Home Buying in McKinney>Question Details

Buyer, Home Buyer in McKinney, TX

Why would a realtor try to steer me away from placing an offer on a short sale home?

Asked by Buyer, McKinney, TX Tue Nov 3, 2009

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Ronda Allen’s answer
Because they agreed to represent YOU. A short sale is a pain. The bank is certainly not jumping up and down to work these short sale deals. They are slow and tedious. The dates on your offer mean absolutely nothing. They'll get to you when they get to you. Heaven forbid one of the big banks holds that mortgage. Your patience will more likely wear out waiting for an answer than it will take to get the answer. In that case, the short sale was a waste of time for you and your agent. McKinney is still working their way through short sale and foreclosure inventory, where places like Prosper and Frisco don't have too many offerings left. But, go into those short sale and foreclosure offerings with your eyes wide open and don't schedule closings, movers, contractors, or utilities until you hear the words 'closed and funded' from the title company.

Some of the better purchases in 4th quarter 2009 are normal resale sales and builder specs that are finished inventory in the current year. Be open to all the offerings and don't just lock yourself into what you believe to be the best purchase. Trust your agent. Have a blessed day!
Ronda


Ronda Allen-Realtor and Certified Purchasing Manager
CEO of comingsoonhomes.com
RE/MAX Dallas Suburbs-Keith Dobbs Team
#1 Office and #3 Team for RE/MAX in the North Texas Region at mid-year 2009!
Follow me on twitter: http://www.twitter.com/comingsoonhomes
1 vote Thank Flag Link Wed Nov 4, 2009
Buyer
Most buyers go in and say okay, they will be patient but then they become impatient. Great answers below.

My question to you is, did you absolutely LOVE the home.
If so, put an offer. Know up front it may not happen but if your offer is around the comps, then it stands a good chance of closing. Put your patient hat on. Ask that the listing agent keep you updating once a week, even if nothing has changed. I find when there is communication... all parties are happier. Know that the bank could demand money from the seller in the end that they may not be willing to pay... that could make it a bust. If you agent knows which banks that would be helpful in knowing a little bit about how it will be handled.
0 votes Thank Flag Link Fri Mar 5, 2010
Because they don't know how to do them. Short sales take time and expertise. there is also a lot of paperwork in putting together a short sale package. Check out my blog on the subject here in Trulia. it will outline the full process. I am a short sale nspecialist with SFR certification.

Having said that. Short sales can be a GREAT DEAL FOR YOU. It's like buying the same product wholesale rather than paying retail. Why would you not want to do that? Why would a buyers agent not want you to do that? You got me.

Call me if you need help.
best of luck!
Helen Karuba
Virginia Cook Reators
5950 Sherry Lane #110
Dallas, TX 75225
214-534-2020
hkaruba@virginiacook.com
0 votes Thank Flag Link Fri Mar 5, 2010
The agents below have offered the why. I suggest the following suggestion so you can proceed with a short sale offer and your agent will be comfortable with it as well.
In submitting your offer, include the requirement that the Seller hires a qualified Short Sale mediator.
A mediator is far more likely to have the contacts in the bank's asset management and to know the ins and outs of the approval process than even the most experienced realtor. They usually charge a 1% fee at closing, paid for by the creditor bank and in most cases protect the realtor fees. Most importantly, they get the YES or NO answer from the bank much more quickly.
A win for all.
0 votes Thank Flag Link Thu Mar 4, 2010
All great advise here. But it is a lack of knowledge by the agent or he/she is just down right lazy.
Steve Bolgiano
0 votes Thank Flag Link Thu Mar 4, 2010
Many issues are involved with short sale, drama and etc.

When are you looking for move short sale purchase may not work with your time frame.

Have you spoken to your buyer's agent about why's?

Most don't understand I place a disclaimer about 5 working days prior short sale closing ALWAYS drama not due to listing/buyers agent how bank does business. Many agents have stopped doing sales transaction involving foreclosures and short sales.

Good luck

National Featured Realtor and Consultant, Texas Mortgage Loan Officer, Credit Repair Lecturer
Follow me on Twitter: http://twitter.com/Lynn911
Lynn911

http://www.lynn911.com
0 votes Thank Flag Link Thu Nov 5, 2009
Because it is such a gamble. You wait 4-5 months before the bank even DECIDES whether or not to take your offer. And if the prices have dropped during that time, you could end up paying more that market or having the appraisal come in too low. All the while you are waiting and possibly missing out on some great homes.
Yes, I have had some successful short sales, but most are nightmares, like one I have going where the seller is not getting their paperwork into the bank.
0 votes Thank Flag Link Wed Nov 4, 2009
It depends on your situation.

A short sale offer will get submitted to the bank, and it may take 90 days or longer to get a response on your offer. During that time, other offers can be submitted, and depending on the listing agent, they may or may not submit additional offers to the bank. This leaves you in limbo during that time.

If you find a great deal on a short sale and want to make an offer and wait, then you could have an opportunity to get a great deal. You just want to make sure that the listing agent will not be accepting any other offers during the waiting period.

If you have any further questions, please feel free to give me a call or email.

Amy Downs, Realtor
Keller Williams Realty
972.468.5136
http://www.TeamDowns.com
Web Reference: http://www.amydowns.com
0 votes Thank Flag Link Wed Nov 4, 2009
IF you don't mind waiting 3-5 months to have the transaction closed, and if you don't mind having the rug pulled out from underneath you at the last moment, then short sales are for you. Because both of these things happen frequently. It doesn't happen 100% of the time, and when they work they are great. But it can be a very frustrating situation for everyone involved. I had one that was approved and closing in 90 days. I kept in constant contact with everyone. About 2 wks before closing my bank contact went on vacation for a week. No problem, until I called her the day she got back. She never took my calls or answered my emails. I figured she was trying to get caught up from her week off. Two more days pass and still nothing from her. Title company can't reach her either and we are within days of closing. Finally, I get hold of someone else in her department, and the short sale approval has been withdrawn. No closing, and I've got a very unhappy client. No one would give me an answer as to why, in fact no one would give me answers to anything after that. Totally unbelievable. Now, not every situation is like that, but that's an example of what can happen and does happen frequently. I wish you luck!

Jackie
0 votes Thank Flag Link Wed Nov 4, 2009
On average, a short sale will take 3 to 5 months to get an answer from the seller's lender whether or not they will approve the contract. For buyers who need to purchase and be in a home in a shorter period of time, a short sale will not work. Buyers in short sales tend to get frustrated with the length of time in the process and continue to search for properties, and, in many instances, will withdraw from a short sale contract to pursue another property. This also leaves the listing agent without a buyer after so much work has been done to get the seller's lenders approval. The transaction fails for everyone and alot of time and work has been wasted.
Short sales can be a nice buy for those purchasers who can wait and be patient with the process. In the end, they will have a property at a discounted price, and, at today's low interest rates, an excellent buy for the long term.
Now let's be honest. Real estate sales is one of the few professions where a sales agent does not get paid until the transaction is closed. In the case of short sales, an agent can be involved in a transaction for months, continue to show properties because buyers want to see anything and everything at the expense of the agent, and there is no compensation for the agent's counsel, advice, experience, time, paperwork, research etc. Try this with a lawyer, doctor, accountant, or any other service provider. So there's a downside for agents also. But, with proper, upfront education for a buyer, a short sale can be a great deal, and through mutual understanding and agreement between buyer and agent, there can be a positive outcome, with patience. The buyer gets a great deal on a property they really want and the agent gets compensated to pay their bills for the next month or two.
0 votes Thank Flag Link Wed Nov 4, 2009
I think there is a fear in the Realtor community because so many agents aren't familiar with the short sale process and to be honest, don't want to deal with the banks/lending institutions. A short sale comes with a conception that it will take a long time and the lenders aren't committed to the process. I work short sales and foreclosures all the time and can say from experience that is NOT the case. The lenders want to dispose of these properties and get them off their books and their reps are knowledgable and courteous. Having said that, if the seller has not notified his/her lender of the need for a short sale and obtained approval it could take a little longer. You just have to talk to the parties at the other end of the transaction and get ALL of the information so you can make an informed decision as to whether or not it is a good deal for you. Remember, just because it's a short sale does NOT makle it a good deal.

Best of luck and remember, your buyers agent is there for you to get that info and get the house YOU want, at the best terms and price.

Helen
0 votes Thank Flag Link Wed Nov 4, 2009
Could be timing....I normally plan on 60-90 days for closing a short sale. If you wanted the $8000 tax credit they may be protecting your interest.

If you have a limited amount of money to spend for option period and inspections and appraisal, they may also not want you to blow it on a short sale that might or might not happen.

Short sales work best for buyers who have a little extra cash to gamble on what might be a slightly better deal than average and who have real flexibility on move and closing dates.

If you are serious about going after short sales and meet the criteria above, we are willing to work with you if your current realtor won't.
Web Reference: http://www.dfwSnapshot.com
0 votes Thank Flag Link Wed Nov 4, 2009
Bruce Lynn, Real Estate Pro in Coppell, TX
MVP'08
Contact
Hopefully at some point banks will get smarter about short sales. In the meantime expect it to take a horrifically long time to hear anything and a ton of frustration. My last short sale I had the ideal client for. He was retiring to the area in a few months and didn't care when it closed, just that he get in within a year. The bank was surprisingly fast at acceptance. Within 2 weeks we had a signed purchase contract. Days before closing the bank attempted to raise the price of the short sale after getting two appraisals and a lot of kibbitzing. Needless to say my patient buyer soon became my agitated buyer. It's difficult to explain to the client at that point what the banks mindset is and there is a potential to loose the client. Many times they feel it's the agents fault in some shape and form.

Nevertheless, if I have a buyer that is ideal for a short sale I will do my best to educate them about the process and tell them all the things that can go wrong and then do my darndest to make it work.

Hope your situation goes well & good luck!
Web Reference: http://www.ChrisTesch.com
0 votes Thank Flag Link Wed Nov 4, 2009
If you are needing closing costs to be covered by the seller, you are not going to get that on a short sale. They do take a long time to hear back from the banks and you can spend months waiting and end up not even getting the house. It would depress you and your agent in the process.

There are enough homes out there to choose from. If you are in no hurry to purchase and if you were getting the best deal, then you can just insist and explain it to your agent.

Naima
214-289-8555
Naima@Sumner-Realty.com
Web Reference: http://www.SumnerRealty.com
0 votes Thank Flag Link Tue Nov 3, 2009
Because they don't want to have to show you houses for several months while waiting for a response on your short-sale offer?

This is something that you really should discuss with your agent.

From my point of view (that of an agent), here, I've found you a property, but it could take months to find out if the bank accepts your offer. IN THE MEANTIME, you're going to want me to continue to show you properties (aren't you?), and you'll always be comparing them to the dream of having the short-sale accepted.

I'm not saying your agent is right to steer you away, just trying to explain why this might be happening.
0 votes Thank Flag Link Tue Nov 3, 2009
Short sales are extremely unpredictable and frustrating for both buyers and agents. While a short sale may be a great opportunity, these contracts are dependent on the cooperation the seller's first and often second mortgage lien holder. These are financial institutions that have thousands of short sale requests on their desk. The lender must determine for each file whether it is more economical to cooperate with a short sale or foreclose on the property. Their decision is strictly financial and often based on a drive-by property evaluation and market analysis provided by a third party broker who is paid $50 - $75 for their opinion. The most organized of these lenders will have a schedule that might produce a response to your offer within 45 days. This is after the seller provides the lender with a hardship letter explaining why they are not able to continue making their payments and are forced to sell the property for a price that will not cover the outstanding loan or loans. The worst of these lenders may never respond to a short sale contract between you and the seller. You may wait for months without a single reply from the lender. They are not required to respond to any offer.

There are hundreds of short sales on the market right now. Some are listed by short sale experts who have excellent records in negotiating with lenders. Others are listed by inexperienced agents who know nothing about the short sale process but use the short sale opportunity to attract new buyers to a listing that is otherwise impossible to sell.

If you have unlimited time, patience, and have an agent that you trust to research the feasibility of a short sale, then you might be successful in getting a good deal on a property. You will probably find that the most promising opportunities will have multiple offers. You're not the only one looking for a deal.

In this market there are many opportunities for great deals. But even foreclosures are less trouble and have a much higher percentage of closing than short sales. Good luck!
0 votes Thank Flag Link Tue Nov 3, 2009
They generally taken a lot longer to close, and are not always a sure thing, as you are at the banks mercy. We've seen a lot of them verbally accept the short sale, then foreclose on the home. But if you have time, and are willing to take a chance, you should go for it, because not all banks work the same way.
0 votes Thank Flag Link Tue Nov 3, 2009
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