Selling your home as a short sale is not the optimum situation for a homeowner, but when compared to the alternative (foreclosure) it is a much better solution.
My previous post Short Sales, Are the Risks Worth the Effort? I wrote about the potential credit score damage that occurs with a short sale vs. foreclosure. Financial experts agree, the impact of a foreclosure is far greater and longer lasting than a short sale. That fact alone should make it worth the risk, despite the odds.
In the past the odds have been against the homeowner achieving a successful short sale. The problems come from the “hurdles” as Mary Pope Handy referred to in her “Short Sales Sell But Don’t Often Close, Why?” post.
Denver Short Sales are very much like short sales around the country. We have buyers who need to purchase a home and need to be assured they can close within a certain time. Prospects with specific time frames are NOT good candidates for the purchase of your short sale home.
Why? We cannot guarantee an approval or a closing date. Even if we try the buyer often gets very nervous and ends up “walking away from the contract.” In the State of Colorado any parties to a Colorado Short Sale Contract have the legal right to quit at anytime.
Keeping a buyer tied to an offer that is not moving along quick enough for them is difficult and not legally possible.
Another common practice I see with Denver Short Sales are investors faxing in contracts. There’s nothing wrong with this practice, but the type of offer I am referring to is one that is not the only one the “investor” is doing. Many agents are instructed to put an offer on “every good deal that comes along.” They have no intention of purchasing all the homes they present offers on, they are fishing for a great deal. Their focus is not on a successful closing but rather a “steal of a deal.” We call them faux buyers.
This practice serves only one cause, it gives you the short sale seller the opportunity to present an offer to the bank. In a manner it gets the ball rolling, the problem arises when that faux buyer bails out.
Other issues arise with these faux buyers because Brokers are required to update the status of the listing with Metrolist. When a property goes “under contract” we are required (and fined if we don’t) change the status to accurately represent if the property is pending or not.
Faux buyers may get the approval process started but they foul up the process when it comes to marketing the property to a Real buyer.
Here’s where a Short Sale Seller needs to stand firm on their actions. Do not accept faux offers. Insist the property is marketed to find the right buyer that will stick with you until your closing.
Finding the Right Buyer for a Short Sale
Grandma had a saying, “If you don’t do it right the first time, when will you have time to do it right again?”
These words ring true when marketing a short sale. Both the seller and the listing broker have to play their A Game. You are a team, you need to act and work as one unit to get the job done. One doing his job without the compliment of the other will not work. You will both fail.
The listing broker is in charge of Marketing and the seller is in charge of Marketability
A seller with the right Attitude will make the house so nice, so clean, so well kept it will be irresistible. The right Attitude means the home will be showing ready everyday. Yes, this is tough. We all know the way you live in a home and the way you sell it are TWO DIFFERENT things. But if it is to get sold it has to show well, no excuses.
The listing broker will research and advise on the proper pricing for the market after reviewing the condition, recent sales in the neighborhood, and the absorption rate. It’s not unusual for a listing broker to build automatic price reductions into the property at certain stages.
Managing the Short Sale Expectations
The field of buyers that will be ready, willing and able to purchase your home is a narrow one. There are REAL investors in the market, as well as qualified buyers who are willing to wait the time it will take for your bank to approve the process. All you need is ONE qualified, informed and confident buyer that is savvy enough and understands the system. Not every buyer fits that description, but luckily all you need is ONE.
Short Sale Sellers find this process extremely heartbreaking. Leaving a treasured home is gut wrenching, but it is the first step in the right direction, if that direction is a Fresh New Start.
Keep that goal in mind, stay on the right path and the rest won’t be so difficult.
Tomorrow the discussion will take us to Evaluation of the Short Sale Offer, Do We Accept or Reject?
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