We listed a short sale recently...we had sold the sellers the home and through a combination of very sad hardships as hard as they tried...no one has ever tried harder...they could not stay in their home and remain employed. The house, in a wonderful neighborhood had some updates done...they had enjoyed the landscaping they did....and maintained it well. We priced it a little below market and had a brokers' open.....with over 30 showings....and on to the open house.
The phone started to ring with agents promising offers from their buyers....we always asked..."Do you and your buyers understand what a short sale is...?" No agent ever wants to admit...apparently...that they don't know what they think they SHOULD know...so the answer was always "Yes, of course !" Not soooo much.......
- We got offers that included seller paying closing costs
-Offers that listed what the seller could fix
-Offers with 45 day closings
- Home sale contingencies
- Without pre-approvals
We have had to re-phrase what we say to agents so that don't further embarrass themselves and their buyers.... YOU DO UNDERSTAND THAT THIS IS A SHORT SALE AND AS SUCH:
- The sellers will not contribute anything for repairs, replacement or closing costs
- Closing must be flexible 75-90 days
- No home sale contingencies
- Letter of pre-approval from local lender OR 3rd party verification of funds for a cash offer
We could forgive and understand the consumers who were eager to know and to learn about short sales...we offered informational handouts and discussed the opportunity of being a short sale buyer. We get it....now the get it...If you are a realtor or a lender...you had better LEARN IT !
"We got offers that included seller paying closing costs"
Why is that an issue? I always include up to 3% of the purchase price in closing cost on the HUD-1 and I ask that the foreclosing lender to pay everything. Very rarely does the closing cost get knocked off. If it does, then I use it as a negotiating tactic to lower the price.
"Offers that listed what the seller could fix"
Since the property has to be sold "as-is" and I haven't came across a lender willing to do repairs, what I do in this instance is to have a licensed contractor submit a high repair cost estimate to offset the purchase price. I fax it in and give a copy to the bank's BPO. Very effective!
"Offers with 45 day closings"
Very rarely does this go through, even with offers with a FHA loan. I always have the buyers give a 30 day closing period. Getting extensions is never an issue for me. Sometimes the approval letter places a per diem penalty, which motivates the buyer's lender to close fast. This 30 days kicks in on the date that we get the approval letter, not from the date of the purchase offer.
"Home sale contingencies"
Agreed. Our clients are facing foreclosures. Either you will buy or not. We do not have the luxury of seeing if your home sells or not.
"Without pre-approvals"
Agreed. However, in our area loan guidelines change frequently (as I am sure they do there). What I look for is cash strong buyers who are putting more than 20% down. It also allows them to pay my commissions and other items the foreclosing lender shot down.
Great Reading!
Good points!! I love it when I get an offer and a week later I receive a telephone call asking for an update. I had to generate a set of guidelines to follow and post them as an attachment on the MLS. If I didn't have an Escrow Check and 90 days for acceptance, don't bother sending the offer. In my neck of the woods...asking for 3% and even 6% at times has almost become the norm. They usually agree to the 3% and I have had instances where they have agreed to 6%.
Good luck know you are doing the very best thing you can do...
On the average you are correct and should be used ass a rule of thumb.....I had two last year that my Buyer's each got 3% seller assist.....my take is if you do not ask you will not get.....
The Agent of the Seller side is key....in one of those above the Agent was great and we got to settlement in 53 days......the other took almost 90.
Out here an agent is required by law to present all offers to the Seller, so even if the agent advises something, his Clients can decide otherwise and require his agent to write the offer. So don't be too hard on the Buyer's agent if you're not intimately involved with the conversations between the agent and his buying Client.
yup...gotta present them here too...the problem is that an agent doesn't "get it" and can't explain to the buyers what a short sale is not able to do...wait for a homesale, pay closing costs...repairs, replace....