Short Sales: The Times, They Are A-Changin
As Bob Dylan so famously said…… “The times, they are a-changin”
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Short sales, REOs and real estate in general are constantly changing, and to be successful, we all know that it’s important to stay current with changing rules, trends, markets and exit strategies. What works today, may not work tomorrow.
We had been working on a short sale for a 3 unit property for 4 months, and were very close to an approval letter when we got word that the owner had been thrown into bankruptcy (problem with a partnership) and the property was under the jurisdiction of the bankruptcy court. We could not move forward with the short sale. The listing agent, buyer’s agent, buyer, and buyer’s lender all prepared to wait for the property to be released. It was hard to watch the property sit and deteriorate, but nothing could be done.
Finally, last week after 3 months, we got word that the Federal Bankruptcy attorney was releasing this property so it could move forward with the short sale.
The buyer and listing Realtor were jubilant, and wanted to proceed immediately to get the approval letter and schedule a closing. When we dusted off the file, it became immediately apparent that in those 3 months, we had drastically changed our process. Not only have the new MARS requirements come into play, but the way we deal with lenders, what they will accept and our exit strategy are very different than they were 3 months ago. As you’re adjusting day to day, you don’t realize that the small changes you’re making add up to BIG changes over time. Looking at this file with today’s perspective was eye-opening, and made us realize how much had changed in 3 months.
The short sale lender had closed the file since the property was tied up in bankruptcy court, so we need to start the process over. We will need to write a different purchase agreement with the buyer, and our exit strategy will be adjusted. We are confident that the buyer will be rewarded for his long wait, and we will get an approval letter and close this property.
If we had been stuck in the rut….trying to do business the same way for the last 3 months…….we would no longer be successful. That’s why it’s so important to stay current, read the blogs and message boards, and constantly adjust your business plan for a changing market. In real estate, just like most other businesses, if you are not learning and adapting, you are going backwards! Many of the books and “Guru” programs that sell you a “how to” system to make money in real estate are outdated before they get to you! That is why we think that a forum like BiggerPockets is a much better place to get up to date information on real life questions by members that are actually doing business now.