 05:49 AM
Jeffrey Smith
Author of 'Realtors Guide To Short Sale Success - Eustis, FL
Short Sale Education

and the flip side is when I got an answer in 3 weeks after submission and THEN found out the buyer had already purchased another home. The agent simply said, 'oh yeah, I meant to call you and tell you."

Feb 10, 2010 12:12 PM
Susan Manning
Realty Executives - Temecula, CA

Oooh, Jeffrey that hurts!  Only three weeks?  Quite honestly that makes me question your responsibility in that situation.  Were you in constant communication with your buyer's agent? Were you calling and emailing updates on what was happening on your end as a short sale listing agent? I send updates on a weekly basis on a minimum to my agents and even backups to see who is still in the game.  Especially with my Bank of America short sales I want to know the minute they walk to determine what I need to do to get the approval quicker.  It does happen though.  Something to consider next time: maybe you could require the buyer to deposit their earnest money deposit into escrow in order to tie them to the transaction a little bit more? There's always some sort of leverage you can require if you feel you need the comfort level.  Good luck on your next one, I'm sure you'll get it closed. 

Feb 11, 2010 04:11 AM