How a short sale is like chess
There’s no question that a listing agent needs to understand the nature of his or her listing. Not only must the agent know the number of bedrooms, bathrooms, square footage and lot size, but the agent must also understand much more about the property and anticipate any issues that may arise in the future sale.
A good chess player can look at a chessboard and anticipate the opponent’s next move. A good chess player also prepare for that future move well in advance. The same goes for real estate. Like a skilled chess player, a savvy agent can anticipate the direction of the sale and prepare for any hiccups or hurdles well in advance. While this is certainly the case with all real estate transactions, it seems even more important with short sale transactions.
Three things to anticipate
Want to improve your short sale game? Here are three things that you may want to anticipate well in advance:
- Will the property require significant repairs? If the property will require significant repair work (such as the need for a new roof or a new oil tank) and this impacts the market value, then the listing agent will need to prepare a packet of information for the short sale lender that demonstrates the issues at hand. This packet should include multiple bids and photos of areas needing repairs.
- What kind of buyers will be able to purchase the property? Based on the location and the quality of the home, it’s possible that the property will not qualify for certain types of financing—such as FHA, for example. If that’s the case, then it’s important to keep that in mind when reviewing offers with your seller.
- Is the home located in a Homeowner’s Association (HOA)? If the home is in an HOA, then the buyer’s lender may look at the HOA’s financials before permitting the buyer to obtain a loan on the property. If there is a low owner-occupancy ratio or a high delinquency rate, then any buyer obtaining a loan may run into some trouble. In this case, it may be better for the seller to review cash offers on the property.
There’s nothing worse than working on a short sale for five months and obtaining your short sale approval letter only to learn that the buyer doesn’t qualify to purchase the property. Sadly, because of the nature of the short sale process, most lenders require that the short sale listing agent (or short sale negotiator) start the process over from the very beginning with the replacement buyer. So, if you don’t want to add another three months to your short sale, it’s best to win the short sale game by anticipating all of the moves well in advance of the end of the game.