Home Buying in West Roxbury>Question Details

Mark Zarse, Real Estate Pro in West Roxbury, Boston,...

Why would a RE Agent tell my client to stay away from Short Sales?

Asked by Mark Zarse, West Roxbury, Boston, MA Wed Jul 1, 2009

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Something that I don't think other agents touched on is the fact that short sales are sold as is. The seller is not in a position to make any repars, maintenance, offer warranties, etc. Aside from the fact that the process is lengthy and takes patience, if an inspector finds repairs to be needed and it is an FHA loan . . . well, it gets complicated. I've represented both the buyer and the seller in many short sale transactions and the level of work involved in getting one closed is tremendous. When it works out for both the buyer and seller, then it has been a really good day.
1 vote Thank Flag Link Wed Dec 26, 2012
You have gotten a lot of good answers. I would guess that the client isn't a candidate for a short sale for some reason. I have clients who have very specific timelines of when they want or need to get into a property. A short sale doesn't have the same timeline as a traditional sale, normally.

If an agent doesn't choose to work short sales, I don't think they should steer a client away, but instead be up front and let the client know it is not in their business practice but refer them to someone who will work with the short sale should the client want to pursue them.
1 vote Thank Flag Link Wed Dec 26, 2012
Many agents have now stop working with foreclosures or short sales there is usually drama when banks are involved not due to listing/ buyers agent takes up so much time with all circumstance come up. If a family wanting to move within a given time I don't recommend these types of purchases.

I have worked both sides representing seller, or family searching purchase I am seasoned veteran in real estate sales.

Times closing can go very smooth with no problems.... never know each property stands alone

However amount of time vested educate your buyer regarding standard procedures, why's, repeated conversations of melt downs by family not understanding process.

I am composing a letter of statement of future home buyers who want pursue these properties, I can refer them item A - Z .

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1 vote Thank Flag Link Fri Jul 24, 2009
Hello,

Aside from the frustration that many have experienced dealing with a short sale, I believe the transaction obeys to the laws of science. It's an equation, and if there are many unknowns, it won't be solved.
There are things that need to be done by the listing agent before and after the house is on the market. If all the ingredients are in, the transaction will be a success. The buyer's agent should ask the listing side some questions to determine if the listing has a chance of being approved by the bank.
Short sales can be great deals if done right.
http://WWW.HOMESBYHASSAN.COM
1 vote Thank Flag Link Tue Jul 7, 2009
In addition to the extended time it takes to complete a short-sale transaction, there's also the question of the condition of the property. Most of the buyers currently attracted to the short sales (because of price) are then finding that they would need to spend almost equal amounts of money on fixing up and rehabing the place because it got trashed the first time.

I had a buyer recently give up on looking at things in her price range (90% short sales) around here and has decided to look in NH instead - she can spend the same amount, get more for her money, and not have the extra worry about whether or not her short sale offer is accepted. I encouraged her to go for that, since it was in her best interest, even though I was losing a client.

Since most of the buyers in this market right now are first-time homebuyers, anything that makes the transaction sound or feel more difficult, they're going to want to stay away from. That's just my opinion!

--Tim
1 vote Thank Flag Link Wed Jul 1, 2009
Why would you want them to buy a short sale? Considering the amount of time that it will take for a bank to approve the short sale, so many things can happen. Rates can shoot up and your client will no longer qualify, you can lock them in and they would have to pay exorbitant extension fees, their credit can change, the appraised value can change, there are so many reasons that neither of you would want to bother with that when there are other homes out there that are not short sales that can be purchased in their price range.
1 vote Thank Flag Link Wed Jul 1, 2009
I help finance many short sales, often with a renovation loan because many of these properties have issues. But I must say I had a better success rate last year as I did this year. The short sale lenders are now convinced that the real estate market has tunred up and they are no longer accepting the low ball offers that they used to. They figure, if they ca not lose by waiting,because the propertyuvalues will only go up. So they counter the short sale offers with higher prices. Then it becomes a waiting game. Unfortunately, the banks can afford to wait.
0 votes Thank Flag Link Tue Oct 8, 2013
There are lots of reasons buyers may want to avoid potentially wasting a lot of time with short sales, as an SFR agent I myself won't touch a short sale unless it's preapproved by a lender. I guess the question is why another agent would be offering advice to your client which is unethical unless your client initiated the contact and asked their advice. Perhaps you should simply have a conversation with your client and explain to them the pros and cons of short sales and your experience working short sales.
0 votes Thank Flag Link Wed Mar 20, 2013
Short sales are just not for everyone.They usually take longer than conventional which will not satisfy a lot of buyers. The process has become better especially when the listing agent is qualified and experienced in the short sale process. The buyer's agent really does not get too involved with the interaction with the lender who holds the short-sale loan but needs to be willing to work with and assist when possible.
0 votes Thank Flag Link Wed Mar 20, 2013
Time, time and time. Local banks can be easier to deal with in a short sale. It depends on your buyers situation as well, are they in a lease and need something sooner than later. Is the home history easy to find out. Some banks can make the process very long up to six months. I would not want my buyers to lose out on a different home because of the length of time it could take.
0 votes Thank Flag Link Mon Mar 18, 2013
Every buyer's circumstances will be a little different. Short sales will often take a long time and have a higher than normal likelihood of not closing. Most short sales are not suitable for most first time home buyers- the challenges are too great for most. Sort sales are good for most investors- they rarely get an emotional involvement with the property and time is(usually) not critical
0 votes Thank Flag Link Sat Dec 29, 2012
Short Sales are misunderstood they can definitely be good deals for savy buyer's who are not afraid of waiting and maybe having to do some work. Yes the process can be long and yes many factors can change while waiting on the approval but the benefits outweigh the risks, in my opinion, when you are getting the property are a good price.
0 votes Thank Flag Link Fri Dec 28, 2012
Short Sales used to take a lot longer to complete. Today, if handled correctly, they can be very advantageous. Feel free to call to discuss.

Best,
Nick
0 votes Thank Flag Link Wed Dec 26, 2012
This is short and sweet - because right now about 1 in 8 short sales actually closes. Those are not odds that I would want to put my buyer thru unless they were truly in it for the long haul and mortgage rates, timing and housing were not an issue.

Lisa Newman
0 votes Thank Flag Link Tue Jul 14, 2009
Short sales are cumbersome transactions. The RE Agent is assuming that the buyer doesn't have patience to wait the negotiations. I know of very good deals out there with short sales and some really good strategies for making the lenders accept the deals in 10 days or less. good luck!
0 votes Thank Flag Link Sat Jul 4, 2009
Thanks for that information about the MI. Something I did not know, and could be very helpful.
0 votes Thank Flag Link Fri Jul 3, 2009
Mark simply put, unless the short sale is already approved in the sense that the seller is approved financially to sell their property via a short sale and the property has been appraised and all documentation complete and they just need a buyer and can close within 30 days, it is a wonderful opportunity for a buyer. However if the short sale is just starting, then the buyer can be facing 6 nmonths of not getting an answers or updates from the bank until they run through their process. One of the things banks dont always tell everyone, is they dont want to do a short sale, if there is PMI on the property, and it goes to foreclosure they are getting paid back where in a short sale they are getting 0 form the PMI company. The buyer broker needs to ask lots of questions of the listing agent prior to even bringing the buyers into a short sale, a few questions can lead to a wonderful deal or head off months of headache and heartache.
Web Reference: http://www.ScottSellsNH.com
0 votes Thank Flag Link Fri Jul 3, 2009
Thanks for all the answers, my client was concerned and I just wanted to get some feed back from other agents. Thanks again-
0 votes Thank Flag Link Wed Jul 1, 2009
As a listing agent of short sales, all I can do is echo the other agents comments.
Depending on who the lender is this process can take 45 days or in the case of one of my properties- 1 yr. Buyers who are NOT patient or need to find a property sooner for any number of reasons should steer clear.
Another reason is that on most short sales the lenders don't pay for much, including termite repairs,back HOA dues or even closing costs. So alot of 1st time buyers can't look at these homes as an option.

The ONLY exception is if the short sale already has an approved price and that approved price is realistic to the given market area. This way you already know what the price is, and what the bank will pay UPFRONT and there is no months long waiting period.

Hopefully this process will be streamlined in the near future to make it proceed faster, but it may take awhile due to the intricate web some of these loans are woven into.

Hope this helps!
Micki
0 votes Thank Flag Link Wed Jul 1, 2009
There could be a miriad of reasons. Alot may depend on the initial consultation of home wants/needs of the client and timeframe involved or the clients desire for a certain timeframe, location, price range etc. Perhaps the agent in question preferrs not to deal with short sale properties.

Short sales are a real source of fustration for many buyers and alot of it is the fault of the lending industry, more and more agents I'm finding are less interested in dealing with short sale properties than they are with REO properties. When in doubt ask your client's agent to discuss why and perhaps you can all explore the best options for the client.
0 votes Thank Flag Link Wed Jul 1, 2009
Buyers of short sale peoperties place bids and the REO entity selects who wins (if any). Typically the 1st go round must be owner/occupant buyers before the 2nd round allows investers. A buyer could submit many bids and never get selected. The process is also complicated and the buyers must wait on the REO to decide which is frustrating. Such buyers must be very patient.
0 votes Thank Flag Link Wed Jul 1, 2009
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