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The Short Sale Listing.....How Are Our Duties To The Seller Different?

Reblogger
Real Estate Agent with Integrity Real Estate Group

With short sales all we learned while getting our licenses or working with "traditional" sellers is off.  Keeping a buyer's agent informed on the status of the transaction and the negotiations with the lender is part of keeping them engaged in the process. 

 

Original content by Karen Fiddler, Broker/Owner BRE# 01494165

 

 

I'm working on an offer for one of my short sale listings. It started me thinking about how different I exercise my Fiduciary Duty to the seller when it's a short sale vs equity sale.

When I first got my license, the term short sale was never mentioned. The Fiduciary Duty to the seller seemed to be clearly defined in terms of activities.....those you did and those you didn't.

Do:

Do....Market the home at the best list price you can. Do....Negotiate the highest offer price you can. Do....Negotiate the repairs request and other terms to the best financial advantage of the seller.

 

Don't:

Don't....Disclose any personal information or motivation of the seller to the buyer or their agent. Don't....Encourage an offer be accepted that is too low just because it's the first one. Don't....Consider that closing at any cost is success.

Short sales are different. First of all....time is of the essence when a seller is facing a Notice of Default and/or foreclosure. They often come to us late in the process, and we need to move fast. Next, list price is often the lowest we think we can market....not the highest. Again...since we are often racing the clock, we need to get it started as fast as possible, and a low list price generates interest and offers.

Another big difference is the way we interact with the buyer and their agent. In a short sale, the seller gets no proceeds...they have nothing to gain...so working with the buyer's agent is often a open conversation about what it might take to get the transaction closed and short sale approved. With the sellers permission, this could include disclosing the reason for the hardship, lack of funds for a cash contribution, and if the short sale had been approved previously....the price and terms of that approval.

For instance in the transaction I'm working on now, I already know that a previous approval included a $10,000 cash contribution, which can come from the buyer. So the buyer needs to know this and be prepared for the same terms in a new approval. We try and reduce/eliminate that, but full disclosure helps give the proper expectations. Often the more open you are with the buyer and their agent, the better chance you have of keeping them engaged and ultimately it can create an environment where last minute hiccups can be addressed as a team.

The Fiduciary Duty to the seller is essentially about care. Care for their financial well being. In a short sale....that duty is still there, in fact it's more important than ever, but the way we perform this duty is different, in fact our actual activities could seem counter to an equity sale. In the end, we are working to ensure a close for the parties, and avoidance of foreclosure, and protection of the seller's funds.


 Karen Fiddler
Broker/Associate
The Fiddler Realty Team/eVantage Real Estate
Lic # 01494165

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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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Comments (5)

Gita Bantwal
RE/MAX Centre Realtors - Warwick, PA
REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel

Thank you for reblogging the post. I had missed the original post.

Aug 30, 2011 12:50 AM
Sally K. & David L. Hanson
EXP Realty 414-525-0563 - Brookfield, WI
WI Real Estate Agents - Luxury - Divorce

  Getting it done is paramount....at a dollar amount acceptable to the lender...the amount to the Seller is of no importance and of course, can't be....moving things along and keeping everyone informed is the name of the game.

Aug 30, 2011 12:52 AM
Linda Edelwich
William Raveis Real Estate - Glastonbury, CT
Serving Glastonbury & Beyond | 218 New London Trnk

I know I need to learn all I can about short sales - thei was great advise thanks for re-posting

Aug 30, 2011 12:58 AM
Gail C. Harris
Resource Network, LLC SFR, AHWD, ACRE, SMAR Board Director - Chesapeake Beach, MD
Reach the BEACH with Gail C. Harris (cell: 703.868

With the laws on short sales the way there currently are, a bigger loss at present is only hurting the neighborhood.  Most banks are not issuing capital gains statements and the feds are forgiving it anyway.  My neighbor just sold their home they purchased in 2006 for $745,000 for $433,000 and Indy Mac gave the buyers $13,000.  My neighbors frankly could afford their house payment but were able to hide their income, sad but true.  I think free rides should be over. 

Aug 30, 2011 02:15 AM
Karen Fiddler, Broker/Owner
Karen Parsons-Fiddler, Broker 949-510-2395 - Mission Viejo, CA
Orange County & Lake Arrowhead, CA (949)510-2395

Hi Cindy....thanks for the reblog. As you can see from Gail's comment, this is a touchy subject, but one we will live with for a long time.

Aug 30, 2011 12:03 PM