4 Biggest Mistakes Short Sale Sellers Make

By
Real Estate Broker/Owner with Mint Properties, Lic. #01871795 Lic. #01871795
https://activerain.com/droplet/qF

4 Biggest Mistakes Short Sale Sellers Make

1)      Letting the house fall apart.  Even though you are short selling your home you should not let your house fall into disrepair.  A house full of deferred maintenance is not appealing to buyers.  You can lower the price to compensate and attract a buyer, but ultimately the lender does have to approve the lowered price.   The short sale lender may not want to take a hit on the price just because you decided not to repair that leak in the roof.  Also, the buyer may be using FHA or VA financing and making those repairs could be required for the sale to go through anyway.

2)      Taking too long to present the short sale application to the bank.  Buyers are waiting for the short sale to be approved.  They have many concerns on their end as well, including when they are going to move, interest rate fluctuations, and the cheaper short sale next door that just hit the market.  Don't delay submitting your short sale package.  Ideally, you should have all material for the short sale application ready to go when you put the home on the market.

3)      Making the home difficult to be shown.  Let's face it many short sale home sellers are not happy about selling their home.  Some are angry because many efforts at a loan modification with the lender have failed.  They feel that the bank is pushing them toward losing their home.  However, making the home difficult to be shown will not help the situation.  If the bank determines that you are deliberately delaying the short sale, they will simply continue the path toward foreclosure.  A simple market twist and you may be unable to quickly get an offer that the short sale lender will accept.

4)      Waiting until the last minute to put the home on the market.  Many times sellers believe that they will work out terms with the bank and their loan modification will be approved, etc.  If you want a short sale you need to leave enough time for an agent to get an offer and present it to the bank.  I have seen more than one short sale listing fail where the sellers gave the agent two weeks or less to obtain an offer and have the short sale package presented to the lender in order to stop a foreclosure sale.  If you want a short sale you need to give your agent enough time to present it.  There are routine delays with short sales; banks lose documents and packages have to be re-faxed.  Don't wait until it is down to the wire.

If you are looking for an experienced short sale agent that can help guide you through the process, set up a consultation with me by calling (805) 878-9879

Tni LeBlanc, Mint Properties
tni@mintprop.com

  • Nothing in this article is intended to solicit listings currently under contract with another broker.  Those considering a short sale are advised to consult with their own attorney for legal advice, and their tax professional for tax advice prior to entering into a short sale listing agreement - this article does not offer legal and tax advice.

Copyright © Tni LeBlanc 2010 *4 Biggest Mistakes Short Sale Sellers Make*

Posted by

Tni LeBlanc, Broker
(805) 878-9879 mobile/text

tni@mintprop.com
www.MintProp.com
CalBRE #01871795

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Re-Blogged 5 times:

Re-Blogged By Re-Blogged At
  1. Brian Geraghty 11/20/2010 01:08 AM
  2. Tony and Suzanne Marriott, Associate Brokers 11/20/2010 01:49 AM
  3. MeLisa Minter, Realtor 11/21/2010 01:57 PM
  4. John Cochran 11/24/2010 11:06 AM
  5. Sidney Kutchuk 11/25/2010 02:14 PM
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short sale seller mistakes

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Rainmaker
52,995
Raine Spivey
REIGN REALTY - Charlotte, NC
Realtor

Helpful, and great information that is truly appreciated. Good to put out there, because many homeowners think because they've missed payments and received a Notice of Default, giving up completely is acceptable.

Nov 21, 2010 06:41 AM #40
Rainmaker
908,388
Pamela Seley
West Coast Realty Division - Murrieta, CA
Residential Real Estate Agent serving SW RivCo CA

Tni, the biggest mistake is letting the home fall apart and not keeping utilities on!  Also, a homeowner in a short sale needs to cooperate with their lender and get in all documents in a timely manner.  Those two are the biggest mistakes that a homeowner can avoid to make their short sale a success.  Also, I agree with your point about making the home available for showings.  Whether or not the lender postpones foreclosure, the homeowner and, we as the agents have no control over.  

Nov 21, 2010 08:59 AM #41
Rainer
92,374
Ellen Wright Adams
Academy Mortgage.......We are a Equal Housing Lender - Eugene, OR
LoansByEllen- Licensed in Oregon

Nice post, very much true.  #4 is the hard one....

Nov 22, 2010 04:54 AM #42
Rainmaker
130,606
Olga Diaz
COLDWELL BANKER TOMLINSON - Pullman, WA
Potter, Mng Broker, CRS, ASP, ePRO, ABR

Tni!  What a great post!  Thanks you so much for posting it.  Every point is incredibly valid.  The process itself is difficult enough without the blocks some Sellers put up.  The idea is to get it sold....even if its at this point...especially at this point.  The best effort needs to be implemented.  Great Post!!

Nov 22, 2010 03:36 PM #43
Rainer
7,056
Gilbert Alires
Realty Executives Austin - Austin, TX
It so true, I have a couple who were trying to negotiate a loan modification, it didn’t go through the bank sent it to their Foreclosure department and they set it up for auction. Now we are trying to get the paper work together for a Short sale. The Bank told them to get the paper work in ASAP this was 4 days ago. The owners think that they have until the auction date, I keep stressing to them “NO WE DON’T”. I explained to them the Bank may not stop the Auction if they don’t show they are doing their part and acting fast.
Nov 23, 2010 04:25 AM #44
Rainmaker
1,317,476
Joan Whitebook
BHG The Masiello Group - Nashua, NH
Consumer Focused Real Estate Services

This is a very important post and is full of important information for those who may find themselves in a short sale situation.

Nov 25, 2010 02:41 PM #45
Rainer
54,834
Charles D'Alessandro
Fillmore Real Estate - Brooklyn, NY

You are absolutely correct!  Thank you for this post.   Keep their homes in good repair, clean and easy to show.  Sometimes they can be their own worst enemies! But in these troubled times many of these people are having trouble keeping their lives in order,they try to hang on to hope.

 

 

Thank you for this post

Nov 28, 2010 05:51 AM #46
Rainer
16,209
Luna Petty
Unyque Financial - Pasadena, CA

This is the perfect advice for short sale sellers however many that I encounter do not care enough to keep the home together.  Some of them resent the people who are coming to look at their home and many are still bitter with the lender.  The most I can get some sellers to do is pick up the laundry before a showing...

Nov 28, 2010 03:41 PM #47
Rainer
14,417
Mary Robinson
Lenders Realty - Vista, CA

Making the home difficult to show, to me, carries more weight.  Because even if the owner puts the home up for sale later than earlier if you can't show the property it will not sell.  And you are right, the owners tend not to be really interested in selling their home.

Nov 28, 2010 07:42 PM #48
Rainer
15,254
Don J. Shead
Southwest Financial Alliance - Spokane, WA

Tni,  Amen To That.  You're right on.

Nov 29, 2010 07:49 AM #49
Rainer
286,848
Thomas McCombs
Century 21 HomeStar - Akron, OH

Sometimes it is hard to get homeowners to spend any more money or effort on a home they are going to lose one way or another.  They believe that any money they spend is just down a rat hole with no chance of getting any of it back.

They feel that the bank is not going to give them any credit for their efforts, so why even keep the insurance in place since they will not get any proceeds in case of a loss?

We have to figure out how to explain to these soon-to-be-ex-homeowners why they should not make the "mistakes" you list above.

Any ideas would be appreciated.

BTW, you write very well.

Nov 30, 2010 01:20 AM #50
Rainer
11,541
Parnell Jackson
CHICAGO HOME LOAN SHOP - Chicago, IL
CMPS, DM

Tni your first suggestion was not allowing the house to fall into disrepair.  Did you for get that the reason for the short sale was because of an economic down turn.  Most people that are losing their homes don't have the resources to keep a home in good repair.  I agree that they should keep it clean and as presentable as possible. I don't think that it is realistic to expect that they'll keep the home in good repair.

Regarding your second point, "Taking to long to present the short sale application to the bank".  I think that this problem can be overcome with education.  Educating a short sale home sellers to the benefits of short selling will greatly overcome this problem.  It comes down to the old adage, "what's in it for me".  If a short sell home seller sees a benefit they'll move through the process somewhat quicker.

Parnell

Chicago Home Loan

Dec 01, 2010 05:30 AM #51
Rainer
95,701
Bina Yajnik
Watson Realty Corp. Palm Coast, FL - Palm Coast, FL

You have explained this very nicely, hope the future sellers can read this.  Up to a certain extent listing agents can definitely help with #2.  Some of these sellers are so deep in financial trouble that they do not have any extra money to maintain their home, excellent post....

Dec 02, 2010 12:47 AM #52
Rainmaker
345,972
Anja Kerstens
Coldwell Banker Residential Brokerage - Morgan Hill, CA
GRI, CDPE, CHS, ASP, Selling Silicon Valley Real

Great article. 

In our market we see many many homeowners who are selling their home as a short sale but aren't interested in moving yet.  Living for free for months and months.  I showed a short sale where owners hadn't paid their mortgage for 1 1/2 years and the foreclosure date was postponed several times.

 

 

Dec 02, 2010 02:50 AM #53
Rainmaker
226,084
Michelle Finnamore
Toronto GTA, Alliston, Newmarket - Vaughan, ON
Preparing your property for sale

HI Tni, I follow the market in the U.S. and have really come to appreciate what it takes to sell a short sale. You really have to be ready to present a complete package in a timely manner or else you would be wasting a lot of time as a sales rep working on offers that are going nowhere. Great detailed post. Good luck with your short sellers.

Dec 02, 2010 11:51 PM #54
Rainmaker
50,400
Dustin McClure
Mossy Oak Properties Outdoor Realty - Mooresville, NC

Great info. Thanks for the post.

Dec 03, 2010 04:37 PM #55
Rainer
133,502
Kimberly A Norgard
Devlin McNiff Halstead Real Estate - East Hampton, NY

Thank you so much for the post.  I agree with you 100%.  The one that cracks me up is when the seller makes it difficult for the house to be shown.  I've come across that and it's so frustrating and counterproductive.  Also, number one stands out.  I've seen people feeling defeated and giving up on the way the house presents itself.  Thank you, again.

Dec 08, 2010 09:53 AM #57
Rainmaker
152,299
Keith Strawn
www.ExploreBeaufortRealEstate.com (Ballenger Realty) - Beaufort, SC
www.ExploreBeaufortRealEstate.com

Very nice, Tni. Informative, and incisive. Keep it up!!

Dec 10, 2010 02:10 AM #58
Rainmaker
30,111
Nick Dailey
RE/MAX Affiliates - Union, KY
RE/MAX: Northern Kentucky Real Estate - NKY MLS - Short Sale

I think we've all dealt with these at one time or another.

Dec 20, 2010 02:33 AM #59
Rainmaker
108,222
Marie-Denise Kratsios
Daniel Gale Sotheby's International Realty - Huntington, NY
Where ever you are, that's where I'll be!

And tying in with all of your points are those short sale sellers who are trying to "milk" the process for as long as they can because they are basically living rent free while the mortgage goes unpaid.  I came across another one today while I was calling on this Expired Listing.  They want to stay with their previous "Broker Who Specializes Only in Short Sales," even though the broker did absolutely nothing for theseller other than put the house on MLS.  Their "broker" did not even tell them the house was no longer on the market, but the seller wants to stay with them because she mistakenly believes, the longer the process takes, the better off she will be.  Foreclosure may be coming to them all too soon, and sadly, their credit will be severely hurt, with perhaps other repurcussions as well. 

Jan 02, 2011 09:43 AM #60
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Tni LeBlanc, Realtor®, J.D.

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