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Can I Do a Short Sale Without A Real Estate Agent?

By Rob Magnotta

Real Estate Agent with Huntington Beach, Newport Beach, Seal Beach, Irvine REALTOR

October 07, 2010 05:41 PM

Can I Do A Short Sale Without a Real Estate Agent?

I got this question today, and my first reaction was, "Why would you want to?"

I'll get into the technicalities of this answer in a second, but here's what struck me. After speaking with this lady for a while, I came to find out that she was concerned about the commission. She was unaware that in a Short Sale, the seller does not pay the commission. I asked her who gave her that information, and...

wait for it...

Her FRIEND, who has a real estate license told her!
"Did you tell you friend that it was going to be a Short Sale and not an equity sale?" I said.
"Oh yes, I told him. But he said I'd still have to pay the commission."

When I woke up, I had a bump on the back of my head. Luckily, the nice lady was still there. (okay, okay, I didn't pass out, but I did feel light-headed!!!).

I probed further to try and find out what other bad advice her friend had given her, and it was scary!
By the way, Buyers and Sellers who are reading this, unless you are CERTAIN that your friend is a "Successful" "Full Time" Realtor, you should seriously consider finding someone who is!!!!
This is not a day at the beach, folks, this is very difficult, time consuming, constantly evolving, complicated process that even the best Realtors can struggle with at times. And while you like your friend (or a family member for that matter), your friend (or family member) may not be the best person for the job. I know, I know, "but he's/she's a really great person". Probably true. But being a great person doesn't equal being able to get a short sale closed.

Okay, back to the story. After the discussion, I felt good that I had at least clarified several things she didn't understand. She still wanted to do the short sale by herself (go figure), but I told her she could call me with questions.

Now, in order to do a short sale without an agent or REALTOR, which I strongly suggest you don't do, you have to list your home for sale... aka, For Sale By Owner. In CA, you have mandatory disclosures that have to be made to the potential buyer, and you have to know what those are and how to correctly fill them in. You have to stay in contact with your lender(s) as well as with the buyer, and potentially, the buyers' agent. You may have to open up escrow at a certain point, order title information, order Natural Hazard Disclosures, etc., and coordinate all this with the dates and deadlines on the Approval Letter.

That's a brief overview of what you would need to do, and after reading it, I don't want to do it anymore! (Just kidding, I joke from time to time)

Seriously, this is a major event, and one that is tough to manage. I do NOT recommend taking on this task without a very experienced Short Sale agent. No matter what city or what state your in, find a Realtor who specializes in these types of transactions. You'll be glad you did!

**** UPDATE - I just got off the phone with one of the big lenders (very big). According to the person I spoke with, they would allow a seller to do their own short sale, although they would recommend against it!!! They also stated that very few people actually attempt this, and it has "not gone well". ***

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Randal Jenkins

Coldwell Banker F I Gray and Sons Residential, Inc. - New Port Richey, FL

My response is... You do not need a realtor for a short sale. You need a realtor to sell the house. The short sale should be done by a short sale specialist. The fees for this are going down all the time. A good short sale expert is working a hundred files or more and can work a lot more effectively and for less than you would expect.

I work with a SS specialist that charges $250. It would be hard to beat that price.

Oct 10, 2010 03:21 AM

Anonymous

Most lenders require the home be listed with a Realestate Agent or handled through a realestate attorney. Consumers going through a shortsale need an Agent or Attorney that is experienced in this arena PERIOD!

Oct 10, 2010 06:26 AM

#141

Monica Atherton

eXp Realty - Georgetown, TX

Your Georgetown Real Estate Gal

How scary! I hope you will be waiting in the wings for the seller when they realize it isn't going to be a cake walk!

Oct 10, 2010 06:37 AM

Effie Aultman

Coastal Realty Group - Cape San Blas, FL

I learn so much from these blogs, and just when you think you have herd it all one like this posts and just blows you away. I can't imagine someone doing a short sale without help....Crazy!

Oct 10, 2010 08:07 AM

Kathie Burby

Coldwell Banker Mother Lode Real Estate - Sonora, CA

REALTOR, SFR, Tuolumne County Real Estate Guide

So she is was misinformed and given the correct information she still wants to sell on her own. That is one brave lady! You didn't even mention the marketing and advertising needed to get noticed in this market. I assume she doesn't have a job because she will need lots of time to deal with the different parties involved. You could get this listing if you stay in touch, I doubt she will be able to handle all the details herself.

Oct 10, 2010 12:57 PM

Zach Entwistle

Keller Williams Tacoma - Tacoma, WA

If someone as that much get up and go, I'm really surprised they feel behind on the mortgage in the first place. Usually it's either something major in their life is taking all their time (aka a major illness or death) or they are not motivated. Either way, things don't line up.

Oct 10, 2010 01:14 PM

Ron Nedd

Charles Rutenberg Realty, Inc. - Dunedin, FL

I've also heard that removing your own appendix isn't all that hard, especially if you've had enough to drink beforehand so you don't feel anything...

Oct 10, 2010 03:22 PM

Michael Simcock

Coldwell Banker (Elk Grove, CA) - Elk Grove, CA

Elk Grove, CA Realtor 916 425-1084

Can you imagine your doctor would work for free and your response is....."No, I think I will do it myself"

Sounds insane to me that anyone would pass up help (free help) in a manner like this.

This is one of the things that I love about our country. We can choose many paths, even if it is a dumb one.

Oct 10, 2010 03:56 PM

Michael Simcock

Coldwell Banker (Elk Grove, CA) - Elk Grove, CA

Elk Grove, CA Realtor 916 425-1084

Can you imagine your doctor would work for free and your response is....."No, I think I will do it myself"

Sounds insane to me that anyone would pass up help (free help) in a manner like this.

This is one of the things that I love about our country. We can choose many paths, even if it is a dumb one.

Oct 10, 2010 03:56 PM

Rob Magnotta

Huntington Beach, Newport Beach, Seal Beach, Irvine REALTOR - Huntington Beach, CA

Huntington Beach & Newport Beach Coastal Specialist

Hey Michael - You're point is well made. I'm pretty sure my doctor wouldn't allow me to back in the office!

Oct 10, 2010 04:06 PM

Rob Magnotta

Huntington Beach, Newport Beach, Seal Beach, Irvine REALTOR - Huntington Beach, CA

Huntington Beach & Newport Beach Coastal Specialist

Hi Randal - Your suggestion for a short sale negotiator isn't bad. I think it's like having a TC, it's a question of time. It's not like submitting a tax return, some pay stubs, and a bank statement is rocket science. If an agent has the time, great. If not, they paying $250 for someone else to do it seems reasonable.

Oct 10, 2010 04:09 PM

Anonymous

KathieSearls

FISBO short sales indeed scarey! We as ShortSale Realtors want the process with lenders speeded up not slowed down by FISBO shortsales who don't know what they are doing. By lenders having to look at incomplete short sale packages slows the process down. Chose a Realtor who works full time and is experienced in shortsales it will make the process so much better and keep the buyer.

Oct 11, 2010 02:26 AM

#151

Greg Shepherd

eXp Realty - Allen, TX

Greg Shepherd

I agree with the original statement "why would they (a FSBO) want to" and comment #3 about "so much information out there".

Why would anybody want to do a short sale without consider the possibility that the bank may not have the right to the home owners loan? Have you not been seeing the media in the past week about "robo signing?".

My process should be used if an equity sale is not possible and before a short sale. Its free, no obligation and what would you as a listing agent prefer? Dealing with the bank on a short sale or selling a free and clear house?

www.shortsalekiller.com

Greg S

Oct 11, 2010 02:30 AM

Anonymous

I'm amazed that a lender would even allow a home owner to handle their own short sale. I have a listing that is under contract pending the lender approval. The lender, a major player, would not allow the owner to handle the sale on their own and they will not allow a friend or relative to handle it either. It had to be arms length.

Surprisingly this lender has been extremely cooperative and communicates well with me. On the other hand I have semi panicking sellers. Understandably, they are up against a financial wall, they are disrupting their family by having to move, change schools, job loss, etc.

Selling real estate is not a cake walk in the first place, and we all know why. But to try to sell your property short - that's scary. Halloween is coming up isn't it.

Oct 11, 2010 05:39 AM

#153

Randy Poll

Greenridge Realty Inc. - Newaygo, MI

The only reason for a seller to do any sale themselves is to save a commission (although statistics don't support the fact that they actually save money), since there is no commission being paid by the seller, why indeed, would they want to attempt it themselves, even if they could. I have never personally heard of a bank that would allow them too anyway. In every case I have come across, at least in my area, they require the property to be listed and a copy of the listing agreement to be provided. It reminds me of the commercial where the guy is on the phone with the surgeon, and is prepared to do surgery on himself...crazy, to be sure, but not any more ludicrous than trying to do your own short sale. As far as I'm concerned, most agents shouldn't even attempt them without professional help let alone the home owner. Great post Rob!

Oct 11, 2010 09:33 AM

Anonymous

Kat

Yeah the HAFA program REQUIRES the home to be listed with an AGENT and several lenders have told me that they will not consider short sales unless they are listed by a properly licensed agent. I think the lady that is trying to do it herself IS the part time agent pumping you for information to do it herself, again its pretty silly....

Oct 11, 2010 12:34 PM

#155

Anonymous

With the "rules of the game" changing so often, you need a Realtor with experience.

Oct 12, 2010 02:58 AM

#156

The Hollinden Team

EXP Realty - Louisville, KY

Serving the Greater Louisville area

Wouldn't you love to have the buyer and cross sale with a FSBO doing his own short sale? Talk about disaster! I think most of us are experienced enough to walk away from such a situation.

Oct 13, 2010 08:22 AM

Deborah Nance

Orange County, Corona, Riverside, Los Angeles - Corona, CA

Southern California , Reverse Mortgage Specialist

Great post!

Oct 14, 2010 03:24 PM

Leah Stapleton

Century 21 M&M and Associates - Berkeley, CA

Berkeley Closer, Bay Area Real Estate

What is the alternative for a FSBO Short Sale gone wrong? Would the lender be nice enough to allow the seller to contact a Realtor? I don't think so. Or would the lender just foreclosure. Most likely. I am glad this person continued to ask questions to hear how she could help herself and thanks for educating her.

Jul 25, 2011 11:35 AM