In Part One we discussed what a short sale is, and what the possible effects are to your credit (FICO) score. This post will expand on the actual process of marketing your home and selection of your REALTOR® as a short sale and discuss the Short Sale Listing Addendum – California Association of REALTORS® Form – SSL.
The final in this series will expand on our Short Sale Marketing Program for your consideration.
A recent article in the New York Times asked Short Sales, a Win-Win, Not Quite.
Short sales are a seemingly attractive alternative to foreclosure because they don’t do as much damage to a borrowers credit score. Also, the bank doesn’t ever have to take over the home, tend to its upkeep, and then turn around and find a new buyer. Studies have found that lenders recoup more of the home’s value in a short sale than a foreclosure. A win-win, right?
Well, not quite. Short sales have been underutilized, real-estate agents say, because they’re time consuming. It can take months to get a bank to sign off on a short sale, which is a lot longer than some buyers are willing to wait. Realtors say that banks also try to reduce their commissions on a short sale, which means that the process can involve less pay for more work. “As a Realtor, most of us avoid them like a plague because we all get burned,” says Brett Barry, an agent with Realty Executives in Phoenix.
Your first step once you have made the decision to pursue a short sale is, select an experienced agent to market your property. At the time this article was written, inventory in lower price ranges in San Diego is very tight, while the Buyer pool is frustrated with lack of inventory. What that means in our current market is, fairly intense competition for few properties, meaning a Seller’s option of picking a fairly strong offer to present to the Lender(s). Prices above $500,000 tend to be much more difficult to sell, and pricing is critical to generate interest and offers.
Foreclosures are starting to show up in our San Diego market, so know one really knows who much time this demand will last as it is likely more Bank Owned REO properties will come on the market. Buyers are aware that REO properties can make quick decisions vs. a short sale so most buyer’s prefer them over short sale. However, short sales listings can be in better shape and are not sitting empty for months.
When you choose a REALTOR® to market your home they will most likely attach a Short Sale Listing Addendum or SSL to your listing agreement. This form discusses what a short sale listing is, the tax consequences, credit consequences, lender considerations, broker authority, and to seek tax and legal advice from an appropriate professional.
Short sales take a great deal of work on behalf or both the homeowner and the REALTOR®. Time should be spent up front to determine that the homeowner has an acceptable case for consideration of a short sale, while the REALTOR® needs to have adequate time and experience to deal with the short sale departments of the lender(s). Critical to success is supplying the requested documents fully completed with a hardship letter and all underlying documentation requested. Failure to do so will result in delays or failures of short sale approvals as the file goes back to the bottom of the stack.
This process should be started sooner than later while the marketing of the property gets underway. Generally, it is much easier to get an approval if you are able to submit a bonafide “arms length” buyer for approval.
Here are a few considerations when picking the agent to represent you.
- Make sure the REALTOR® is experienced and responsive.
- Don’t pick an agent that does not have the time to spend on your case – many are simply volume agents hoping for something to stick with way too many to do any justice. See Short Sale Shenanigans.
- Make sure to pick a reasonable market price after looking at recent comparable sales in immediate neighborhood.
- Pick someone that fits your personality and style- this is a very difficult time and you need an advisor over a salesperson. Choose someone that has empathy for your situation and understands and respects your feelings.
Continue on to part three – Short Sale Marketing Program by RealtyV2.
[...] Continue to Part 2 of Considering a Short Sale [...]
[...] Last post we disussed the importance of selecting a REALTOR® that has both the time and experience to market your property for short sale approval. Today, I would like to explain our Short Sale Marking Program in general, and of course would welcome the opportunity to discuss in more detail with you. [...]