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Representing buyers in short sales? Iron out your business

Do you iron your own clothes? I mean, do your really press your own clothes with spray starch and the like? The other day I heard a story about a gentleman who always wears a sport jacket over his shirt. So, when he is pressed for time (pun intended), he only irons the front of his shirt. Who cares, right? That’s the only part of the shirt that anyone is going to see anyway. So, the visual impression is that he is well put together, yet I just told you what is really going on behind the scenes (on the back side of the shirt).

What if you were writing an offer on a short sale and you were under the impression that the real estate agent was well-organized, professional and experienced, yet you later learned that the back side of the agent’s shirt was not pressed? That is, while the agent appeared to be on the ball and in the game, what if you later learned that the agent did not know how to write contracts or negotiate short sales?

If this happened to me, I would be disappointed. First off, I would be disappointed in myself for not doing my homework. I think that it’s best to do a little bit of research on all of the parties involved in the short sale transaction. It’s my goal for the deal to close; otherwise I may lose a client.

Representing buyers on short sales is a real challenge. Not only do you have to familiarize the buyer with the short sale process, but you also need to make them aware that nothing is set in stone until the bank approves the short sale. And, even then, if the seller does not like the terms and conditions offered by the bank on the approval letter, the deal may go bust anyway.

So, aside from ignoring all of the short sales when out home shopping, what can an agent do?

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Buyers’ agents need to do their own ironing of the backside of the shirt.

By this, I mean that due diligence is important when representing buyers in short sale transactions. Buyers’ agents can look up the number of liens and confirm that all liens are being addressed as part of the short sale negotiations. Buyers’ agents can also be mindful of any pending foreclosure dates in order to assure that they are postponed, if necessary. Buyers’ agents can also work with listing agents in order to assure that there are no other items that may hold up the closing—such as HOA liens, IRS tax liens, unpaid child support, etc.

After all, you do want to get to the closing table and see that when the listing agent takes of his (or her) jacket, the back of their shirt is just as well-pressed as the front.

(Pressed shirt story courtesy of Jeremy Blanton)

On another note: I just wanted to wish all of my Agent Genius friends and colleagues a very happy holiday. For those of you who are regular readers and follow my short sale adventures, I am grateful to you for your thought-provoking comments and your loyalty. Happy Holidays!

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Photo: Flickr Creative Commons by lohb

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.

24 Comments

24 Comments

  1. Jessica Bradfield

    December 21, 2010 at 10:25 am

    As a brand new agent, I would fall among the inexperienced in pretty much everything. I do, however, have a very helpful mentor and broker who are very willing to support me in my early transactions. Yes, do your homework, but remember that you can’t be experienced without having a way to gain that experience.

    • Bob Wilson

      December 28, 2010 at 4:23 pm

      “I would never put my buyer into a short sale purchase contract when the individual doing the short sale negotiations did not have experience.”

      Along the lines of Jessica’s point, this is a slippery slope when it comes to ethics as making a judgment on competency or experience is purely subjective.

      • Melissa Zavala

        December 28, 2010 at 4:40 pm

        When you’re right, you’re right. I’ve changed my language a bit. Thanks for the feedback.

      • jeffroyce

        December 28, 2010 at 4:47 pm

        Judging experience is not subjective. There is a big difference between a listing agent doing their first or second short sale, and one who has successfully completed 25. Buyer agents need to give their clients that information.

        • Bob Wilson

          December 28, 2010 at 7:07 pm

          What if the new agent is using Melissa’s company to handle the short sale? Are you still going to make what IS a subjective opinion about the agent’s ability to get the transaction closed? I read all the time where agents make what amounts to illegal statements about refusing to show certain properties for a multitude of reasons, including the fact that some agents use 3rd party companies like Melissa’s to handle their short sales*.

          Regardless, that is an area of ethics and agency (at least in California) that needs to be handled delicately.

          *note: I would use Melissa’s company in a heartbeat, but like agents, not all of these types of companies are created equal.

          • jeffroyce

            December 29, 2010 at 7:42 am

            Bob…I agree with you that there are certain situations that have a better chance of closing (like using a good short-sale negotiator), but there is nothing like seeing that an agent has been successful.

            Also, I am not saying not to show those houses. I’m saying that our buyer clients should get all relevant information before they jump into a situation that could have them sitting and waiting for nothing for six months. If there is a negotiator, we should get stats on their track record.

            I do this on “regular” sales as well. When you are negotiating with an agent, it is good to know how experienced they are, at how much of a discount they typically sell homes, and how busy they are right now. This is information a buyer needs to make decisions when they are negotiating.

  2. Rob McCance

    December 21, 2010 at 2:01 pm

    Representing a buyer in a short sale closing tomorrow at 2pm ET.

    I won’t really believe its going to happen until I walk away with the check.

    I have ridden ALL parties like cheap rented mules for the last four months. There have been plenty of incompetent parties in this dealio.

    Even the Listing Agent “short sale specialist” tried the ole “we didn’t know about the HOA” last week, a week before closing. Tried to get me to chip in.

    Ha ha – no.

    I told her, we ALL know about HOAs and at this juncture YOU can pay it, not me, my client or their parents. If you are listing a short sale in a HOA community, you can bet there’s a HOA balance that needs to be dealt with and you can start finding out the details FOUR months ago. Not seven days prior to closing.

    Can I get an a-men?

    How bout a wha-whaaaat?

    Ok, forget it.

    🙂

    • Melissa Zavala

      December 21, 2010 at 2:30 pm

      Amen.

  3. Jeff Royce, Frankly Real Estate

    December 21, 2010 at 5:12 pm

    The most important factor in getting a short sale to closing is the skill of the listing agent. The best thing a buyer agent can do for their client is to investigate the skill level of the listing agent.

    A buyer agent should tell his client the number of short sales the listing agent has closed in the last year. The client should also be told the average time the listing agent’s past sales have taken between the contract date and the closing date.

    As agents, we have all this information available to us on the MLS. We need to give this to our clients before they write an offer on a short sale so that they know what they are getting in to, and they know what the chances are that the short sale closes.

  4. Agent for Movoto

    December 21, 2010 at 6:56 pm

    wow, that’s pretty brave. what if it gets hot and he needs to take the jacket off? what then?

  5. Brad | Home Loan Artist

    December 28, 2010 at 7:06 pm

    great analogy Melissa. I was actually preparing to write a post on choosing a loan officer and was going to use the image of the wizard of oz to illustrate a point. Once you look behind the curtain and see who’s really behind the big name (all powerful OZ), the borrower’s warm and fuzzies may go bye bye real quick about how well their loan approval goes. Awesome post.

    • Melissa Zavala

      January 1, 2011 at 10:32 pm

      I love your analogy better than my own. Did you write that post? If so, I’d love to see it.

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