Hot, hot, hot
For the last two hours, I’ve been listening to an agent in my office take call after call from agents inquiring about his new short sale listing. This listing is hot, hot, hot. He just put it on the market yesterday and the phone has not stopped ringing. I admire his patience really because he is getting many of the same questions over and over again.
Here are some of the common questions that buyer’s agents ask short sale listing agents:
“Is the short sale pre-approved?” No. The short sale is not pre-approved. Despite what you may have heard, there is no such thing as a pre-approved short sale. There are banks (like Bank of America) and programs (such as HAFA) whereby a listing agent may receive a pre-approved purchase. However, only will you have an approved short sale when the bank generates a short sale approval letter that names the specific buyer that is purchasing the property.
“How many lenders are there?” Why do you ask? This question demonstrates that the caller has not done due diligence on the property. In most of the MLS’ around the country, you can access the public records and see the number of mortgage loans currently held on the subject property. While a question about the number of mortgage loans may reveal a bit about the time it will take to get the short sale approved, it will only be effective if followed by a question about the mortgage lenders. This is because a short sale with two liens at Bank of America may receive approval much more quickly than a short sale with one lien at my local credit union.
“My buyer is not qualified for more than the list price, and I think the price is low. What should I do?” You may want to move on. If a buyer’s agent has done a comparable market analysis and believes that the list price on a short sale is a little bit low, it’s best to set buyer expectations and explain that the bank may be countering the purchase price after conducting a Broker Price Opinion. If the buyer is not willing to accommodate a modification of the terms of the offer later in the short sale process, it is best to purchase in an equity sale.
What can be done to avoid these problems?
Read the MLS remarks—including confidential remarks and showing instructions. Often times, specific guidelines for offer submission are included in the confidential remarks. In situations where there may be multiple offers, the offers seen in the best light generally come from agents (and buyers) who follow instructions; are flexible, professional, and easy going.
Another way to avoid the barrage of questions is through agent education. It is the broker’s responsibility to assure that all his or her agents have received thorough training. If agents are writing offers on short sales, brokers need to thoroughly school their agents on how to discuss the short sale process with prospective buyers; this conversation needs to address the risks involved in writing an offer on a short sale.
Lastly, it’s important for buyers’ agents—even in a seller’s market—to slow down, take a deep breath, and learn about the subject property before dialing the listing agent. This due diligence may include searching the property in the public records, investigating any mortgage liens, and checking into any prospective foreclosure dates. After all, if the foreclosure auction date is tomorrow, you and your buyer may want to move on and look at properties that are actually viable short sales.