Buyer’s Agents Struggle with Short Sales
When I conduct one of my short sale workshops for agents, I always get a lot of questions afterwards. Many of these questions are about short sale drama (and boy is there ever drama when negotiating short sales). Who do I call when the bank has not received my fax? What do I do if the second lien holder wants more than the first agrees to give? But, the most common question that I get is from buyer’s agents. It usually goes something like this: “I submitted an offer six months ago for my buyer on a short sale and I call the agent all the time and s/he never calls me back. What should I do?”
Truth be told that buyer’s agents are in a tough spot when it comes to short sales. In many cases they have limited control over the transaction. However, there are certain things that buyer’s agents CAN do in order to attempt to insure that they will not be in the same situation as those buyer’s agents at my workshops.
Here are a few things to consider when representing a buyer in a short sale transaction:
Call the listing agent before you take your clients to the property. If the listing agent’s voice mail message clearly states that s/he will not return phone calls (and this is not uncommon in some areas of the country), then I respectfully suggest that you show other properties first. The absence of a return phone call is most likely a sample of the treatment a buyer’s agent will receive throughout the transaction.
Do you remember the word foreshadowing from high school English? It means “a clue about something that will happen later in the story”. Your short sale transaction is like that short story (or rather, a lengthy literary masterpiece) and you want it to be a good read, not a long drawn out book that you never finish.
Learn more about the listing office’s policies and experience with short sales. Find out who negotiates the short sale. Does the listing agent personally take on the negotiations or are the negotiations handled by someone else in the office? What is the listing agent’s short sale closing history? (You can probably look that up on your local MLS.)
More importantly, does this listing agent submit one offer to the bank? I’ve heard of agents who submit multiple offers to the banks. In representing a buyer in a short sale, I may not want to wait around for 10 weeks just to find out that our offer was at the bank with five other offers for the very same property. Buyer’s agents could use their state contracts in order to negotiate all sorts of terms for the transaction including requesting that only one offer be submitted to the bank.
Add an out clause. In the state of California, our Short Sale Addendum has a section where buyers can add a date by which they request lien holder approval or they will have the option to cancel the transaction. If you are a buyer’s agent in another state, consider some sort of out clause, just in case the transaction is not moving on as expected.
There are all sorts of things that buyer’s agents can do to help safeguard and/or bulletproof the transaction. These are just a few suggestions. If you have any of your own, please share!
