One last thing...
Make sure to have your agent finds out from the listing agent, how they are handling their Short Sale Listings.
Here is how we handle our Short Sale Listings...We price Short Sale listings at what the bank can "Realistically" expect to get for the property. We accept offers until we have Short Sale Approval from the bank. THIS IS THE MOST IMPORTANT PART...we encourage agents to NOT have their client submit an offer over the list price (I will touch on why in a moment).
For purposes of this example I will use one of our Short Sale listing located in the Southwest that is currently listed at $208,000. We have 18 offers on the property, but again I have encouraged agents not to submit offers over list price. (by the way the bank had an appraisal conducted, which is standard on a short sale, and the appraisal came back at $208,250). The fact is that no matter what the home sells for, the Seller will not get any funds from the sale. So our obligation to our seller is to help save them from foreclosure. If one person offers $225,000 for the property and the remaining 17 buyers all offer the $208,000 list price, once the bank obtains a $225,000 offer this is what they will want for the property, as obviously they want to minimize their losses. Now let’s fast forward (for the purposes of this example) to 45 days from now when we get the Short Sale Approval back from the bank. If the buyer that submitted the $225,000 offer NO LONGER WANTS THE HOUSE OR HAS PURCHASED ANOTHER HOME, we now have to go back to the other 17 buyers with a Counter Offer of $225,000 because of that offer. If none of the other 17 buyers are willing to pay the $225,000 for the house, then that puts us back to square one with no one to sell the house to. This also puts the seller another 60 days behind on payments and closer to foreclosure. So by turning the sale into a "bidding war" this has not helped anyone involved, as the seller is now closer to foreclosure, the remaining buyers cannot get the house for a “realistic price”, none of the agents get paid, the bank may now have to foreclose, etc, etc.
Now let’s say the situation is different. All offers are at $208,000 the bank agrees to that price, but now there are only 2 buyers that still want the property once Short Sale approval is granted. On our Short Sale listings this is where your 849 FICO score will help you, as at this point the seller now has to choose which of the 2 buyers offers they will accept. Obviously time is of the essence and they need to be sure that the buyer can close the deal, so at this point we would advise our client to accept the offer that has the strongest buyer and that can most likely close the deal.
When it comes to Short Sales, our client is the seller that is trying to avoid foreclosure, not the bank trying to minimize their losses. And again no matter what the property sells for, the client still does not get any money from the sale. On a Short Sale listing our obligation is to the seller and to help save them from a foreclosure and to help salvage their credit as much as possible. So again causing a “bidding war” could ultimately cause the property not to sell and therefore hurt our client in the end, as it may be too late to obtain another buyer for the property before the bank takes the home.
On our REO (Bank owned) properties and standard sales this is a different situation. Our client is now the bank, or the private seller, and our obligation to the seller is to get the most we can for our seller. So REO’s and standard sales are handled in a much different manner.
Bottom line is that not all agents handle their Short Sale listings in the same manner, so knowing how the agent will handle the sale will help you a great deal.
Please forgive the 3 answers, and this lengthy explanation, but I am trying to pack almost 10 years of Short Sale experience into a few posts on Trulia. - Sun Mar 16 2008, 22:51
Dear LV Home Buyer,
After viewing the responses by other agents, Jason Salsbury hit the "nail on the head". He basically answered your question the same way I did, however he answered before I did (and went into more detail).
Again I have been conducting Short Sales for almost 10 years, and Jason Salsbury gave you the most accurate and complete information in regards to your looking for an agent to help you with Short Sales. If you would like to e-mail me, I can send you a list of the current short sales that my team and I are handling. I am sure there is one in there that will suit what you are looking for, as we currently have over 30 Short Sale Listings. And because of our Short Sale experience we have over 25 agents that are referring their clients to us if a Short Sale needs to take place, so we are getting an average of 3-5 new short sale listings each week.
In regards to "Pre-Approved Short Sales"...If an agent says they have a Pre-Approved Short Sale one or more of the following statements is true...
A. The agent is lying
B. The agent does not know what they are doing, or talking about
C. A previous Short Sale offer was made to the bank(s) and a conditions list was supplied to the agent with the terms by which the bank(s) will agree to a Short Sale. So therefore the agent now knows the terms by which the bank has agreed to a Short Sale.
Many agent out there are claiming to have "Approved or Pre-Approved Short Sales" as they think because they have submitted documentation that the bank requested to "Consider a short sale". However without an offer, most banks will throw this documentation away or toss it to the side. Most of the banks have Loss Mitigation and/or Short Sale Departments which are overwhelmed right now, so most of them will not bother with Short Sale packages (and most of them will not even accept the package without an offer) that have been submitted without an offer by someone to purchase the property. In fact one bank that I am currently working with is so overwhelmed that they have outsourced many of their short sales to "First American Asset Preservation" to assist them in handling the great number of Short Sales that are taking place.
Again good luck in your Short Sale pursuit and if there is any thing we can do to be of assistance, feel free to contact us.
The Goad Team of Century 21 Infinity
(702) 586-2772 - Sun Mar 16 2008, 21:31
While it is smart for you to seek out an agent that has Short Sale experience, the buyer's agent is not the agent that deals with the banks when it comes to Short Sales. All of the dealings with the bank (or banks if there is more than one loan) is done by the Listing Agent and/or the Sellers. So again while you do want to have a Buyer's Agent that is experienced in Short Sale representing you, your agent will not be the one dealing with the Bank(s) in order to gain Short Sale approval. The only way your agent would be the one dealing with the bank(s) is if you are purchasing the home directly through the listing agent on the specific property you wish to purchase.
Good luck to you.
John Goad, Jr. - Sun Mar 16 2008, 20:23