There are a high percentage of short sale transactions that never make it to closing. Maybe the seller has waited too long and the foreclosure process has already started, maybe the lender is hard to work with, or maybe the agent doesn’t have a clue as to how to manage a short sale.
If you decided to purchase a short sale there are things your Buyer’s Agent can do to determine if the property has a shot at actually getting to the closing table. Here are examples of questions your Buyer’s Agent can ask:
1. Who will be managing the short sale transaction? There are several ways an Agent can manage a short sale transaction. Sometimes they will refer the negotiations to another specialized short sale agent. Sometimes, they will refer the file to a short sale closing specialist. Sometimes, they will manage the entire transaction themselves. If the agent is managing the transaction it is important to determine how many short sales they have successfully closed. If they do not have experience with short sales, the likelihood of the property getting to closing is limited.
2. Where are you on the short sale package? A qualified Listing Agent with experience dealing with short sales will know to acquire the documentation to complete a comprehensive short sale package for the lender at the very beginning of the listing. There are many challenges that must be identified and addressed when dealing with a short sale transaction. Many of these challenges can be addressed before an offer is ever received on a property. You don’t want to deal with a property whose listing agent has done nothing in regard to the short sale package. This simply states that the transaction will likely be unorganized and therefore unlikely to make it to closing.
3. Who is the lender(s) servicing the loan? There are some lenders who are known to be harder to deal with. Understanding each lender’s reputation and policy will help determine if it is time well invested for the buyer.
4. How many loans are on the property? If there are more than one loan on the property, each individual lien holder must approve the short sale. This could mean that an already long process could be much longer.
5. How are offers submitted to the bank? It is important to determine that the listing agent will be presenting offers in the same manner as a typical sale. In other words, when the seller receives an offer and accepts the terms of that offer, that contract is then submitted to the lender for approval – If the listing agent intends to submit multiple offers at one time to the bank, this is a red flag.