Don't Make a Short Sale Offer..............

Real Estate Agent with Real Living HER

house with money in front of it 

Everyone knows what HUGE pain short salescan be, however; most real estate agents will agree that they are an unavoidable part of the Central Ohio landscape.  The more  the process is understood the greater likelyhood there is for a smoother transaction.  As a buyer's agent it is important have a clear picture, with as much information as possible.  This will allow agents to better understand how to effectively work through short sales process minimizing buyer frustration. 

Buyers' agents play a large role in the successful competition of short sales.  Going into the transaction with the right expectations is a key element to successfully completing a short sale.

I suggest you Don't Make a Short Sale Offer on any Central Ohio home, until you get answers to following 10 questions from the listing agent:

•1.       Has the seller completed all the paperwork for the short sale?

•2.       Are there currently any offers on the property?

•3.       Have there been any offers on this property?

•4.       Has the BPO/Appraisal been completed

•5.       Do you know if the lender will pay any seller concessions?

•6.       How will multiple offers be handled?

•7.       How many mortgages are on the property?

•8.       Has a negotiator been assigned?

•9.       Have you worked with the lender before?  If yes are they responsive?

•10.   Is there anything else you can share with me that will better insure my client successfully getting this home?

Once armed with the answers to these questions agent and buyer will better be able to determine how to set correct expectations for short sale success...  It does no one any good to lose a potential buyer due to frustration or not having an understanding the process.

If you need help with short sales or any other type residential real estate in Central Ohio, please give me a call at 614-273-6406 or email me at


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Charlie Ragonesi - Big Canoe, GA
Homes - Big Canoe, Jasper, North Georgia Pros

Your post is really good. But here a lot of the time the lender will not even look at a short sale scenario with out an offer. But Amen to your post they are a big pain

Feb 22, 2009 11:44 PM #1
Sally K. & David L. Hanson
EXP Realty 414-525-0563 - Brookfield, WI
WI Realtors - Luxury - Divorce

  I disagree with some of your one knows how long any property will be on the market so why would a BPO be done BEFORE the offer...2 or 3 months could swing that number wildly. We love doing short sales and see it as our opportunity to give back to the profession we love...more work ? You is no greater joy than helping a distressed seller.

Feb 22, 2009 11:48 PM #2
Bill Somerset
Re/Max Realty Group - Dover, NH
ABR, e-PRO - Realtor - NH Real Estate Agent

Some great tips, however I agree with some of the comments above.  Most lenders will not even consider the short sale unless there are offers on the table.  Second, most lenders will not spend the money on a BPO until there is an offer submitted on the property.

I most certainly agree that a buyers agent plays a very signoficant role in the process, however, the process is worth the risk most of the time.

Feb 22, 2009 11:54 PM #3
Vanessa V. Simmons
Real Living HER - Columbus, OH

Charlie thanks for your feedback you are right most lender will not look at a short sale scenario without an offer I was writing this with with the thought that prior to submitting the offer the buyer's agent should know certain info.

Sally and David,  you too are correct in that a BPO/Appraisal is not usually done until an offer is in hand but if the agent asks question #4 it should  let the buyer agent know if there every was an offer that may have fallen through and if so they will have a better idea of the time to allow.  Short sales are a large part of my business too and I agree they do provide a great sense of fulfillment when you are able to assist.  thanks for your comment

Feb 22, 2009 11:57 PM #4
Ellie McIntire
Ellicott City Clarksville Howard County Maryland Real Estate - Ellicott City, MD
Luxury service in Howard County & Catonsville

Most bank that I have worked with will send the "short sale package" but won't even open it until there is an offer in play. Every bank is also VERY different.

Feb 22, 2009 11:58 PM #5
Vanessa V. Simmons
Real Living HER - Columbus, OH

Bill and Ellie thanks for the comments.  You are both correct most lender will not do much more than send out the packet without an offer. 
I would just like to the the buyer agents ask more questions upfront so that they better prepare the buyers for what can be long waits. 

Feb 23, 2009 12:06 AM #6
Roger Johnson
Hickory Real Estate Group - Hickory, NC
Realtor - Hickory NC Real Estate

A lot of these tips won't happen until an offer is presented.  Everyone gets an "A" there.  However, they are still very good questions to ask if for no other reason, to determine where the listing agent is in the short sale process and how much of it has been done.  Many, many agents still have no clue how to perform a short sale, yet still are listing them.  I'd add another point-blank question, too.  How many short-sales have you, as a listing agent, been involved with?

The experience level of the listing agent will greatly determine the success, or failure, of a short-sale.

Feb 23, 2009 12:11 AM #7
Vanessa V. Simmons
Real Living HER - Columbus, OH


Roger, I agree with you on the experience level of the listing agent being a good thing to inquire about from the potential buyer  but especially from the sellers.  Sally and David has an excellent post on this topic

thanks for your comment.

Feb 23, 2009 12:24 AM #8
Michelle Roethle
Windermere Peninsula Properties - Belfair, WA
Your NorthWest "Real Estate Solution"

These are very important and as a short alae listing agent I make sure that all of this is done ahead of time so that when an offer does come in the transaction is smoother

Feb 23, 2009 12:37 AM #9
Vanessa V. Simmons
Real Living HER - Columbus, OH


I am with you I am one of those agents that force the subject as far as the lender will go without an offer if nothing else it helps reduce the wait time for the buyer. 

Last month I actually got lucky and worked with a lender that did the BPO prior to receiving an offer.  I could not believe it but I will now ask on every deal just in case lightning strikes again.

Feb 23, 2009 12:49 AM #10
Kathy Torline
ERA Herman Group Real Estate - Colorado Springs, CO
Colorado Springs Real Estate Blog 719-287-1049

Great comments, and great posts.   I think 80% of a short sale going through is based on great communication between the listing agent and the buyer's agent; everyone needs to understand that it is a process, one step at a time.

Feb 23, 2009 09:55 PM #11
Vanessa V. Simmons
Real Living HER - Columbus, OH


thanks for your comment.  It is a process and I truly believe that knowledge is key.

Feb 23, 2009 10:13 PM #12
Sidney Jimenez
Keller Williams - Miramar, FL
CDPE, Short Sale Expert, 954-665-9449,


some good points here, although I agree with some of my colleagues about #4 and #8. I also wouldn't put too much stock as to who the lender is. Many of the challenges come from the actual owner of the note which is not necessarily the lender whom you contact.

A key question is to ask if the agent will be negotiating the short sale. If it is a lawyers' office or a title company you can expect it could take longer than expected.

Become a CDPE Today

Feb 25, 2009 05:53 AM #13
Lenn Harley
Lenn Harley,, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

•8.       Has a negotiator been assigned?

What do you do when the answer to that comes back as a NO?  Few banks are going to assign a negotiator until they have a contract ratified by the buyer and seller in hand.


Feb 28, 2009 10:55 PM #14
Vanessa V. Simmons
Real Living HER - Columbus, OH

Hello Lenn,

These questions are designed to help the buyers agent assess the time that the short sale is likely to take.  If a negotiator has not been assigned that should tell the agent that this short sale is very early in the process and the wait could be lengthy.  I have found that buyers stay with the offer if expect ions are set properly up front.  If the buyer is not well informed they tend to get impatient and want to bail.

Feb 28, 2009 11:33 PM #15
Morris Childs
PEP source - Spartanburg, SC

Welcome to Active Rain. It just gets easier after your first blog. Just write about what interests you.

Toby Cat says Hello!

Mar 01, 2009 12:16 PM #16
J. Philip Faranda
J. Philip Faranda (J. Philip R.E. LLC) Westchester County NY - Briarcliff Manor, NY

Good list. Noteverything will be the answer you are looking for, but a good agent will have most of them covered.

Mar 01, 2009 12:59 PM #17
Vicki Workman
Keller Williams Consultants Realty - Marysville, OH

Hi Vanessa, these are all good questions. Doing quite of few of these sales myself, there are many reasons why the questions cannot always be answered the way a buyer's agent contemplating an offer may want to hear.  Especially if that agent has little or no experience with short sales.  The only way to get the experience is to jump in with both feet.  It does take the right buyer and providing that buyer with good information about the process.  Buyers too should be screened with questions to make sure they are a good candidate to endure the process.  (ie how soon do you want/have to move? do you LOVE this home enough to stick with it and not jump to others? are you REALLY qualified for this loan amount? are you dedicated to not go on a shopping spree in the next several months so you still qualify when we get finally get the short sale approved? are some good examples)  If your buyer does not have time to wait, wants closing costs paid, does not want to buy a home "as is", will not sit down with a good lender, and the like, they are not a good one to endure a short sale purchase.

Since last fall, we have mandatory short sale addendums for contracts with the Columbus Board.  These docs are excellent tools to make sure that all parties are educated and know what to expect.  Those cover the details for both the listing and selling agent and their clients, one for the seller at listing when all of the docs are gathered in accordance to the short sale package letter that the listing agent should have when the listing is taken.  This provides them with permissions to speak with the lender, get all of the required docs for the seller in order and prepare the seller for the tax and/or credit consequences of a short sale. 

The packages/letters vary for different lenders and if there is a first and second, 2 packages will be completed (incl 2 HUDS, 2 BPOS, 2 points of contact and 2 packages).  It is the listing agents job to know what reasons would or would not qualify for a short sale as far as seller hardships are concerned and to appropriately price the home in a range the bank may accept in a negotiated offer (by supporting with recent sold comps that include other short sale and foreclosed properties).  I have heard from many clients that short sales are being suggested by some "modification specialists" for reasons that would not qualify for a short sale.  It is common sense and agents should be on alert as to whether or not a short sale is even justified for the property they are listing and their sellers motivation to sell.  Agents should have a close contact with any third party who is involved who is supposed to be negotiating the sale for the seller if one is involved (there are a lot of scams out there and an agent needs to know what is happening in the process with lenders - many of us have learned to just make the calls ourselves or with our own staff-there are few modification specialists I have encountered that have a successful track record and are dedicated to getting answers)

There is also an addendum to explain to the buyer about the process and delays and why it is the way it is.  I agree that the buyers agent should do their best to get information from the listing agent to make sure that the short sale is justified for the lender.  There is a fine line there with ethics and duty to clients and sharing personal information.  This addendum explains that the property will remain for sale to other buyers until the offer is accepted by the sellers bank which means another offer could come in.  A good listing agent should alert the buyer's agent if something else better comes in and give them a change to stay in the game, but all offers agreed on must go to the bank for review and selection.  In the meantime as well, the buyer can continue to look for properties and is not obligated to the sale until the bank approves - so it works both ways and is risky for both parties.  The addendums include this information.

However, even if the sellers agent sends the completed package to the lender(s), they will not look at the package until an offer is received with a HUD1 attached.  In fact, if they are sent without it, the package can be rejected causing more problems and delays when an offer is received.  Rarely have I seen a lender do a BPO without a negotiator assigned. That BPO is a good sign that someone at the sellers bank is working on the package - but no guarantee they will accept the buyer's offer.  And too, the sellers lender does not set the price for short sale properties listed, agents and their sellers do.  And the negotiator will not be assigned until all of the "gate keepers" make sure the package is complete - including an offer and ALL of the docs THEY require which varies by lender.  The gatekeepers will tell consistantly this assignment to just get the file in front of a negotiator will take 4-8 weeks. Even after faxing a 60 page package they will put the listing agent off 72 hours to even look at the docs.  Missing docs they want? Another 72 hours, and so on.  Some lenders seem easier than others, but some of that has to do with timing and their staffing at the time that the completed package is received. Why? #1 the lenders really do not want to write off a portion of the loan and #2 they are not going to hire more staff in a department that is obviously not profitable no matter how overloaded they are (even though they may bet more in a short than a foreclosure, they do not see this as saving money for them) And they receive A LOT of incomplete packages that plug up the pipeline for those that are ready to go.  That file is just another batch of paper for them and if it goes to the foreclosure department or the deal falls out before they get to it - so be it.  It is a factory of paperwork and procedures - the end result, property or people on the other end of this are not thought of - it is just black and white for them and there is little or no incentive to get thru it.  (I have had some that had 3 changes in negotiators in less than 6 weeks before anything was approved due to staff turnover)

The only time I am seeing a fast response from the lender is when one buyer walked away AND/OR  the home is on the march to the auction - sometimes already on the docket and some negotiators are reluctant to remove them and are ready to lock down the property.  But it is difficult for the agent to get any direct line to a negotiator until the lender has done their "process", and even then, many times the contact phone number or email is kept a big secret from the agent in touch with them.  It is almost humorous the triumph felt when you finally get the name, number or email address of that decision maker.  This is what agents are up against when trying to get a sale approved.

I am helping both sellers and buyers with this process doing 12 shorts in the last year (6 in '07) with 10 of them closing and now 3 listed as shorts, 2 of those waiting on the negotiators and 1 buyer in contract on one listed by another agent.  (this is about 25% of my business) The key is tenacity and teamwork from the agents and clients.  Sellers have to have some concern over the process and the property (ie utilities and maintenance) and buyers have to be sure that they can qualify and are dedicated after long waits (60-90 days).  And agents - they have to communicate in a co-op without driving one another crazy or causing their clients to stress out.  As an agent, you have to develop your own system to deal with the call making and long awaited steps.

If it sounds like a challenging balancing act, it is.  Short sales are hard work and the lenders will still, even with new rules, continue to find ways to slice agent fees in the end.  So it is what it is and agents need to decide whether or not they want to do them.  With listings, that is a no brainer, you just do not take the listing. But, with so many on the market for buyers, if you want to work as a buyers agent in this market and avoid them, you may have a lot of explaining to do to keep your buyer as a client.  Plus, you may find that even though the agent should know up front if their seller is going to have to sell short, they do not always and it could throw what you think will be a "normal" sale for a buyer into a short sale status due to the seller not having money to bring to the table.  And there is always a risk it can be turned down flat or the buyer can walk away after all of the work.  Ahhh, the glamourous world of real estate :) - you gotta love it! (to stay at it these days anyway)





Mar 24, 2009 12:34 AM #18
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