5 MORE Reasons Why A Short Sale Would Fail
A recent lender satisfaction survey conducted by the California Association of Realtors found that agents view short sales to be a little less frustrating but still difficult. 64% of agents claim they had difficulty in closing short sales.
The short sale arena is not a walk in the park especially when the agent is not trained thoroughly on how to handle one. Here is a list of tips from a conglomerate of our own experiences as well as experiences from other short sale experts around the nation.
Here are the 5 main reasons why a Short Sale would fail:
- Buyer’s walking. Agents must be able to maintain a buyer while negotiating with lenders for agreeable terms.
- Incomplete Short sale packages from sellers. Banks have stringent rules on all documents being satisfactorily submitted. Common mistakes agents make are omitting required documents, not reviewing seller’s documents (financial worksheets for correct figures on expenses and etc.) before submission to the lender, and an insufficient hardship letter. Per my previous article, I state that organization is Key for the success of a short sale transaction.
- 1st and 2nd (or 3rd) lienholder’s not agreeing to terms. All parties must be satisfied before the lenders issue approval letters. This is especially true when trying to get a full deficiency release on the approval letter(s).
- Inaccurate Brokers Price Opinions. If the lenders expect high compensation for the property, you will lose or will be unable to find buyers. Make sure the agent submits a value dispute package to get a reasonable appraisal. More information here.
- Bad negotiators on banks side. Every expert short sale agent has dealt with incompetent servicers who work for the bank. They are underpaid employees that don’t have the motivation or the experience to properly execute a short sale file.
Here are 5 more reasons why a short sale would fail:
- Price Control. Agents must know how to set the listing price of the home on the market accurately from the start. They must also know how to set subsequent price reductions.
- Preparing for cash contributions and/or promissory note. Agents must prepare the seller for any possible cash contributions and/or promissory note in case the lender absolutely will not close without one.
- Solid Counter Offers. Clarifying expectations are important. There are many unknown factors in a short sale that causes much stress to agents, sellers, and buyers if not addressed early in the process. For example, termite and septic clearance are commonly requested in an offer. Address items like that and all other unknown variables early in your counter offer so it doesn’t get addressed later in another counter offer thus taking a lot of precious time renegotiating and making it more likely for a hot buyer to become cold and walk away.
- Do All Things Promptly. Although the lenders/servicers may lag on their part, do not reciprocate that habit. Submit files and execute all incomplete tasks to maintain momentum on the file.
- Keep your emotions controlled. A professional, in any field, should be a master at keeping their emotions under control. This is especially true when dealing with multiple parties all aiming to get the biggest piece of the pie.
Make sure your agent is fully trained on all of these potential problems. Our Washington based agents are experts in the short sale arena. They have hundreds of closed short sales under their belt and teach classes to other agents on how to conduct a successful short sale. If you are in Washington State, contact our agents here and we will connect with you within 24-48 hours via email and/or phone.
Hope this helps