In the past year of working with primarily short sales, I’ve gained enough experience to fill at least one book. I’ve dealt with just about every possible scenario from multiple lenders involved in the transaction to having to dispute valuations from 3rd party agents. Although I was certified through an awesome organization, nothing prepared me for the trenches like the war itself. And quite frankly, a battle is exactly what the short sale experience is like. It is imperative that the listing agent be organized and have a strategy for getting the requests pushed through.
Unfortunately, there are many out there who take on a short sale listing without a clue of what they are doing. Sadly, that was me on my first deal! However, I took the experience and learned from it.
Like Mark Twain once famously said, “A man who carries a cat by the tail learns something he can learn in no other way.”
In addition to being the listing agent, I’ve also had the experience of being on the buyers side on some short-sales as well. I’ve found that my experience as the listing agent in previous deals, has helped on the other side. For example, there are really four important questions that you need to ask the short sale listing agent before submitting an offer.
1.) Have you worked many short sales in the past?
An agent with solid short sale experience will already have whatever necessary financials completed and submitted to the bank. He or she will also have a realistic value for the property and know what the bank will accept as an offer price. They will also have realistic expectations regarding the time it takes to get an offer reviewed and qualified. A seasoned short sale agent will understand the importance of daily calls to the lender, when to escalate the file, and how to request a postponement for foreclosure, which they will have to do every month. Additionally, they will understand the difference between and be able to correctly define the acronyms for HARP, HAFA, and HAMP. I don’t know that I’ve yet mastered this one! But dealing with a listing agent who knows their stuff will save you from wasted time and money.
2.) Have you submitted the financial package to the lender?
The big box lenders all have their own short sale packages that a homeowner must submit to be considered for the short sale. They are full of financial worksheets and information and are required along with the homeowners pay stubs, bank statements, tax records and maybe even blood type (well, it just seems this way). This, along with the 3rd party authorization should have been submitted to the lender immediately. If you are dealing with a listing agent who tells you they are “working” on this, proceed with caution.
3.) How many lenders/liens are there?
It is also imperative to find out how many lenders you are dealing with. I am the listing agent for a short sale that I’ve been working on for almost a year and we are dealing with, gulp, 3 different lenders. My job is to get every last one of them to agree to the amount of money they will get. I keep it fairly simple by telling them, “You either get X amount or zero. Which would you prefer?” But dealing with multiple lien holders is not for the faint of heart, so make sure you know what you are getting into. It typically takes even more time than just a simple single lien holder situation.
4.) How many offers will you be submitting to the lender?
This one is simple because there is only one answer you should get and that is simply, “the best offer”. Lenders do not want to sort through multiple offers. The listing agent’s job is to sort through multiple offers, choose the best, get a HUD-1, and then submit. There should only be one executed contract sent to the bank. If the agent you are talking tells you differently, I would be suspect.
In my experience, I’ve found that with these four questions you will know fairly quickly how painful or painless the transaction is going to be. Depending on what part of the country you are in, a short sale may be a great investment opportunity for you. Working with the right agent can make all the difference in the world!
Good luck and happy investing.