No matter how many times you try to explain what a short sale is and what is involved, it is always a good idea to set expectations at the very beginning. Then follow up with a written explanation -- be it an outline, an email, a question and answer ---- anything that the Buyer can refer to because invariably, there will be some confusion as a result of short-term memory and impatience.
It is so frustrating to get calls repeatedly from the buyer, asking the same questions. It is just as frustrating to keep following up with the lender's loan services to get an answer. If I'm lucky, I get a human being on the other line; but for the most part, it's a vicious cyle of going through the menu, re-dialing, waiting, and being put on hold.
I learned this the hard way, but jiminy cricket, I learned! This time, BEFORE showing a short sale, much less write an offer, I make sure the buyer is fully on board on what to expect. They have to understand that this will be a long process, and that waiting to hear back from the Lender for a response to their offer will take weeks. I give them a primer on short sale. And I am refining that so that it looks like a flow chart.
This is what I am giving my prospective buyers who are planning to write an offer on a short sale. If someone has developed a better list or an easy to understand flow chart, please share!
SHORT SALE PRIMER
Before writing an offer:
- Has the Lender approved the short sale?
- Has a BPO (Broker's Price Opinion) and/or appraisal already been done
- How long has it been since the short sale was approved
- How long has the property been on the market as a short sale
- Are there any other offers on the table
- Has the seller already accepted an offer
Writing an offer
- Are buyers preapproved
- Are buyers; finances in order
- How much are they willing to give as an initial deposit (preferably 1-3% of offer)
- How much is the downpayment (at least 10% to make the offer strong)
- How soon do they need to buy a home and move in?
- Are they willing to wait for 2, maybe 3 months?
- Do they understand that this may likely be an AS IS sale and that there is very little room for negotiations?
- Would they consider looking at other properties while waiting for lender approval?
Sellers accept the offer
- Offer is forwrarded to Lender or loan services for final approval
- Sellera may accept offer, but they do not have the final say; lenders make final decision
- Other offers may come in after offer is submitted
- There is no accepted offer until Lender accepts
- This is not first come first served basis
- It will involve constant follow ups to get through to the right party
Timeline
- If we're lucky, 3-4 weeks after offer is submitted to Lender, we may get an answer: the Lender could accept, reject or counter the offer
- 30 days just to get the offer accepted
- Another 30 days or longer to process the escrow
- Figure on 60-90 days from beginning to end.....
Options
- If buyer can't wait, we can withdraw short sale offer
- While waiting, we can continue looking for other properties if necessary
IS IT WORTH IT TO WAIT? Or shall we look for something less contentious -- like a foreclosure?