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A short sale can be like the slowest read in the library

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.)

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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!

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Written By

Melissa Zavala is the Broker/Owner of Broadpoint Properties and Head Honcho of Short Sale Expeditor®, and Chief Executive Officer of Transaction 911. Before landing in real estate, she had careers in education and publishing. Most recently, she has been able to use her teaching and organizational skills while traveling the world over—dispelling myths about the distressed property market, engaging and motivating real estate agents, and sharing her passion for real estate. When she isn’t speaking or writing, Melissa enjoys practicing yoga, walking the dog, and vacationing at beach resorts.

14 Comments

14 Comments

  1. Michael Bertoldi

    May 11, 2010 at 11:22 am

    Thanks for the advice Melissa! My first transaction was actually a short sale and we were blessed to have a great agent on the other side of the deal. Things are moving along and set to close this month.

    One of the reasons we (my mentor broker and I) took on this short sale is because we knew the agent on the other side was a good one and the bank had already approved the short sale amount. Glad this one wasn’t a mess!

  2. Dean Ouellette

    May 11, 2010 at 3:38 pm

    Melissa, great post with some good advice. The key really is to interview the agent before you even show the the house and give yourself an out after 90 days.

  3. Mike

    May 11, 2010 at 6:34 pm

    I would never leave the contract open for 90 days. I would use 45-60. If it’s been approved already, then definately no more than 45. It can always be extended at the buyers request. Also, I use a, “Listing must be under contract within 48 hours of ratification, and remain that way” clause. You want to know that no more offers will be coming in.
    As far as the agents closing history, I’ve been saying this for a year at least. YOU MUST, check the MLS for closing history. Even if the agent has not listed or closed a SS, I want to see some closings from the listing side, and very few withdrwan/expireds. If you aren’t researching the history of the LA, then you simply are not representing your client in a professional manner.
    You should know as much as you can, and explain it to your client before an offer is made. There are too many agents listing SS that have no business doing it. Why put your client, and yourself in a losing situation?
    -Mike O’Hara

  4. Ricki Lynn Miller

    May 18, 2010 at 1:29 pm

    Thanks Melissa, You’ve always given me a new idea with each of your article’s. I appreicate you.
    My experience with Short Sales has been good compared to other agents in my office. The best piece of advise I can give my clients is to be Patient, and I’m not talking about a 2 week period of patience. This Real Estate Market is a learning experience for all of us. Our industry is changing on a daily basis and we must all learn to be flexible. Of course due diligence is a must for both client and agent. But anything worth doing is worth the wait. And remember, be NICE. You never know what’s going on, on the other end of the phone. We have the ability to change the future for ourselves and our clients.

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