After a year full of short sales and feeling totally fed up with them, I've come full circle. I'm loving short sales for the satisfaction I get, similar to a first time home buyer. I'm enjoying the negotiations and the process... at least on the listing side. If you have short sales you want to refer, call me!
Having completed several this year, I can tell you why some short sales fail. There are two main areas:
HUD STATEMENT
- Closing times on short sales can be long. A big mistake agents make is estimating a 30 day close. Some short sales can take up to 6 months. Make sure you overestimate your closing period.
- Assuming that the second or third lien holder will take a certain amount. Always assume the worst. Overestimate.
- HUD is simply incorrect. Nothing is worse then spending hours trying to get an approval to get one and then show up at the closing only to have it change. You aren't likely to get that account manager on the phone let alone have them jump to sign off on a change at your closing. It's probably coming out of the real estate agent's pocket.
Word of the day, over-estimate. That goes for commission too.
BPO (Broker Price Opinion) is neglected
- The bank wants to know what the value is, so they send out a person to evaluate it. So you make it tough for them to see the inside. They do a drive by BPO and it comes in much higher than it should. Deal is dead.
- A lot of BPO agents don't really know the market, are you helping them understand why the price should be what it is?
Some final tips
Utilize your advocates. Is this a Fannie Mae or Freddie Mac home? Call them to get them involved. The PMI companies want the short sale to happen too, get them to put pressure on the bank as well.
Short sales are a lot of work but they are far better than a foreclosure for clients.
I'll still pay referral fees for short sale referrals! Put me on your speed dial 770-374-4667.
JJ,
Like you I`m making plans to head in a different direction.
Short Sales have way too many variables! One thing is constant often the lenders don`t know the right hand from the left!
Thank you for sharing. I have avoided short sales, and do not think I will get involved in them.
Its good to have a good title company in your pocket as well in the process since the banks title companies usually will take longer than necessary and not really work with you in the mentality that you are not their client/s.
Great Post
Keith Stonehouse
I love short sales, because I've taken time to get better at them AND built my network. Title companies aren't a big deal in Georgia, but having good attorneys is.
We have an Short Sale Addendum in Arizona that states the close of escrow is 30 calendar days after lender's written acceptance of offer. Also, notify buyer response can take weeks to months.
Another issue is the BPO company requesting the BPO. Some of the Quality Control managers try to force up your estimate if it doesn't fit their idea of what the recommended price should be. Usually wanting it higher. They are looking at an exteior view from out of the local market, and have no idea what the current trend is in pricing to sell.
Do you have any suggestions for the buyers agent? We have an offer on a short sale, but I don't feel like there is much I can do. I call the selling agent weekly if I havn't heard from him, but is there anything else I can do?
Johnnie Rosser
RE/MAX Excel
Logan, Utah