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Tom, Home Buyer in Silver Lake, Los Ang...

Why do real estate agents not want to get involved in short sales?

Asked by Tom, Silver Lake, Los Angeles, CA Mon Jun 8, 2009

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Tisza Major-Posner’s answer
Hi Tom,

Thanks for stopping by. As you can see by all the previous answers, it is not just here in California that finds agents reluctant to hop on the Short Sale bandwagon. Unfortunately, this "solution" is becoming more and more of a nationwide problem.

The two to four months that was mentioned as a time-line is actually, unfortunately in most cases an optimistic one. I have one client whose listing I took in February of 2008 and now here we are in June, 2009, we are still not closed, and I hasten to add that I am pretty good at getting these things done.

I think that there needs to be an expose' done on the flawed process because what is happening out there to buyers and sellers alike is ridiculous and, if you really want to know, in the case of the sellers in particular, downright criminal.

Because most lender's don't have functional systems in place to effectively handle these transactions, and also because they are in most cases poorly equipping their negotiators with the knowledge or authority to effectively preform their task, we are left with a tool that functions like a hammer without a head. A whole lot of energy gets expended on all sides but when the dust settles, what was broken remains broken.

Seller's of Short Sales are really getting the short end here as they can be held financially liable, to the tune of tens of thousands of additional dollars because of the continued descent in value of their home from the time the process starts to the time of its completion. Not everyone qualifies for the Mortgage Forgiveness Act, and for those that don't, every drop in value is an additional swift kick in the chops. Not to mention the added decimation of their already battered credit which is caused by the longer time lines and adding additional late or no pays to their records.

And, here's the best part, the lenders are not just hurting themselves here. Ultimately, it is you and me that will pay the price for their foolishness, with higher costs for everything from the interest rate we pay to purchase our homes to the additional fees that they will charge to try to recoup their losses.

All that being said, I still continue to believe that for some specific buyer's Short Sales remain a viable option as long as they know what they are getting into at the getgo. As a buyer on the downside, you will wait a hugely long time before you find out if you can actually buy the home you desire and what price you will be asked to pay. Then, when approval finally does arrive, you will be expected to move with the speed of greased lightening to get things closed. On the upside, you will get all of the disclosures about your future home that the foreclosure process denies you and you may get the home in better condition than if it goes all the way to the auction block.

But the biggest upside you get is the knowledge that you directly affected someone else's life in a positive manner. You helped become part of the solution to this current economic crisis instead of adding to the burgeoning problem. And, because most folks won't or can't wait it out, if you are one of the few who will or can, you may find the playing field oddly deserted when you get to the end game which means you may ultimately face little to no opposition or competition from other prospective buyer's.

So, that's my personal take on the "why". Once again, as long as everyone knows what we are getting into at the start, I am still willing to aid my client's who wish to pursue them and in 100% of the cases I have been involved in we have met with success on both sides of the table. (Even the aforementioned deal that has been plodding along since February, '08 is going to close successfully.)

Oh, and one more thing, if you run into an agent who doesn't want to do a Short Sale with or for you, don't get mad at them, thank them for their honesty and move on to one who can a d does. There are a whole lot of folks out there with real estate licenses who shouldn't even be helping folks buy dollhouses let alone real ones and their ineptitude compounds an already messy problem.

Thank you again for stopping by. I hope this helped.

Take care and have a great day!

Tisza Major-Posner, Realtor DRE#01784679, IVPG Realty (909) 837-8922 or (213)392-4084
Web Reference: http://Route66Living.com
2 votes Thank Flag Link Mon Jun 8, 2009
Short sales are for the most part a nightmare and agents use so much time going back and forth with the bank etx. These typically take months and sometimes longer.
1 vote Thank Flag Link Mon Aug 5, 2013
Because if your time is money and you track the time, effort, and energy you spend on a short sale a regular sale is more cost effective.
1 vote Thank Flag Link Mon Aug 5, 2013
Some agents do not want to get involved with short sales because they can take a long time to close,I had one take over 22 months to get approved and closed. They are very time consuming & can be stressful to the buyers & to the sellers ! Good Luck !
1 vote Thank Flag Link Mon Aug 5, 2013
Tisza gave a really great answer from both the buyer and seller side. I personally believe that a buyer may be able to get a better deal on a short sale than an REO. There is less competition for all of the reasons that have been stated so far. The number of local buyers looking in the $500K and less market has swelled to such proportions that most "normal" and REO listings are selling in record time with multiple offers above the asking price. If a buyer understands that the short sale process is long and anything but certain, I have no problem showing short sales and do my best to get them the property. My experience has been that they process take at least 3 months and less than 1/2 of short sales actually close. For buyers who are not in a hurry, it's certainly and option worth exploring.
1 vote Thank Flag Link Mon Jun 8, 2009
Well, Tom, have you read some of the questions from buyers involved in short sales? It takes forever for the bank to get back to us, the listing agent also takes forever to get back to us, sometimes the listing agent does not even return our calls, then the buyer comes on Trulia and asks if we are trying to put something over on them or are we acting ethically and can we be sued.
1 vote Thank Flag Link Mon Jun 8, 2009
My first answer from three years ago would be different now. Short sales can be very frustrating and they still take a long time, but the success ratio today is running much higher, about 50% in my markets, and time frames are getting more reasonable.

An agent who refuses to work short sales is eliminating a large portion of the market in most areas. Nowadays, an agent has to work short sales whether they want to or not, if they want to survivie in the business.
0 votes Thank Flag Link Wed May 2, 2012
Quite simply, we run the risk of working our butts off and never seeing a deal come through. Unlike most professionals, we do not get paid by the hour. Thus, anythin that takes longer, is more complicated and has a large risk of following through doeesn't seem all that appealing.

For my sellers, I've learned to refer these to those hearty Realtors who do nothing but short sales and have an affective system in place.

For my buyers, I will write a short sale, but always encourage them to keep looking since short sales don't always pan out.
0 votes Thank Flag Link Wed May 2, 2012
Dear Tom,
Short sales can be a way out of a difficult situation for the seller. It can also be a way to purchase a property at a good price for the buyer. Considering there are so very many short sales right now, it's inevitable that we will be confronted by some of them.
The reason some Agent's avoid them is that they take a very long time to close and often will upset their buyers when they are outbid by cash buyers.
0 votes Thank Flag Link Wed May 2, 2012
I can't tell you how many unhappy Buyers I have run into who have tried short sales. Sure, some of them are successful, but lots of them are not. I recommend short sales only for Buyers who do not care whether or not they get a home.
0 votes Thank Flag Link Thu Jun 18, 2009
Its not that real estate agents don't want short sales, they just rather to have listings and live in the perfect world. Its OK, that's the way I am as well but the reality is a little different.
These days if a real estate agent wants to make money he have to do some short sales, that's where the money.
The major problem that short sales have is the time. Short sales may take a really long time and then not even close and real estate agents may be waisting their time(real estate agents do not want to waste their time). Real estate agents(just like me) are spoiled. We got used to little work for a lot of money and today it's more work for less money.
Can you understand the frustration here? I can.
I do short sales all the time and its not that bad, its the way you look at things in your life.
If you're looking for a real estate agent to buy short sales, interview few agents and see who is really into his job and who is just doing it because he have to.

I hope it was helpful

Good Luck
Web Reference: http://homesinsale.com
0 votes Thank Flag Link Thu Jun 11, 2009
Any standarization of the short sale process would be helpful all around. I believe it wil be difficult to come up with a truly standardized process since each bank handles things differently and many times there is more than one lender involved. At least there is now something in place that requires banks to notify people when their loan has been sold. It certainly helps in tracking down which banks need to be dealt with if a person ends up needing to do a short sale.
0 votes Thank Flag Link Mon Jun 8, 2009
Wow. Thanks for all this excellent information. Very helpful. Does anyone have an opinion about the Obama administration's plan to creates a standardized process for short sales? Might it change the landscape you describe?
0 votes Thank Flag Link Mon Jun 8, 2009
Very good answers. Some agents simply don't have the time that is required to deal with the banks in a short sale. Each offer can take hundreds of hours on the phone just trying to get answers that may or may not go anywhere.

When I have clients who want to pursue short sales, I refer them to an agent in my office who does nothing but short sales and has 2 assistants that just spend their time on the phone with the banks.
0 votes Thank Flag Link Mon Jun 8, 2009
Basically for the most part agents do not want to be put in a position where their time invested in their clients results in problems and frustrations due to time lags, problems with the banks, frustration with the banks difficulty getting information or lack there of.

All could lead to fall out of clients. Additionally, if the home does go to close....a good deal of the time banks are also arbitrairly reducing the commissions of the agent.
0 votes Thank Flag Link Mon Jun 8, 2009
Tom,

Time invested, frustration, bank insensativity, endless periods of waiting, lack of information, misinformation, losing the home to another buyer, etc........... all of which put the customer in a less than desirable position and cause them to question their agents ability to serve their needs.

Basically, if an agent truly accepts their responsibility to their customer(s), this avoidance is essentially a means of protecting the customer from the almost guaranteed negative experience that is a reflection on the agent, brokerage, and profession.
0 votes Thank Flag Link Mon Jun 8, 2009
One of the reasons is that only about 40% of short sales close after they get an offer. If you have the temperment to wait 2-4 months to find out if you can purchase the home then a short sale may be the way to proceed. Check out the link for a little more on short sales and the process.
http://www.realtor.org/rmosales_and_marketing/handoutsforcus…
Web Reference: http://www.Find1Home.com
0 votes Thank Flag Link Mon Jun 8, 2009
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