Tips About Short Sale Real Estate Agents Experience - Make sure your agent is experienced with short sales. Because of the complexity of this type of transaction, you don't want to work with someone who is unfamiliar with the process. Also, make sure your agent is willing to work with you on a short sale. Some agents won't want to get involved due to bad past experiences or the poor reputation of short sales. Not only are short sales more work for agents, they sometimes offer less of a commission. The bank may not be willing to pay the listing agent the usual 5-6% commission because it is already taking a loss, and because the buyer's agent gets a percentage of that percentage, he or she will see even less money.
In addition, try to find out if the listing agent is experienced with short sales. Although the bank is ultimately in control, a listing agent who knows the ropes may be able to facilitate or expedite the transaction.
Given how long it will probably take the bank to reply to your offer, you should probably keep looking at other houses while you wait for a response, and you should probably proceed with the purchase of another property if you find an easier buy. Have your agent write the short sale purchase agreement in such a way that you'll retain this flexibility. And if you're buying on a deadline, don't even bother with a short sale.
Short Sale Pricing - Be prepared to raise your offering price. For the seller to increase the odds of the bank going through with the short sale, he or she may try to convince you to up your purchase price. Ultimately, though, the seller has no real authority to approve the selling price. The bank may also counteroffer as it tries to cut its losses.
What's worse, the bank may continue to collect offers even if you make it to escrow. Most people would consider this unethical because the potential purchaser is likely to have shelled out a few thousand dollars on inspections, title searches and the like, at this point. Getting dropped from the deal so late in the game is a huge waste of time and money for the buyer, not to mention enormously frustrating. For all of these reasons, the listing price of a short sale must be taken with a healthy dose of skepticism.
On the other hand, the bank might not counteroffer. They might just reject your offer outright, especially if you've written a significantly lower priced offer. Or, in the worst case scenario, they might not reply at all. Ever.
Seller Must Be in Official Default - Make sure the short sale is already lender approved. If the seller has not actually gone into default yet, the bank may not be interested in doing a short sale. The bank may also not be interested in a short sale if it thinks it can get more money by going into foreclosure.
Short sales are already difficult because of the involvement of the original lender. If there are two lenders, you double the difficulties of completing the transaction. It takes a considerable amount of time and convincing to get a bank to agree to a short sale, so if it hasn't agreed already, don't waste your time. Many homes are listed as a short sale by the listing agent, but there is no guarantee that the transaction will ever be completed as such.
