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How Not to Sell A Short Sale - - The “No Showings” Approach

By
Real Estate Broker/Owner with Mint Properties, Lic. #01871795 Lic. #01871795

How Not to Sell A Short Sale - - The “No Showings” Approach

Why is selling a home as a short sale without showing it problematic?  A short sale is not like a regular sale.  Yes, the owner gets to decide what offer they accept and will present to the bank.  And yes, the highest offer is not always the best offer.  However, in a short sale, the owner must ask the short sale lender’s permission to sell the home for less than the balance owed.  As a part of that process, the short sale lender wants to know that they are receiving market value for the home and that the seller will not directly benefit from the short sale.  Although the short sale lender will perform a valuation of the property, their valuation does not substitute for true market exposure.

In general, the short sale home has to be sold in an arm’s length transaction, meaning, for example, that the seller’s family members or business partners cannot purchase the home.  In fact, most of the major lenders (Bank of America, Wells Fargo, CHASE, GMAC) require that the parties (including agents) sign a short sale affidavit attesting that the sale is in fact arm’s length.  If the home has never been shown and access completely denied, it can create a question or red flag to the short sale lender.  Lenders want to be sure that the short sale is not an ‘inside deal”  and that there was an effort to obtain maximum value for the distressed property.   

In agreeing to accept a short sale, the short sale lender expects that the home was properly marketed, and that includes advertising the home, and also showing the home to potential purchasers.  
Since “no showings” is not how most people sell their home when they hope to profit from the sale, it is hard to argue that it is a legitimate way to sell a home when the bank is being asked to take a loss.  Every situation of course is unique, and I can certainly envision a situation where a home needs to be short sold and no viewings are possible.  In that situation, at a minimum, full disclosure of the restricted marketing of the home should be made to the short sale lender to protect the short sale seller from subsequent claims that the short sale was an inside deal.

Before deciding whether to short sell your home, it is essential that you obtain legal and tax advice, and consult with an experienced local short sale agent. If you are considering a short sale of your Central Coast home and would like a complimentary short sale consultation, please call my office to schedule an in person meeting or a telephone consultation at (805) 878-9879.

Tni LeBlanc is an independent Real Estate Broker, Attorney, and Short Sale Agent. She has successfully completed short sales with Bank of America, Wells Fargo, CHASE , GMAC, Seterus, CitiMortgage, Green Tree Servicing, Specialized Loan Servicing,  HomEq Servicing, Wachovia, Coast Hills Federal Credit Union, Select Portfolio Servicing, and others.
She is a Certified Distressed Property Expert (CDPE), Short Sale and Foreclosure Resource (SFR) and Certified HAFA Specialist (CHS) serving California’s Santa Barbara and San Luis Obispo Counties.  


* Nothing in this article is intended to solicit listings currently under contract with another broker. This article offers no legal or tax advice. 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.  Tni LeBlanc and MInt properties are not affiliated or endorsed by any lender.

Copyright© 2012 Tni LeBlanc *How Not to Sell A Short Sale - - The “No Showings” Approach*

Posted by

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

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

Comments (27)

Gina Chirico
Lattimer Realty - Fairfield, NJ
Real Estate Agent - Essex County, New Jersey

It amazes me when listing agents take listings, especially short sales, and then either don't answer their phone or the show remarks indicate that it can't be shown or you actually speak to the agent or broker's office and they tell you no showings!!  I often wonder if its the seller or the agent making these no show decisions.  It makes no sense for a seller not to show their home if its a short sale when you'll end up losing it to the lender in foreclosure anyway.  I think some of them are on an emotional rollercoaster and although they agreed to listing it, they still haven't dug their head out the sand yet.  Great post! Happy New Year.

Dec 31, 2012 05:06 AM
Dr. Stacey-Ann Baugh
Century 21 New Millennium - Upper Marlboro, MD
A doctor who makes house calls.

I have had a home that I tried on 10 different occassions with 3 different buyers to get a showing appointment and we were always denied.  Definitely doens't seem like the best way to get an offer on the house.

Dec 31, 2012 05:12 AM
Tni LeBlanc, Realtor®, J.D.
Mint Properties, Lic. #01871795 - Santa Maria, CA
Tenacious Tni (805) 878-9879

Gina - It amazes me as well.  I think sometimes it os a combination of the two.  Sellers often don't want to show and sometimes they are not given encouragement to show.

Dr. Stacey - It certainly doesn't. 

Dec 31, 2012 06:20 AM
Tamara Inzunza
Realty One Group Capital - Alexandria, VA
Close-In Alexandria and Arlington Living

Hi Tni!  Happy New Year and congrats on the Featured Post!  Don't you just LOVE short sales.  Here's to many more homeowners helped in 2013!

Dec 31, 2012 06:32 AM
Carla Muss-Jacobs, RETIRED
RETIRED / State License is Inactive - Portland, OR

I've seen the "no showings" and tacked on to that is a very, very low list price.  Makes one wonder . . .

Dec 31, 2012 06:48 AM
Debi Braulik
www.roundrealestate.com - Maple Valley, WA
Selling Maple Valley to Fife WA Homes For Sale

I wonder "what's the point" to listing a home for sale and then not allowing showings. Another one I love is when it says you must confirm the appointment- and then the seller refuses to allow you in. I had one buyer set on a house.... and literally we tried for a month to get in to no avail. So frustrating!

Dec 31, 2012 07:43 AM
Michael Jacobs
Pasadena, CA
Pasadena And Southern California 818.516.4393

Hello Tni -- I've noticed the same thing in our MLS as well -- priced well-below market, no showings or very limited and then poof --- goes into pending status --- and when it closes -- the listing agent is also the selling agent.   Even if this is not common, the practice does not reflect well on our industry.

Dec 31, 2012 08:28 AM
Brenda Mullen
RE/MAX Associates - San Antonio, TX
Your San Antonio TX Real Estate Agent!!

IMO the no showings approach doesn't sell any home, much less a short sale lol :)!  You make a great point about the extra issue is if you get an offer with no showings, the short sale lender is sure to be suspicious.  

Dec 31, 2012 11:34 AM
Hella Mitschke Rothwell
(831) 626-4000 - Honolulu, HI
Hawaii & California Real Estate Broker

Tni: I've never seen the "no showings" of a short sale. What I have seen is that it goes under contract pretty much at the same time as it hits the MLS. Have seen an absolutely rediculous price on a property, which went immediately under contract. Even if the lender wants more money, that initial buyer has first right to pay that amount. Seems to me it should go back on the market to possibly allow multiple offers, but that's not how it works.

Dec 31, 2012 12:49 PM
Sally K. & David L. Hanson
EXP Realty 414-525-0563 - Brookfield, WI
WI Real Estate Agents - Luxury - Divorce

Not had this happen....once we had Sellers who just could not seem to find times "convenient" for showings...and we explained to make this "about them" they needed to make this "about the buyers" and that was the end of that....best of the new year to you !

 

 

 

Dec 31, 2012 07:13 PM
Conrad Allen
Re/Max Professional Associates - Webster, MA
Webster, Ma, Realtor

Happy New Year Tni.  Keep writing your interesting posts in 2013.

Dec 31, 2012 09:09 PM
Michael Setunsky
Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

Tni, I don't see the point where a seller will go through all the trouble of listing a home for a short sale and not allow showings. Must be some hidden agenda in the works.

Dec 31, 2012 09:54 PM
Richie Alan Naggar
people first...then business Ran Right Realty - Riverside, CA
agent & author

Very good post presented so that the layman can come onboard. As to no showings, one wonders if it is really a short-cut designed for other reasons...The banks should set a price and hold to it. In other words act as sellers. That may eliminate some of the shenanigans to get the best price tactics

Dec 31, 2012 10:32 PM
Gary Frimann, CRS, GRI, SRES
Eagle Ridge Realty / Signature Homes & Estates - Gilroy, CA
REALTOR and Broker
I sometimes think the no show policy is because a relative or friend has a listing, and they put it on the market to show the bank that no bank wants it at that price, so the bank should do a loan modification... I've seen MLS entries where the no show policy is added about 3-4 days after the listing was entered, which tells me that they forwarded the listing to the loss mitigator (or whoever) and try to help their client stay in the house. Also, if there are tenants, and it was suppose to be owner occupied (so there is an issue of fraudulent obtaining the loan), and the seller wants to make sure they are the ones who get the cash for keys.
Dec 31, 2012 11:35 PM
Ed Silva, 203-206-0754
Mapleridge Realty, CT 203-206-0754 - Waterbury, CT
Central CT Real Estate Broker Serving all equally

There are so many agents that are unsure of short sales and steer their buyers away from them. Many buyers also do not understand a short sale. Exposure of the house may not always get an offer at market value especially in a high inventory situation, and with the arm's length forms they take additional risks and gamble that no one will pursue the participants

Dec 31, 2012 11:42 PM
Tni LeBlanc, Realtor®, J.D.
Mint Properties, Lic. #01871795 - Santa Maria, CA
Tenacious Tni (805) 878-9879

Thanks Tamara!  Happy New Year!

Carla - It certainly does make you wonder.

Debi - As a buyer's agent it is frustrating.  As a buyer's agent with low inventory it is maddening.

Michael - It doesn't, does it?  I think some agents don't quite understand that a short sale is not like  a regular sale either.  Unfortunately, this will only lead to more regulations and hoops for the rest of us to jump thorugh when doing short sales.

Jan 01, 2013 04:00 AM
Tni LeBlanc, Realtor®, J.D.
Mint Properties, Lic. #01871795 - Santa Maria, CA
Tenacious Tni (805) 878-9879

Brenda - It is clear that the short sale lenders expect for the home to be properly marketed.

Hella - I've seen both with short sales.  Hardly ever does this happen with a normal equity sale in my experience.  So, it does not seem to be the normal way to sell a home.  Short sale lenders are asking more and more questions about these practices.

Sally & David - You're lucky, I see a lot.  Happy New Year!

Thanks Conrad!  Happy New Year!

Jan 01, 2013 04:08 AM
Tni LeBlanc, Realtor®, J.D.
Mint Properties, Lic. #01871795 - Santa Maria, CA
Tenacious Tni (805) 878-9879

Michael - Must be.  It certainly can raise suspicion about the offer presented even if it is a perfectly legitimate offer.

Richie - I think the banks are fearful because they are not that great a valuing property or taking quick advantage of market trends, real estate agents are better at it, and even an appraisal won't necessary capture it that well.

Gary - There are certainly a lot of angles being worked in distressed markets.  When working as a buyer's agent, I certainly don't appreciate the no show listings.

Ed Silva - It's been so long since I've seen a high inventory situation!  I would love to have that problem. 

 

Jan 01, 2013 04:13 AM
Christine Donovan
Donovan Blatt Realty - Costa Mesa, CA
Broker/Attorney 714-319-9751 DRE01267479 - Costa M

Tni - There are so many short sales that don't allow showings. It makes it difficult to sell them. 

 

Happy New Year!

Jan 01, 2013 02:39 PM
Deborah "Dee Dee" Garvin
C2 Financial - San Diego, CA
C2 Financial

Tni,  In my experience, successful short sale closings come from working with experienced short sale agents...both listing and selling!  Your clients are very fortunate to be working with you!  Great post and clarity on the lenders position in a short sale!!!

Jan 02, 2013 04:43 AM