You may think with a short sale, that you should jump on any/all offers…In my opinion, this is absolutely NOT true!
Choosing the right buyer is as prudent as completing your paperwork with diligence.
If you keep an eye on the real estate market, you may notice homes come back on the market repeatedly. This is typically because non-committed buyers or investors write offers hoping for the deal of the century. During the process, a better deal comes along, or a foreclosure that can close right away appeals to them, and they move on. Not only do you have to start from scratch, if you are in a declining market, you're property value has again gone down. The history on a listing where this has occurred looks something like this:
ßPending again at a much lower price
ßBack on the market after 3 months
ßPending
ßStarts out at market value with gradual reductions
It is not uncommon to see this recurring pattern for 12 months or more. With most major banks no longer allowing foreclosure postponement, it is more crucial than ever to make sure every day counts. Sometimes situations are beyond your control… you get flaky buyers, bank won't accept the offer price, you cannot get a response quick enough, etc. Beyond your control. On rare occasions the bank tells you what they want up front, or specifically ask for you to submit all offers. Very rare. Every situation is different.
For most circumstances here are a few tips for avoiding problems on your short sale, and moving on to a successful closing:
- Make sure buyers know how long it will take by putting an approximate # of days on the MLS listing... and estimate high. That way they know what to expect, and won't walk based on timeline.
- Ask the buyer to commit to 90 days or more, and agree to submit one offer. They give you their loyalty, you give them yours – it is a fair trade, and better in the long run for all involved. Let's face it, most negotiators have 500 files on their desk… do you think they want to sift through 5 crappy offers, or look at one committed offer?
Make sure your buyer is qualified for more in case the bank counters your offer. If you are priced 25% below market value to induce an offer, chances are the bank is going to want more. Make sure the buyer is flexible (just in case). Explain that you want them to get the best deal possible… but you need to know they can buy the house if the price goes up a couple thousand dollars. In simpler terms, if your house is 200k, don't accept an offer from a buyer that only qualifies for 150k… unless you are very close to foreclosure and have no choice.- Lastly, and probably the most important – Find an agent that is experienced with short sales and with your bank. Not too long ago I submitted an offer for some buyers that were insistent they had this house. There were 3 loans on the property, the agent had never done a short sale, and was submitting offers by the dozens to all 3 lien holders. Not surprisingly, it foreclosed and nobody got it. Try a Certified Distressed Property Expert, and if you can't find one – CALL ME. I would be happy to find one for you.
