The number one questions I get from agents is, "How do I keep my buyer from withdrawing his/her contract in the middle of a short sale approval process?".
Well, quite simply... you can't! That is, after all, their right.
But there are some ways you can improve the odds that they will stick around. And if you can't keep them around, there are some ways to have a buyer ready to go when you do get approval.
We process short sales for agents all over the country, and some agents are bound by stricter Board rules or state law, etc. So everything I say is subject to local rules and norms. But this is a rundown of what I have seen agents do that leads to short sale success. Some may be a bit controversial, but this is about what is successful for your client. After all, the bottom line is that you represent your client and what is in your client's best interest is that the property CLOSES and they avoid the foreclosure.
So what have successful agents done?
1. Communicate, communicate, communicate. This is no joke, I've heard agents tell the buyer's agent, "look, it will be approved when its approved, quit calling." Ummm... no. Don't do that. The buyer's agent is trying their best to keep the deal together. Let them know at all reasonable times what is going on so they can inform their buyers. Informed buyers are confident buyers who stick around. When you work with us, you can forward the buyer's our mandatory emails to you, or you can even have the buyer's agent call us directly if you want!
2. Tell the truth. Sometimes the news isn't so good. Its difficult to call the buyer's agent and say, "Remember how I told you Bank of America was ready to approve your offer? Well, they lost the file, the negotiator quit, they are changing systems and they lost our file and now we have to start over from scratch." We all wish we had the magic bullet to prevent lenders from being... well... lenders! But these things happen. Successful short sales take persistence and perseverance. You have to be able to explain that to your buyer's agent but you cannot sugar-coat or flat out lie. They will find out, lose all trust in you and leave. If they leave when you tell them the truth, you can be confident that you did the right thing.
3. Constantly remind the buyers they are getting a DEAL! You did give them a deal didn't you? After all, a home's value is simply what people will pay for it. And people will pay less for a home that requires patience to close. Therefore, the home is worth less. Price accordingly and you will get buyers who are patient. Try to get full market price and you will get buyers who expect to close in 30 days or less. This point will be a bit controversial I know. It shouldn't be. Remember who your client is and what is in their best interest. You need to close. Remind the buyer's agent on the phone constantly... and I mean constantly... that they are getting a deal and they will relay that message to their buyers. i.e. "I know this is taking a long time, but what a great deal your buyer is getting. Your buyer needs to be a little patient to get such a great deal. Great deals like this don't come easily, but we'll get it done and then your buyer will have a great deal." Lay it on thick. I see the more successful agents do this all the time.
4. Recommend to the buyer's agent that they work with loan officer X. Now I know you have very little control over who the loan officer is... and often times the buyer's agent has little control over that too. But with the right pitch, you can sometimes get this to work and it pays off. One of the biggest reason buyers vacate during the short sale process is their loan officer locks in a rate, gets frustrated and tells them they need to move on. ARGH! Loan officers are likely to talk to the buyer more than the buyer's agent! Find one that understands short sales, when to lock, and how to constantly remind the buyer what a great deal they are getting, and you will close more short sales. Its a fact. And recommend it that way. "Mrs. buyer agent, this is a short sale and one of the most important things we can do to ensure a closing is make sure your buyer's loan officer understands the short sale process. I have a loan officer I can recommend if you need one." That statement can save you a ton of hassle. I see it all the time. By the way, if you need a loan officer like that that works nationally, call me.
5. Get mutliple offers. This one will be the most controversial. But its so true. Short sale listings with one offer are likely to fail. Short sale listings with multiple offers are likely to succeed. Again, board rules/state laws vary. I'm not trying to start a debate about the "right way" to list a short sale, but rather just report on what I've seen successful agents do. So here are some of the tactics that have brought success:
- Keep the listing active: Your contracts should already include language something to the effect of "offer subject to lender approval". If the lender hasn't approved, you are not under contract. Why go pending?
- Don't accept any offers: If you feel you have to go pending when your client signs an offer, don't sign it. Surprisingly, whether or not your client has signed an offer doesn't seem to matter to the lender. They will look at offers and net sheets or prelim. HUDS regardless if the offer has been "accepted" by your seller. Remember to be honest with the buyer. "Yes, you can submit an offer, but we won't be accepting an offer until we have an idea of what the lender wants". When the lender responds, then you accept an offer.
- Solicit for backups: If you HAVE to go pending, solicit for back-ups. And I mean more than just changing the status to "pending taking backups". Have an investor list? Get them to send in back up offers. Use language available to you in the description the public will see on sites like Realtor.com that tells them its a short sale and back up offers are needed, be first in line, offers often fail so gets yours in line today, etc. SEEK backups (and obviously follow state laws/board rules on this one... they vary).
Hopefully, this gives you some ideas and thoughts about how to make your short sales more successful. As always, I'm available for phone or email conversations... I love this stuff!