Which should come first in a short sale? Putting the house on the market and and getting a buyer OR contacting the bank first about the list price?

Asked by Deployedbride, Las Vegas, Las Vegas, NV Fri Jan 20, 2012

There seems to be two schools of thought on this? Which is correct or better, which gets the bank to cooperate? It seems a good idea to get the bank in on the first step so they are OK with the price. But then again, coming to the bank with a buyer in hand might also be better. Which is it?

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Steve Matthe…, Agent, North Las Vegas, NV
Fri Jan 20, 2012
Hello again,

Actually, there is a possibility that you can qualify for a HAFA short sale, which means that you can receive a pre-approved short sale price prior to obtaining a buyer. If we are successful in getting HAFA approval you will be guaranteed a waiver of deficiency, and your Lender will give you up to $3000 as a moving allowance. This requires that we contact your lender up front. Personally, I prefer to put your home on the market at what we determine is market value while we are working on getting HAFA approval. This shows that we are attempting to mitigate the Bank's loss. There is a possibility that your Lender will not approve your short sale under HAFA guidelines, which means, if we were to wait for their approval or disapproval, it could put you in a worse position due to the one or two or even three month delay. If/when you do get a HAFA approved price, we simply adjust the price up or down to meet their approved price and then market your home as a pre-approved short sale.

The last HAFA short sale I negotiated, we put the home on the market at a value we felt reflected the actual market while we worked toward getting HAFA approval. Unfortunately, when the pre-approved price finally came from the lender it was 20% over market. The reason it was so high was due to a bad BPO agent (but that is a subject for another post). We were able to prove through evidence of our marketing effort at a lower price and showing comps that supported a lower price than our approved price, got the price lowered and got an offer which was acceptable to the lender.

Please feel free to call me, so we can discuss your worries, concerns, and see if there is a fit between your needs and my ability.

Best wishes, and thanks for reading.

Steve Mathews
Prudential Americana
1 vote
Wendi Willia…, Agent, Las Vegas, NV
Tue Sep 11, 2012
Hi, Deployedbride.

This article should answer most of your questions regarding Short Sales:

Las Vegas Short Sale Types And Tips

Short Sales are probably the most dynamic component of the Las Vegas real estate market. First of all, there is nothing “short” about them and it’s a bit of mystery of how or why that term came about. There are real benefits to these types of distressed property sales.

What are they?

In summary, a short sale means that the bank is taking a loss on a mortgage to get rid of an asset. For example if Johnny owes $100k on a house and finds a buyer willing to purchase it for $70k, Johnny is asking the lender to take a $30k haircut. This is where you step in and can make money, if you do it right.

The Two Kinds

An unapproved Short Sale means that the bank is aware that the owner is motivated to do a sale but the bank hasn’t formally agreed to take a haircut. The process for getting an approved “short” is hugely complex, involves a considerable amount of luck and is driven by the skill of an experienced short sale agent. An inexperienced agent will slowly bleed everyone to death a year later. It takes an experienced buyer’s agent to recognize one. Unapproved short sales often take between 2 months and 2 years to close!!!

An approved Short Sale means the bank has formally agreed to take a haircut. This also means that a buyer has made an offer and the bank accepted it. When these buyers do not execute on their offer you can jump on it. Unfortunately, this means that if you want to purchase an approved one, you have very little time to act (usually less than 48 hours) and you won’t have time to fly here to kick and smell the property. You will need an experienced agent to get a deal like this.

Please feel free to contact us for more specialized information,

LV Property Search
0 votes
Michael Parks, Agent, Las Vegas, NV
Tue Aug 21, 2012
This would actually depend on the bank (more importantly The Investor) you're dealing with. There are a few variations of programs that will allow "Pre-Approved Price" short sales. Bank of America is currently one of the most supportive of this program, and as I'm writing this email they are offering homeowners between $5,000-30,000 if they submit a short sale Without an offer (subject to them qualifying for the short sale of course). They also have the HAFA short sale program which offers $3,000 to the homeowner at closing (whether submitted with or without an offer). That being said, the majority of banks & investors as of now will not process a short sale without an offer. So more times than not you'll probably need an offer before submitting the short sale to the bank.

So the first step is to determine which process your bank or investor is utilizing, then proceed with whichever process is more favorable to your homeowner. Either process will work, but knowing your banks process can be the difference between receiving thousands of dollars for your homeowner at closing or receiving nothing, so be sure to confirm before doing anything.

Michael Parks
Broker (CDPE, CSP)
0 votes
gbsresfix, , Las Vegas, NV
Mon Jun 18, 2012
It would seem that if one has a buyer, than contacting the serviceor would be a bright idea to find out what its going to take to succesfully qualify, Money always talks, research to date states a short sale could not even begin without a full appoval from the bank as they set the price along with negotiating seconds, thirds, insurance issues, cash settlemant probabilties and serious qualification issues. "Intention" to list at the recomended BPO, is the optimum, so its almost a parallel operation, realize that not all short sale negotiations are going to be sucessful, along with the risks of posession, vandalism, and exiting issues. No guarantees for sure. A lot of research as I just learned something new from Kurt below, fascinating process for sure. Funny Process, Mediation, BK or loan mod, aaahh, short sale qualifiers, internal short sale negotations process,an all involved approval with a possible cash or kill issue, deficiency write offs, realization of tax issues, which is why the shorts sale process is expected to begin an extreme acceleration. RE is challenging and exciting, always be open minded, as it always helps to have an experienced attorney available for comsultations, and a whole lot of patience. :)
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Terry Bell, Agent, Santa Rosa, CA
Sun Jun 3, 2012
It all revolves around getting new financing for the buyers, so determining the fair market value is the first place to start for both directions. Do your market analysis, list it accordingly and start discussions with the bank submitting your opinion of value. In any case they will do their own BPO, so just get the ball rolling!
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Jeffery Sklar, Agent, Las Vegas, NV
Mon Jan 30, 2012
I would do both at once. List the home and start contacting the bank to get the ball rolling. Listing the home will speed the process along as you do need an offer to short sale a home. I know you can get an approval prior to selling but having a bona-fide offer helps the process greatly.

Jeffrey Sklar
Property Manager
2012 Vice Chair GLVAR Property Management Committee
Southern Nevada Property Management
8871 West Flamingo Road Suite 202
Las Vegas, NV 89147
Phone 702-522-6764
Fax 888-203-2779
0 votes
Kurt Grosse, Agent, Las Vegas, NV
Sat Jan 21, 2012
Hello Deployed Bride! I will be lucky answer number 12 for you to contemplate. Let me start by saying that I specialize in upside down properties and am also a home retention counselor. What I do is stratigize with you about what is the best solution to your particular case. HAFA is a great way to go but also no one below who's answered you has mentioned Nevada's Hardest Hit Fund which will relocate you, help pay your bank and make a house payment or two for you if you qualify. There is no one answer and each seller needs a strategy. You should also plan for what your goals will be down the road. To answer your particular question, I believe it should all be done concurrently. Apply for everything! I can help. Visit my website to learn more or give me a call and we can talk. Looking forward to hearing from you, Kurt 702-656-8987.
0 votes
Suzie Marqua…, Agent, Las Vegas, NV
Fri Jan 20, 2012
Great Question. I like to list the house to start the short sale process. We have it listed and we have the short sale package and supporting documents to submit to the servicer. Most servicers are not going to set the process in motion untll you get an offer on the property . The only deviation is that some sellers may qualify for the HAFA program. If the seller can qualify for HAFA we want to get the BPO done as soon as possible to make sure our listing price aligns with what HAFA determines the sale price should be. I like to submit a complete short sale package ,have the property listed close to the comparable sales, talk with the lender/servicer and submitt the package to get started while marketing the property for an offer. If we are not getting activity on the property I drop the price regularly until we get an offer to submit to the servicer. I have completed many short sales using this scenario. When the short sale sale is being processed I allow reasonable time frame for processing. If I am not getting the answers I should be getting I escalate the file to a senior vice president(SVP) and if necessary to the CEO's office. Make sure you have a savvy experienced Realtor. I am always available to answer any questions you have.
Thank You
Suzie Marquardt
0 votes
Robert Peddi…, , Las Vegas, NV
Fri Jan 20, 2012
Generally speaking, most lenders will not consider a Short Sale Offer until there is, "an Offer." Another words, I am of the school of thought that would advocate listing the property and obtaining an offer before approaching the bank. Having said that, I will also advise that my clients begin the process of trying to obtain a Loan Modification (maybe HAMP), while waiting to receive an offer on their listed property. It has also been my experience that when a client is current on their mortgage payment the banks will not approve the short sale offer. Having said that, an ideal situation for me is when I am invited to the client’s short sale event just prior to their 1st missed payment. The reason I want to be involved from the beginning is because it reduces the risk that the bank will foreclose during the process of trying to obtain and process the short sale offer from a proposed buyer.

My response here is a short attempt at trying to answer your initial question, but this subject has a lot more moving parts that you need to consider. There are potential tax consequences for example. And, today that risk is greater than ever, because as of now there has not been any indication from congress that they are going to extend The Mortgage Debt Relief Act of 2007. Depending on whether or not that IRS Act is extended, someone who fails to settle their short sale during this year may find out their tax liability is significantly greater than if it had been handled while The Mortgage Debt Relief Act of 2007 was in effect.

Another subject that may be important to consider is asset protection strategies in the event that a waiver of deficiency is not obtained. For Nevada, the time period for filing a deficiency judgment by your lender is 6 months. However, they can file this deficiency judgment and can enforce it later against you, (Refer to NRS 40.455 Deficiency judgment: Award to judgment creditor or beneficiary of deed of trust).
Information is always going to be your best most reliable tool. There is a lot of confusion about this subject, so pick your trusted adviser very carefully. Give me a call and let’s begin the education process.

Robert K. Peddicord
Real Estate Consultant
Prudential Americana Group, REALTORS®
Direct: (702) 218-3974
E-Fax: (702) 317-3371
Email : robertp1@americanagrp.com
Web : http://www.peddicordconsulting.com

871 Coronado Center Dr.
Suite 100
Henderson, NV 89052
0 votes
Francesca Gi…, Agent, Henderson, NV
Fri Jan 20, 2012
Deployed bride, I respectfully disagree with Steve in one respect. There are certainly some people who have to use an attorney and pay a retainer fee and there are certainly agents who don't want to or can't negotiate short sales themselves, HOWEVER, there are competent agents who handle short sales and process them with great success. That isn't to say that we never refer to an attorney, because there are certainly times that we recommend that, but oftentimes, it is not necessary. That being said, it is important to know that agents can't offer legal or tax advice regardless of how your short sales are handled.

I also disagree with Kelly that you should list your house first. I have a homeowner who just got approved for streamline short sale and that happened because we didn't list his house first. By doing so, he is being released from over $250000 in debt and getting a relocation incentive. BTW, we negotiated this ourselves, without an attorney...

My advice to you is to set an appointment with someone as soon as possible. As the gal from Florida pointed out, time is not your friend in this situation. Again, good luck.

Francesca Gilbert, CRB, CRS
0 votes
Jeff & Kelly…, , Las Vegas, NV
Fri Jan 20, 2012
You need to speak to your Realtor first because each case is individual. I give my clients the knowledge of the process and expectations when I meet with them. I caan give you the paperwork needed on the first visit and generally we put the home on the market first. Banks sometimes want a value above what the market will bear and it is my job to make them come down to what is realistic.
I have links on my website that may be helpful:
0 votes
Steve Mikrut, Agent, Henderson, NV
Fri Jan 20, 2012
All these "experts" and you can't get one clear answer. That's how it goes with Las Vegas short sales. The correct answer is that it depends on your servicer and situation. MOST of the time you would have an agent list the property first. But how about a Bank of America Streamline Co-operative short sale? In that case you better not have listed it first or you will screw yourself out of some benefits...including $2500 at closing.

Here's another thing to consider. It is possible for an agent to be a "certified short sale agent" and never have closed a short sale. Most people wouldn't think that's possible. All it means is that they went through a certification program.

These are intricate deals that take a lot of attention and you really need to pay attention to who you choose. If I were you I would choose an agent that DOES NOT negotiate short sales themselves. Many agent, like myself, have paired with with a law-firm and negotiating company to handle the negotiation. It's free to you as the seller and me as the agent. You get sound LEGAL advice, not opinion. And you get a negotiating team that sees several hundred approval letters a month. Approvals, verbiage, rules, etc are changing all the time so you need someone negotiating for you who knows what banks are doing TODAY.

This decision will affect the next 7-10 years of your credit rating AND could leave you stuck owing money at the end of it all....be sure to choose who you use wisely.

0 votes
Rena Levy, Agent, Las Vegas, NV
Fri Jan 20, 2012
Most bank will look into short sale process once there is a buyer in place. Some banks will send paperwork to homeowner that wants to participate and start the short sale process. 
I recommend that you contact a certified short sale Realtor and list your house for sale first. The agent and you will detarmain the list price base on the most recent sold properties in your subdivision. Once there is an offer accepted from a buyer, that there are some financial information that will need to be provided to the bank along with the listing and purchase agreement. 
Once the bank receives all necessary documents from you, they will assign a person to do a broker's price opinion ( an appraisal ) to estimate current market value. 
most banks will work with a home owner on a short sale even if they are not late on their payments but have a hardship!
I will be happy to meet you and provide you with a short sale guide book and any information regarding the short sale process. 
I am certified short sale agent and have been helping home owners with selling their properties in a short sale since 1997. 

Please contact me at 702-612-7099 or visit my website at cvegashomes.com 

Rena Levy 
Realty Executives of Nevada 
Web Reference:  http://Www.cvegashomes.com
0 votes
Annette Law…, Agent, Palm Harbor, FL
Fri Jan 20, 2012
As others have stated, you situation needs to be assessed.
As much as we read about the prevalence of short sales, they are all unique.
You may find it best to consult with a truly multi-disaplined real estate professional.
Your professional will be aware of the behavioral patterns of the lender and their requirements.
Based on your situation, there may be other options that could result in a better outcome for you. Consulting with your CPA or attorney may prove beneficial if you have other assets.
Understanding what your end-game, is ESSENTIAL for the process be started correctly. There are long term consequences for a bad start.

On nearly a daily bases, banks such as Bank of America pile on additional obstacles that complicate the process. What we know to be true today, can eaisly be false tomorrow. It's hugely frustrating for everyone involved. The homeowner, the buyer, all of the professionals involved, it's a mess.

Give one of the pros who have responded and get an assessment of your situation. Time, in the case, is not your friend.

Best of success to you.
Web Reference:  http://www.MyDunedin.com
0 votes
Tim Moore, Agent, Kitty Hawk, NC
Fri Jan 20, 2012
I have to disagree with Petra somewhat. All too often an agent and a seller decide to list a house as a short sale without talking to the bank at all. Sometimes the seller is current on payments and is not in a hardship at all, just upside down and wanting out. This type of scenario will never close because the bank won't accept any offers, no matter how good since the seller does not meet the criteria for a short sale. As far as talking with the bank, they will most often NOT discuss what they will accept in a short sale because they have not done any work to find out what the current market value is yet. The listings that say "Bank Approved Short Sale" are the ones that have done the work before it is listed and they have the best chance to sell.
0 votes
Francesca Gi…, Agent, Henderson, NV
Fri Jan 20, 2012
Hi, again the answer depends on who your servicer is. Some allow you to proceed without an offer and some require you to have an offer. Some will set the list price for you but you CAN'T have an offer. You seem to have a lot of questions...deciding on whether to do a short sale or not has a lot of possible effects. You should really try to sit down with a reputable agent and get all of your questions answered at once so you can make a good decision. When you do hire an agent (banks require you to list the house) you want to find out how many short sales they've closed, how many with your servicer, what their % of short sales closed is AND what percentage of deficiencies they get released is. If you have an agent negotiate your short sale, you want to make sure they really are experienced. Have a great day and good luck!
0 votes
Petra Reyes, Agent, Las Vegas, NV
Fri Jan 20, 2012

FYI short sale is my expertise area. Definitively recommend to put property in the market first, and let Realtor to contact lender in your behalf. The next step is to gather required paperwork and send it to bank. Bank will order an appraisal or BPO and determine property value. Some of the paper work required is not submitted until there is an offer.
Strongly recommend to put property in market first and let Realtor work for you for free. Keep in mind Realtor does not get paid unless property sells and the commission check comes from lender, and not from you, the homeowner.

Petra Reyes, Realtor
0 votes
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