It’s going to cost you $500
When I first did a short sale in 2008, I had to give up part of my commission in order to close the deal. The bank refused to budge, the buyer refused to budge and the seller had no money and no time. The listing agent didn’t negotiate in-house and gave up control of the deal to a third party negotiator. The automated pricing matrix kicked in and dropped the list price. The bank refused to honor it. The deal ended up on the bottom of a pile of paperwork and sat on someone’s desk for months. Frantic calls went to voice mail boxes that were too full to accept additional messages. The bank was so backed up, it couldn’t clear its own inbox.
The experience left a bad taste that lingered for years. I vowed never to be sucked into a fruitless short sale again.
2015 is a different real estate market. Inventory is short in the Elgin area and multiple offers are getting more common for regular sales. Investors shy away from short sales for good reason. Short sales frequently attach nearly impossible standards to process their deals. We’ve routinely handled listings with a bankruptcy, two mortgages, a notice of foreclosure, and a wonky title before the real fun begins. Throw in an auction date or an FHA loan and one loose string can unravel the best laid plans.
It’s no wonder that few licensed agents seek out the extra trouble of the notorious short sale. There is nothing short about them. It’s a niche that requires tenacity, people skills, marketing, administrative checklists a mile long and unlimited patience. Each bank has its own documents, requirements, loss mitigation departments and rules to process a short sale. If there are two mortgages, double the workload. The average short sale package to kick off a request has 50 pages. And banks like to have documents with wet signatures, black ink only, in PDF format, faxed AND emailed. If you’ve closed a short sale, thank your admin folks for sticking to it.
Now let’s consider that on the listing agent is dealing with touchy banks plus aggravated homeowners. Besides housing issues and money issues, the sellers may have health issues, or have lost their jobs, be going through a divorce or much worse. Buyer’s agents know that even the steepest discounts on the best properties can sour a buyer enough for them to lose patience and move on to something with far less drama.
But what fun is an easy, simple deal? It would mean a boring blog post.
Streamlined short sales
But I am here to tell you, I’ve seen the bright side. Consider that there are fewer short sales in today’s inventory. I can almost guarantee there will not be multiple offers on the table, so, the competition is lower. If you can put up with 90+ days to process, the discounts on a short sale are still viable for some investors and many are in good condition. One turnkey investor buys distressed short sales and then rents them back out to the homeowner. A high risk endeavor, but every investor is unique in their RE deals.
I’ve come a long way since negotiating that deal a few years ago. In 2015, short sales have matured. Spoiler Alert: short sales are still a huge pain. But they don’t have to be for a buyer. My biggest fear of all that work and no reward is finally fading. Why? Banks are now actively engaged with proper systems in place to push deals through. They know how to crank them out more efficiently.
Who’s ready to take a dip in short sales?
What has your experience been with short sales? Did your deal turn out great or been a nightmare? Let me know!
Jennifer Kinzle is a licensed e-PRO broker with Charles Rutenberg Realty. Contact her via firstname.lastname@example.org or 630-854-4360. http://www.elginfoxvalley.com/