Four Questions To Ask A Short Sale Listing Agent

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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.

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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.

Photo: UvaFragola

About Author

Katherine Grote, co-founder of I Buy Austin Houses.com, (Google+) has been involved in real estate for 7 years. Through her experience, Katherine has gained the expertise to sell a home fast. With experience in short sales, REO's, multi-family, and rentals, Katherine is a well-rounded licensed Realtor as well as an avid investor in residential properties.

8 Comments

  1. Here is another very important question.
    Are you using a negotiator to go between the agent/buyer and the bank?
    If they are using a negotiator it is usually a good sign that things wil get done correctly, but that negotiator also charges a fee. It usually states in the contract if the bank will not pay that fee, the buyer is responsible for it.

    • EXCELLENT question!! However, I personally choose to deal directly with the parties myself as opposed to getting another party involved. For me it’s just one more moving part of the puzzle to keep track of. Additionally, If the listing agent knows their stuff a negotiator is not typically necessary. But I do have collegues that swear by using one. I think if it works for your business model and makes your life easier, then go for it!

  2. Thanks for the info Katherine. I read here on BP that some investors feel it is a waste of time to deal with short sales since the banks can pull the whole deal from under your feet and go to court house auction? I visited my local sheriff’s office sales for the first time and they said they open the bidding at the minimum redemption value or something like that? I need to find out what that is? Is that the short sale value or what is owed the bank?
    I have a house I am interested in here that the owner is the realtor and a mess, losing her license, properties, was very successful in the past but ill now; major rehab went south no one wants, totally gutted on the inside in a very good sales area. She is behind on the loan she says, the bank does not want it back we figure, she has mentioned short sale but wouldn’t tell us who the bank is, but I found out at the register of deeds office. I have been told the banks will not talk to me, I have not tried. A buddy of mine says the whole court step thing is a hassle.
    Not sure what to do with this one so I gave up. I got no clue how to find out when it is going to short sale or if I should care. I’m wondering why it has been on the market so long listed with her, and if she will handle the short sale. Seems like a mess not a good first time property for a newbie. 🙂

    • Hi Terry,
      I wrote a blog post a few weeks ago about how to push a short sale through. I personally am pretty negative about short sales for our investment company but I got hammered by a couple of readers about my post because of my negativity LOL! Apparently they’ve been very succesful with it for their business. Which leads me to this point. It all depends on what area of the country you are in and your market. Here in Austin it’s just a wild and crazy hot market. Typically short sale go through at market value and there isn’t a lot of room for fix and flips in the price. But I do see some good deals as far as buy and holds go.

      As far as your situation goes, a homeowner has to agree to the short sale and actively participate. If your lead, the agent/homeonwer wants to, she probably could short sale it. But she’s gotta help drive it. Here’s the blog post I did about short sales…there’s some good info here I think and frankly ALL over the bp blog! https://www.biggerpockets.com/renewsblog/2012/12/28/adventures-in-short-sales/

      We don’t do court house step auctions because here they’re pretty useless. Also a lot of times the big lenders will hold on to foreclosures and list on the open market. Unless it’s a tax sale which is different.

      There’s tons of great info on the BP site. Good luck and happy investing!

  3. My favorite question is “who is the Lender?” If it’s a Certain Bank, I will have to consider passing on the deal or at least know that it will be a long while before the deal will Close. While most of my Short Sales Close within 45 days, with this Particular Bank they tend to take months. I bet You can Guess which Bank, I’m reffering to.Would You agree? Any way I liked Your Artcle. Happy Friday!!!:•)

    • LOL!! Oh yes I can name that bank. Which is funny because I’ve had some deals fly through with them and other ddrrrraaaagggg. The worst right now is an FHA deal that I have. Come May it will be a year I’ve been dealing with them!! Thanks for reading and have a great day.

  4. Hi Katherine! I’m working on my very first short sale (in VA) and have been researching all kinds of information online in this pursuit. As you mentioned previously, I am finding conflicting information. My client has 2 loans on his property. I have listed the property and after a CMA established what I believe to be an attractive list price. If this transaction closes at close to this price, the 1st could be paid in full, but the 2nd would end up with about 60% of what is left on the 2nd loan. In this scenario, does the 1st even need to approve this short sale, or just the 2nd? BTW, my customer is behind on both loans, about 2 months on the 1st and 3 months on the 2nd. I’ve reached out to both lenders, but seem to get conflicting info as to what the processes would be to proceed and hopefully avoid foreclosure. I’m assuming that as soon as either would start the foreclosure process I couldn’t sell any longer… Any thoughts? Thanks much in advance for any insight! Regards, Bob

    • Hi Bob,
      So there’s a couple of scenario’s that could happen here. First of all, you could just approach the 2nd with the short sale and the amount they would be getting and see if you can get them to accept that. They may surprise you and say yes, depending on the lender. More than likely however, they are going to ask you if the 1st is getting paid in full and then tell you what they will accept at that point. If that is the case, you will have to proceed with going through a short sale with the first in order to get what or close to the 2nd is asking. That is more then likely the scenario that will play out. Of course again, it all depends on who the lenders are. Hope that helps. Let me know if you have any other questions…..:)

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