WORKING WITH THE SELLER
Part One: Know Your Loan
Part Two: Don't Sell a Short Sale Short
Part Three: Stay in Touch With Your Seller
WORKING WITH THE BUYER
Part Four: Prequalify Your Buyers.
Part Five: Show Me The Money. This is another aspect of commitment. When you have a short sale listing, you want buyers that are committed. That won't walk. That love the property. That are not making offers on every other short sale in town. You don't want to have to start over, particularly when the foreclosure clock is ticking.
So make sure that your short sale offer or addendum includes a section that requires the prospective purchaser to deposit their earnest money into escrow upon acceptance of the offer from the Seller, NOT upon acceptance by the Bank, when most of the other time frames and the regular escrow period will start running. And request a bit more substantial earnest money deposit than usual. More money=more commitment.
In Hawaii, purchasers commonly offer only $1,000 as earnest money. I would require at least $5,000, if possible, in a short sale. (Remember, prices here in Hawaii are pretty high when compared to the rest of the US, so these amounts may vary by region.) If Buyers are both QUALIFIED and COMMITTED, they should not have an issue with this. If they plan on submitting multiple offers and seeing which comes in first, they usually will not be able to do this for all of them, and will not want to put in the offer on yours if you require it. Just the act of putting any money down at all is mentally more committing to a buyer than having a signed contract for months with no money down.
And while you are at it, if you can get the buyer to do inspections.. go for it! Make absolutely sure that they are aware of the potential risk, however. Many buyers will not agree to this, but you never know unless you ask. A buyer who will inspect is definitely a commited buyer, and at the very least, if they cancel for inspection reasons, you will find out sooner than later.
Read on to Part Six of my Top 10 Short Sales Best Practices or go back to Part Four .
Comments(4)