Have you ever been in an uncomfortable position or arrangement that you couldn't get yourself out of? If your answer is no, then lucky you. Most of us have run into these predicaments a time or two. So, what's the solution? What steps can you take to try and improve a difficult situation you might be stuck in. And, no, divorce is NOT an option.
Let's be honest, the "Short Sale" isn't going anywhere. I know what you're thinking, "Of course it isn't going anywhere(in other words, no action by the lender!)", but, what I mean to say is, they'll be here for a while. In other words, we'll be seeing plenty more of them in the the next few years. As long as the economic downturn is with us, there will be homeowners in states of distress who are unable to pay their mortgages. So, how do we turn this lemon into lemonade? (And, believe it or not, it takes more than a lot of sugar!)
Earlier this week, a few local Brokers and Instructors had the opportunity to sit down with Lem Marshall, the Special Counsel to the Virginia Association of Realtors(VAR), to discuss ways the Realtor community can improve the short sale process. By improve, we mean, enhance the chances of a successful short sale. During his presentation, Lem volunteered some helpful hints at how Realtors can maximize their chances of succeeding in dealing with Short Sales.
He began by reminding us that on average, about one in four short sales transactions, nationwide, are successful. While the real estate community doesn't control all the variables involved in the process, there are a couple of items we do influence. It is those items or factors, if handled and executed properly, that can sometimes mean the difference between success and failure. While Lem conceded that lenders are the main short sale players doing most of the transaction decision making, Realtor's decisions and actions, if done incorrectly, doom the transaction.
The starting point for Realtors in any transaction, but especially in Short Sales, is competence, according to Mr. Marshall. Understanding the process involves an appreciation for all the moving parts. To begin with, the agent must know what they are doing, and what they're dealing with. Agents will consider and interact with four main participants in this transaction; the other agent, the property, the client, and, most importantly, the third party, or lender. Let's begin by looking at the importance of understanding the first two.
THE OTHER AGENT
Since a short sale is a special type of real estate transaction, understanding what's required takes more than a license to sell real estate. Being aware of what the agent on the other side (especially the Listing agent) of the transaction knows about short sales is important in considering the likelihood of success. If they know what they're doing (proper valuation of the property, good communication with the lender's representatives, etc), then chances for success - all things being equal - are probably fairly decent. If they don't know what they're doing and are unfamiliar with what's required, then watch out! You'll be doing a lot of hand holding (with the other agent, as well as your client), but may be doomed from the beginning.
It's unfortunate, but until specialized training in short sale procedures is mandatory for all agents handling these transactions, many agents will be unprepared to properly handle what's necessary. The Certified Short Sale Professional (CSP) course provides agents a comprehensive examination of the requirements of the entire process, and what is required for success. Other than actually handling a short sale transaction, it's about as good as it gets in preparing agents for dealing with the short sale of a home.
But, as mentioned earlier, if you're dealing with an inexperienced agent, and that simply means, in this case, one that is inexperienced with short sales, that's not been trained, then the chances of success are minimal. Why? Because, it is imperative that the Realtor is aware of the specific ins and outs of this unique process. To begin with, the listing agent must be able to properly price the property to be sold.
PROPERLY PRICING THE PROPERTY
Absent a proper valuation of the short sale property, the lender has little incentive to consider any proximate offers on the property by prospective buyers. Real property is worth what someone is willing to pay, nothing more...or less. Believe it or not, lenders are aware of this.
Determining what price a home should be marketed for, whether a regular home sale, or a short sale, depends upon the use of accurate comparables. In other words, what are like or similar properties in the area selling for? Successful Short Sale Specialists advise that these properties be priced just below ($10,000-$15,000 below) the lower price range of similar homes on the market. Remember, lenders WILL be appraising these homes, or ordering a Broker Price Opinion (BPO), at the least. Lenders aren't going to give these homes away, they're trying to limit their losses while getting the property out of inventory. So, accurate pricing by the listing agent is a must. Banks, like any normal home reseller, will be asking for market value, or maybe, a little less. That doesn't mean 20-50% below market value, despite what you might hear from uninformed experts.
Improving the success rate of short sales involves an understanding of what's required, and the successful completion of the necessary steps by all the parties involved in the operation. For Realtors, not only must they know what's needed in order to succeed, but it also helps to know what the other side of the transaction knows, as well. With a good idea of what the other agent and their listing have to offer, agents will be better able to communicate effectively and accurately with their client(s) and the third party that's involved. Those are just the initial steps on the path towards completion of a winning short sale.
To Continue Reading this Article, Click Here: Cleaning Up the Short Sale
