Beware of Short Sale Surprises

Real Estate Agent with Integrity Real Estate Group

VarealestatetalkIn a market as we currently have in the DC Metro area it is likely you will have buyers that fall in love with a home that is listed as a "short sale."   In most cases there won't be any problems with getting the property to the closing table.  However the value of the business relationships that we develop as Realtors® can help immensely in keeping  a "short sale" from becoming a nightmare for your buyers.

Unfortunately some sellers in a short sale situation may not have been 100% upfront with their agent on how much they owe on the property.  Even as a buyer's agent checking the previous sales and tax records doesn't give you an idea of what they may have done with their financing after the sale. 

Recently I had buyer's who were seriously considering writing an offer on a nice home in Alexandria.  I spoke with the agent to clarify if the sellers had worked out everything with the bank and would they be able to come to the table with the money needed or have the appropriate letters from the bank that the amount owed would be written off.  They assured me everything was taken care of.

After a couple of conversations I decided to call one of the title companies that I work with on a regular basis and ask if they would do a pre-contract title search for me on the property.  They readily agreed and what they found blew us away.  The sellers had only told their agent about two loans-it turned out they had four loans on the property.  Instead of being short 15K they were short 45K.  Now it isn't any of my business how they got themselves into this very unfortunate situation but it is my job to keep my buyers from walking blindly into this mess.

I knew right away that this was a sale that would not go well.  In fact we might have gotten 30 days down the road, completed and paid for a home inspection and who knows what else, if I hadn't made the call to the title company before writing the contract.  This is just another reason to keep your business relationships strong in our current market.  It will save a lot potential headaches for you as the agent and heartache for the buyer when you find out the home you want to buy is in far worse financial condition than you know.

My clients made the decision to pass on this house. 

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If you are interested in learning more about the Northern Virginia Real Estate market including Alexandria, Arlington, Fairfax and Prince William Counties give Cindy Jones and Integrity Real Estate Group a call at 703-346-2213.

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Integrity Real Estate Group
Real People*Real Life*Real Estate

Licensed in the Commonwealth of Virginia




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delete me delete me
delete me - Dixon, CA
Great catch...those title people and the relationships we have with them are totally priceless...that is a major win for you.  Congratulations.
Sep 15, 2007 05:01 AM #1
Irene Morales Ward
REMAX Distinctive Real Estate, Inc. - Stafford, VA
Realtor - e-Pro - Northern Virginia Real Estate

Cindy, that is absolutely priceless information for agents jumping into the Foreclosure and Short Sale arena.  It's sort of been thrust upon a lot of us and without carefully watching out for not only our clients, but also ourselves, everyone could come out losing!  Not only did you have 4 lenders to contend with but you can bet your bottom dollar that even if it would have come close to everyone agreeing (highly unlikely), you would have been the first one cut out of the deal. 

Lenders are notorious for "changing" their minds on commissions and even go as far as to refuse to pay certain expenses on the HUD-1...on settlement day!  Sounds like a good situation to implement your Buyer's Broker Agreement so that at least the buyer knows ahead of time that you expect to be paid.

GREAT post and very, very timely.  Buyer AND Broker Beware...

Sep 15, 2007 11:52 AM #2
James Downing - Metro DC Houses Team REALTORS®, CRS, GRI, ABR,MRP, MilRes
Real Living | At Home - Washington, DC
When Looking to Buy or Sell - Make the Right Move

Cindy - GREAT post and great catch on your part.  I almost had a short sale; but my buyer needed a sure thing quick and didn't have time to wait around for banks to  make decisions.

Thanks for the advice!

Sep 15, 2007 01:34 PM #3
Patricia Kennedy
RLAH Real Estate - Washington, DC
Home in the Capital
Yikes!  Your buyers were lucky to have you representing them!  And it's so good that you picked it up early in the process.  Good work!  Good post!
Sep 16, 2007 03:16 PM #4
Al Maxwell
Keller Williams - Marietta, GA
Real Estate Agent

Excellent post, Cindy. Short Sales are just a step away from foreclosure, and you have to really check into all of the things that may go wrong. Thanks..

Sep 17, 2007 12:43 AM #5
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Cindy Jones

Pentagon, Fort Belvoir & Quantico Real Estate News
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