This week I am talking about buyer's patience. There are plenty of short sales in the market place today. What is a short sale? This is when the lender is willing to forgive part of the debt owed by the borrower because the borrower can no longer afford their payments due to a hardship, say a job loss. There are some great deals to be had, but the process is not refined yet. It takes the lenders anywhere from 30 days to 6 months to close a deal. Where does this leave you, the buyer? Not in a good position and it is not for everyone! The buyers are the last one who is respected in this type of transaction. They do not control anything and must go along with all of the lender requirements and documents, etc. They don't get to choose the title company who most often are out of the territory and who could care less about the buyer. I have seen buyers wait for up to four months with no answer from the banks on their offers at all. Most buyers walk away after waiting so long, but a few who are patient sometimes end up getting a good deal or NOT. After 4-5 months go by, maybe the property has declined in value even more and the once good deal they were going to get months before is now not such a good deal any longer. It is a buyer beware purchase, for sure. Make sure you work with a Realtor who knows what they are doing in such a purchase. Many Realtors refuse to even work with short sales because the lenders do not promise to even pay the Realtor's commission in the end. The only way a Realtor gets paid is through a commission so on a short sale all of their time and energy -- not to mention the gas money is out the window. A total loss for a Realtor. I have yet to have one short sale transaction close yet and I have worked on many of them even with the help of an attorney and they still have not closed. Don't get your hopes up to high. You may find a regular seller who is just as negotiable willing to give you a good price and a closing date that you can count on. Your comments?
Kelly,
I can certainly understand your frustration. Unfortunately, fewer than 1% of Realtors say that they are foreclosure or distressed property experts.
If you're working with a buyer who is considering making a purchase of a short sale home, then there is a way to "test" the listing agent, to see if they at least have an idea of what they're doing.
You ask them, before your buyer makes an offer:
- Are you submitting multiple contracts? If they are, then bail...and quickly!
- What is the financial hardship?
- What is the monthly shortfall?
They don't even have to tell you the answers to the second and third questions. The key is that they must know the answers! If they don't, then strongly suggest that your buyer move on to another home, as the listing agent doesn't really know what they're doing, and they will likely waste a LOT of time, energy, and stress on an offer that likely won't be accepted.
If you'd like to learn more, there is an amazing class that is being taught all over the country, called the Certified Distressed Property Expert. We have taken it, and it is significantly better than ANY other "short sale" courses that we have ever taken (and we've taken plenty!). After the intense 2 days, you will walk out with proven systems to get short sales accepted by the banks. Since we have implemented them, our short sale success has sky-rocketed! You can learn more at: www.1cdpe.com. You won't regret it!
I agree with you Nathan. I have been to numerous classes on short sales and understand them thoroughly. There are some Realtors in the community who refuse to go to classes and take the time to understand them like you and I. However, even having an understanding of them does not guarantee a commission or success. Nationally, NAR reports that only 1/3 of all of them ever successfully close.
On top of that I have personally gone the past two days on a bank owned property that should have already closed two days ago. I was fully on top of it and the seller who is a bank has not signed off on the HUD-1 yet. It is a nightmare dealing with this broken system. We are forced to play on their terms selling properties to buyers in "as is" condition and being forced to use unapproved Florida contracts, etc. It is a horrible situation for the buyers. They have no control over the most expensive purchase they make in their life. The Florida BAR needs to become more involved at this point to change the system if they can or at least come up with some legal standardized paperwork. You should see some of the stuff I receive.
Of course the banks want to charge my client $150 a day if they delay the closing, but there is absolutely no penalty for the banks when they are the cause of the delays. I fell the buyer should be given the $150 per day right back to them. What fair is fair.
We had all better get used to this, because there are so many of them in the market today, but the system is badly in need of regulation and control.
Thanks for listening to one very frustrated professional. Kelly
Kelly, you are working so hard for your clients... Short sales are a challenge.. Your frustration is understandable... Hopefully, after November, the whole market will do an about face and we won't have to deal with these trying situations....
Thanks for weighing in with your comments. Personally, I will no longer work with a buyer who wishes to submit an offer on a short sale. I will refer them to another agent if that is their whole goal. I have better ways to spend my time.
Have a great day guys!
Kelly
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