As I consider how many buyers it takes to close a short sale, I remember the ad where the question is posed, “How many licks does it take to get to the Tootsie Roll center of a Tootsie Pop?” (Do you remember that ad campaign?) If you actually remember the commercial, you may remember that it takes Mr. Owl three licks to completely devour the lollipop. Despite that fact, the voice over at the end of the commercial tells the viewer that “the world will never know” the answer to that lollipop question.
With regard to short sales, on some occasions you can actually close a short sale with the very first buyer (one lick of the lollipop). For other short sales, the world will never know.
It is a bit of a drag when you work so very hard to obtain a short sale approval letter and then when you get it, you learn that they buyer has moved on.
Sadly, some buyers lose faith in the process and move on–usually right before the approval is received. If this happens on one of your listings, you need to do your very best to provide another purchase offer that meets the exact specifications of the approval letter. The main concern for most banks is whether their net will be the same with the new buyer’s offer. For example, if a buyer was approved at $500,000 with no closing costs, then you need another offer (if you can obtain one) that meets those same terms. If the next buyer wants closing costs, those would need to be added to the purchase price so that the bank’s net will be the same. (It’s all about the HUD-1.) (Note that this procedure of quickly substituting a buyer is not used with Bank of America short sales being processed through the Equator system.)
If you cannot bring in another offer that nets the bank the same amount, then negotiations are delayed and revision of the approval letter could take significantly time.
Before you go kicking and screaming because the buyer has disappeared and you have already pulled out all of your hair, here are some suggested phrases that you could add to your MLS Listing (if permitted by your local MLS) to entice buyers, after you have received approval:
- Don’t Miss Out! Short Sale Fully Approved. Lender says MUST close in 30 days or less!
- Amazing open house planned for this Saturday. At this FULLY approved price, home will be gone for sure!
I truly hope that your buyer can hang on while you attempt to negotiate the terms of the sale. Perhaps the tips that I have shared will help you better navigate the short sale. If not, consider passing out Tootsie Pops and see which lasts longer—the short sale negotiations or the lollipop. I’ve not tried this technique, but I’m thinking I could devour a lot of lollipops during the short sale negotiation process.
Photo: flickr creative commons by Christine J Warner