If you are a homeowner, and forsee that you will not be able to keep your mortgage payments current, or are already behind on payments, you have no doubt heard about short sales. If that is an option for you to avoid foreclosure, your choice of agent can mean the difference between a successful short sale where you can probably buy again in 2 years, or a foreclosure that could prevent you from buying again for 5-7 years. Rebuilding your credit will take time with both short sales and foreclosures.
I routinely receive calls from agents asking for help with listing short sales. There are many agents that try to conduct short sales, but really they shouldn't be involved. They do sellers a disservice. The MLS is still full of short sales that show that they are under contract, but really they are just waiting to be foreclosed upon because the listing agent is just sitting around telling the seller and the buyers agent that they are waiting for lender approval. They never realize the loss mitigator already threw their file on the trash pile, and the property is in the foreclosure dept. I've seen several properties advertised on attorneys auction sites, but these same properties still show being under contract in the MLS. Neither the agents, buyers, or sellers are aware that the property that they have been sitting around waiting for lender approval on for 2-3 months is scheduled to be auctioned off on the courthouse steps.
In a recent case where an agent called me who had no experience with short sales, I explained the process, pricing, lenders minimum net proceeds,lender requirements, and what the agent should do to start out right. As soon as I saw the prperty show up in the MLS, I knew it would go to foreclosure. It was listed WAY over fair market value and what I told her it should be listed at, the commission amount was wrong in MLS etc. Approx 2 months later it gets withdrawn from MLS, shortly followed by being relisted with another agent as a foreclosure. This scenario happens over and over and is really annoying for me to watch, knowing that if those sellers would have listed their property with an agent experienced with short sales, they could have come away with better credit, and be in a much better position to re-enter the housing market in 2 years.
All lenders are different when it comes to short sale policy- Some still require Arms Length Agreements,which means don't list your house with a relative. Some lenders pay 4%, some 5%, and some 6% commissions on short sales. You and your agent need to know this up front before entering your house into the MLS. Some lenders require your house to be listed for 60 days in the MLS before they will even consider a short sale. Some require us to use their in house forms. Some will requie you to sign an unsecured promissory note for part or all of the forgiven debt. Some take 2-4 weeks to upload a file, and some could take 2-4 months. If an agent doesn't follow their rules, your short sale is in jeopardy.
Don't let desperation cause you to make a rush judgment in selecting an agent to handle your short sale. Short sales involve a lot of paperwork, and lot of continuous communication, a lot of follow up, and many things need to be negotiated throughout the process. In addition, accurate evaluation of current fair market value is a must, and knowledge of the minimum net your lender will approve must be determined. Some lenders now require net proceeds of 90% of fair market value before they will approve your short sale. There is much more we have to keep informed about, so choosing a knowlegable short sale aget is a must.
Jeff Pearl / REALTOR / LIC in VA
Re/Max Distinctive / Reston VA
Homes / Land / Farms
Short Sale Mastery
CDRS - Certified Default Resolution Specialist
703-727-4876
www.jeffpearlhomes.com
Equal Housing Opportunity Provider
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