Fun With Short Sales

short-sales

Short sales, quite simply, are a pain…at least in my humble opinion. They’re so common right now that maybe they don’t need an explanation, but for the uninitiated here goes:

A short sale occurs when a seller owes more on a property than it’s worth. They list the home for sale, usually at a lower than market price and upon receiving an offer attempt to negotiate with their lender to accept less than what they are owed to make the sale close. It’s usually a long and tedious process and their rate of success is far lower than their success rate.

A given house may be listed for $480,000 in a neighborhood filled with comparables listed for $650,000 and up. A buyer could easily write an offer on this place at the asking price, wait for 3 months or more to get an answer from a lender about their offer…and then find out the lender will only take $525,000 for the house. Some times buyers wait alot longer than 3 months. My office mate had a short sale listing earlier this year and I would listen to her daily voice mail messages to the sellers lender (often you can’t speak to a living breathing human) that went unanswered for months . I realize that there are plenty of successful short sales, it’s just that I’ve seen and heard of lots more that didn’t work.

I receive alot of calls and e-mails from clients asking about homes they’ve seen that appear to be great opportunities who are unaware that they are short sales. Here’s why.  The following is actual verbage form a current short sale listing in the MLS on the Peninsula:

Location a prime  Neighboorhood walk to schools.Three bedrooms,2 1/2 Bathrooms,Ranch style home,fireplace in living room,beautiful hardwood floor,nice landscaped,attached garage,wood burning fire place.

Here’s what it says in the “realtor only” section. Not available for public viewing:

Private : Call for more details and to show the property. Short Sale subject to lender’s approval. Commission will be split 50/50. Bring your offer.

On many short sale listings there is really no public disclosure. Particularly the part about “subject to lender approval”. It may not matter at all what price is published on one of these listings. The lender is ultimately the final authority and will make the decision about what they’ll take. A buyer could get stuck waiting for months, and miss out on more real opportunities, before finding out that the lender (or lenders) won’t negotiate. If you have the time and patience a short sale can work…but make sure you have plenty of both.

Comments

  1. yea. not so much transparency. Not many agents answer me ‘whats the approved value of the short-sale from the bank’. They just blink.

  2. Jim Minkey says:

    They probably don’t answer you because they don’t know…and they won’t until you make an offer and they float it by the lender.

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