(Update 6-16-08: This post was featured in the Washington Post)
I wrote about my distaste for Short Sales (aka Fake Listings), and how only 5% close in Northern Virginia (as of 2-08, but that might be changing). I guess now my distaste has shifted away from Short Sales, and more toward clueless agents listings Short Sales incorrectly.
On the buying side, instead of just banning them completely from my showing route, I have implemented a new:
Top 10 Questions to ask the listing agent BEFORE showing A Northern Virginia Short Sale.
*********************
Hello,
I have a possible buyer considering your short sale listing.
Our company policy is to ask for more information from the listing agent before showing any Short Sales.
Can you please answer the following questions:
- Have you closed a Short Sale before?
- Have you requested and received the short sale package from the bank, including the hardship letter?
- Have you sent the package AND have you confirmed receipt?
- What communications, if any, have you had with the bank?
- Has the bank approved the list price?
- Have you received any other offers that you are waiting to hear back from the bank on?
- Does the loan have PMI on it? (Private mortgage insurance)
- Is there one or two trusts? Any other liens?
- What are the names of the banks? Are these FHA or VA loans?
- How long do you estimate that the lender will take to provide an answer to an offer?
Am I missing anything? Please add more in the comments.
I recently sent this to 10 listing agents. Only three replied. Only one really knew what they were doing. The winner was Realtor John Ryan in Woodbridge.
His reply:
Started talking with the bank? Yes Has the bank approved the amount? Yes
Have you received any other offers? Yes, however we are only a few days into the process with the new offer. All other previous offers dropped off.
Have you closed a short sale before? Yes, several. I also have a dedicated team of five people that work the banks to get these through. I can give you feedback along the way so that you can keep your buyers informed.
****
Joy to the world...
So I hereby lift my ban on Short Sales on the buying side.
As for the listing side, after an eight hour NVAR CE class, from a group that gets a 90 percent close ratio, I have no problem taking them on (if the seller qualifies). Don't want a short sale? Send it my way.
Also at the most recent Finance Committee meeting at NVAR, we passed a resolution to consider enacting some sort of Short Sale ____ (certificate, pledge, designation) for those that know what they are doing with Short Sales, so they can put it in the MLS Remarks and buyers can have more comfort.
- Written by Frank Borges LL0SA- FranklyRealty.com
14 COMMENTS SO FAR. ADD YOUR COMMENTS.:
Frank--Funny that you posted this...I just saw another post on the exact same topic. I have clients that really want to look at a few of these but have strict timing issues so I asked some of these very questions. Of course the answers are very vague in most cases but every once in a while a savvy agent has done his/her homework prior to listing. Unfortunately this is not the norm so no I have not had any luck in closing a short sale and will continue to counsel my clients about the pitfalls.
Frank, I just told my buyer agent these same questions to ask the other day on a short sale. I have now forwarded it to my team. Thanks, excellent advice and so important to know up front.
Frank, don't forget to ask how they got their price and if there are comps to back it up?!!! Some agents pull a price out of thin air!!
(comment from other blog, his suggestion was added to main blog post- Frank)
Good questions Frank,
You may want to ask if there are one or two trusts. If there are two are they with the same mortgage company?
Here is my list from my post An Optimists View of Short Sales. http://activerain.com/blogsview/437618/An-Optimists-View-of
That is a nice list..I will have my team use this as well.
That's a great list. We have recently had many client who insist on looking at short sales thinking that they are a great deal, but not understanding the whole process. We have made numerous calls to the listing agents, and most of them do not seem to know what they are doing or what is going on. That being said we have been working on a short sale since January and just last week got approval (yeah!) and still had many interested buyers! Looks like we can close by end the month (about time - sorry when a little off rambling...) ~Rita
Frank - what do you do with this info once you get it. For example, are there dealbreakers on the list (meaning some answers are more important than others?) If a loan was an FHA or VA loan, then what? If there is PMI on the house, then are you more or less likely to continue with the process and why?
Hey MJC
Good question.
Well the first test is if they even reply. Many of these Listing Agents are clueless and that tends to be consistent with not replying.
If they do reply, if the loan has PMI, that is crucial information since the bank might PREFER that it go to foreclosure for them to get a better pay off. Also there might be another person to contact to negotiate the deal (like 2 lenders). And it allows a follow up "Ok, it has PMI, what are you doing about it." If they answer "dunno" you know the deal isn't going to happen, unless your buyer agent takes over the process.
As the home being bought initially as an FHA vs Conventional, there is a completely different application process. If the listing agent doesn't know this, again, the buyer agent has to take over and school them or just walk since overall agents close 1 in 20, clueless agents close 1 in 100 (my guess) and knowledgeable listing agents can close 90%.
Hope that helps.
Frank
I'm 0 for 5 with my buyers, and I now I think I know why. 3 of the 5 the bank REFUSED any short sale offer, as they SELLER didn't qualify since they had assets and income that would have supported the mortgage. Seller's who are just walking away from a rental or investment won't be eligible if they have assets.
Sad but true - most agents really don't know how to negotiate and close a short sale successfully. Most of the time the buyer walks and the deal falls apart.
Did you know that over 405,000 homeowners lost their home in 2007 - a whopping 57% increase over 2006? Even more staggering, over 1% of all U.S. homeowners were in some stage of foreclosure during 2007. And recently, we have just learned that there are over 1 million homes in foreclosure right now!
So is there a way out of this dilemma?
Absolutely. And it's called a "short sale." It's just too bad there aren't enough trained agents that know what to do.
As a person of strong character and high moral values, I have a great deal of compassion for those families who find themselves in a personal crisis - staring foreclosure in the face and not knowing what to do. They absolutely need a true real estate expert who can step up and educate them about all their options.
There is one organization that is leading the charge in developing professional short sale experts - RealtyU. RealtyU, in cooperation with over 36 real estate schools nationwide, have created the official Certified Short-Sale Professional (CSP) course to teach agents how to successfully negotiate and close more short sale transactions.
Find out more at www.cspdesignation.com.
The Washington Post just did a story on this. They said I ask these Top 10 question before putting in an offer. She meant, before I even show it!
http://tinyurl.com/5baazu
Frank
I've been a real estate investor (i.e. not a speculator) since 2003 and I've been licensed in MD since 2007.
I performed 8 short sales before I ever became an agent. My buyers often get excited when they see a short sale listing and how attractively it is priced. Instead of a short sale property having a listing price of $450,000 ; it should say "Your guess is as good as mine". The truth is that most listing agents have not even started the short sale process and are just looking for an offer to get it started. Let another buyer make that offer, there are too many good deals on the market to have your buyers waiting for 3 months just to get an approval...at 8% higher than the list price!
Here are additional questions to ask:
Has the BPO (Broker Price Opinion been performed), if so what was the result?
Do you have a WRITTEN short sale approval?
Vern
Great information, This can be very usefull....
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