How to deal with short sale buyers as a Buyers Agent

By
Real Estate Broker/Owner with Mitch Ribak - The Real Estate Success Network

If you are a buyers agent and have a large short sale market as we do here in Melbourne Florida, you are waiting much to long when dealing with short sales.  Yes, they are a major part of our market.  However, if you can show your buyer the benefit of buying a resale or foreclosure over a short sale, you will enjoy commissions sooner than later. 

One of the main problems I see with short sales is that we may be giving the buyer false hope without realizing it.  For instance, how many of you say, "It's going to take 4 - 6 months before we have approval"?  Even though that doesn't sad bad, it's really giving the buyer false hope.  We are currently averaging 25% approval rate on short sales.  The reality is, most of these do not go through because either the bank rejects the offer, the buyer ends up not wanting to wait (and blames you) or the bank wants the seller to hold a note and the seller refuses. 

When talking to a prospective buyer this should be your conversation.

 "I understand that you have heard that short sales can be a great deal.  In reality, they are not any better deals than foreclosures and resales.  In the end, the bank is going to require you pay market value or they will not move forward with the short sale.  Here is the problem, you are going to wait 4-6 months and have a 75% chance that the offer will not be approved or that the seller is required to hold a note in which they won't. 

 I have pulled these homes, which are similar to the short sales you have inquired about both in price, size and condition and based on my experience, buying one of these homes will save you a ton of stress and frustration."

 In the end you can say this however you want.  But, if you accent the positive, that is what they are going to hear.  If nothing else, just say "You are going to wait 6 months to not get approved or the seller walking away because they are asked to hold a note.  Whether buying a short sale, foreclosure or resale, you are going to pay market value."

 This should help some of you convert your short sale customers to buyers today!  If you have any questions, please don't hesitate to ask.  Remember, it's all in the meaning we give things.  Change the meaning and you can change the outcome!

Comments (5)

Pat Champion
John Roberts Realty - Eustis, FL
Call the "CHAMPION" for all your real estate needs

You are right we as Agents do need to educate the buyer's and let them know just what it entails when purchasing a short sale.

Feb 08, 2011 03:48 AM
Randy Benefield
Trademark Property Services & Real Estate Inc., CalBRE, 01976861, 01442405 - Petaluma, CA

Mitch,

That is the opposite of my experience. The first thing is to know which bank the sellers have their loans with. If the selling price is much lower than the comps, I inform my clients the likelihood of a successful close is slip. if I have have positive experiences with certain banks and the price is within a range, I inform my buyer that there is no guarantee. Educating them as to the process and pitfalls, I have been very successful in closing deals for my buyers. On the other hand, I have a listing that have approval with both banks, the buyer walked the day we got approval. And the price was a good deal. You never know. Good luck!

Feb 08, 2011 03:55 AM
Mitch Ribak
Mitch Ribak - The Real Estate Success Network - Melbourne, FL

You are right there are times that they go smoothly and quickly.  However, in our experience here, and it really hasn't mattered which bank, most do not go through.  I currently have over 100 short sales on our sales board we are waiting on. 

One of the things you mentioned, and I didn't address in my post, was the fact that the buyer walks.  It is something I should have mentioned because that happens as often if not more than the seller walking or the bank not approving the price. 

One of the other problems is that most Realtors have no clue how to do short sales and don't list the price appropriately.  Then, as the buyers agent, trying to get your customer to understand that even though it's listed at $150k  you will need to offer $175k to get the bank to accept this is a major challenge.

All in all, I am educating my Agents to do the best they can to stay clear of short sales.  There are plenty of other homes on the market that are much cleaner and will have a positive result within 30-45 days verse waiting for 6 months or so to find out your customer didn't get the house. 

Feb 08, 2011 04:09 AM
Indera Coggins
Re/Max 100 - Dunkirk, MD

Short Sale is not the easiest and I am not sure why some agents think its as easy as a regular sale.

We really need to educate the buyers but moreso, print everything you can about short sale and give it to buyers. They do come back and do the "I didn't know that".

Feb 08, 2011 04:21 AM
Mitch Ribak
Mitch Ribak - The Real Estate Success Network - Melbourne, FL

Indera - Yes they do.  We actually have a form we have done now that up until now we just gave them.  We have decided today that we are going to have them sign it and go over it with them.

Feb 08, 2011 09:07 AM

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