What Makes a Successful Short Sale?
WHAT MAKES A SUCCESSFUL SHORT SALE?
I asked this question on a couple of other group sites. I was surprised at some of the comments and so I am interested in the responses on this site. Maybe the same people are here.
As a new Realtor with some specific training in Short Sales I am curious why the word 'offer' is used interchangeably with the word contract. Please help my understanding. Once an offer is accepted it is a contract and there can only be one contract on a property. Do you agree?
In Maryland I believe when there is a contract sent to the bank, the MLS is changed to Contract with a contingency. The contingency is third party approval. Another offer can be submitted to the seller as a back up offer but it cannot become a contract, and does not go to the bank. As long as the Buyer knows of these other offers, being a back up becomes their choice, but they are all offers and not contracts. The listing is not active, it is a contract with a contingency.
One of the most important tasks is for the Seller, with the Seller's agent help, to determine that the offer accepted is going to be a strong contract that WILL be accepted by the bank. This requires making a judgement as to what the Lender will accept, including amount of closing costs. Putting in offers that are too low, or requesting too much in closing costs will get the contract rejected, or possibly ignored. I know we want to sell the owner's house, but it may be necessary to refuse an offer, or negotiate with the buyer for a better offer, that will be acceptable to the Lender. The lender may reject an offer eventually, but they may not tell you why and they do not negotiate with the Buyer, the Seller does. This is why the offer that becomes a contract should be as 'strong' as possible.
This is what my "education" has taught me. Please tell me how your experience agrees, or disagrees, with this.
Thank you. Margaret C. Taylor SFR CDRS Century 21 New Millennium, St Mary's County, MD
(Hyperlink didn't work for me)
I asked this question on a couple of other group sites. I was surprised at some of the comments and so I am interested in the responses on this site. Maybe the same people are here.
As a new Realtor with some specific training in Short Sales I am curious why the word 'offer' is used interchangeably with the word contract. Please help my understanding. Once an offer is accepted it is a contract and there can only be one contract on a property. Do you agree?
In Maryland I believe when there is a contract sent to the bank, the MLS is changed to Contract with a contingency. The contingency is third party approval. Another offer can be submitted to the seller as a back up offer but it cannot become a contract, and does not go to the bank. As long as the Buyer knows of these other offers, being a back up becomes their choice, but they are all offers and not contracts. The listing is not active, it is a contract with a contingency.
One of the most important tasks is for the Seller, with the Seller's agent help, to determine that the offer accepted is going to be a strong contract that WILL be accepted by the bank. This requires making a judgement as to what the Lender will accept, including amount of closing costs. Putting in offers that are too low, or requesting too much in closing costs will get the contract rejected, or possibly ignored. I know we want to sell the owner's house, but it may be necessary to refuse an offer, or negotiate with the buyer for a better offer, that will be acceptable to the Lender. The lender may reject an offer eventually, but they may not tell you why and they do not negotiate with the Buyer, the Seller does. This is why the offer that becomes a contract should be as 'strong' as possible.
This is what my "education" has taught me. Please tell me how your experience agrees, or disagrees, with this.
Thank you. Margaret C. Taylor SFR CDRS Century 21 New Millennium, St Mary's County, MD
(Hyperlink didn't work for me)
Comment
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Comment by Theresa Prim on January 6, 2010 at 4:31am
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Hello Margaret, I am new to the group as this is my first post/response. Thank you for your interesting blog. I have done about 3 dozen shorts in the last 2 years. Nothing by comparison to experts, but what I have found is much different. I began shorts by negotiating with the buyer and their offer. The seller would counter until that left no more negotiating room. I submitted the offer with the package, (unless I could get the package in ahead of time and a price determined, which is like 1% of the time.lol) and off we went. My experince with shorts shows me that THE LENDERS ALWAYS COUNTER. It's like they want to throw their weight around or something. " Hey now, I have been negotiating for 8 years, I do know what I am doing by the way."
I even had one earlier this year, when the lender, WAMU, countered at $5 higher than the buyers offer. NO JOKE! The offer was for $65,000, and they countered with $65,505.
Now I do believe that the seller on title owns the home, therefore, if the contract is completed signed and executed,the status has to change in the MLS to some kind of contingent. I have found that a lot of times, the lenders dont pay attention to whether the offer is signed and accepted by the seller (again, believing they hold the cards) so I leave it up to the buyers agent!
If the buyer wants to continue to look and shop with no earnest tied up and no executed contract, then we don't negotiate, and the offer is submitted.
If the buyer wants to submit earnest and be in 1st Position, then i make sure and tell the buyers agent to expect a counter-offer. The buyer sometimes likes to take the gamble and tie the home up and wait. Then it goes into the MLS as accepted, but we will accept back-ups.
Now I am in an area of lower end homes, avg sale price is around 83K. I have worked with BOA, Chase, WAMU, Wilshire, US Bank, mmmm....
What I don't like doing is negotiating liens on title! Now THAT is another blog. LOL!!!
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Comment by Wendy Rulnick on January 2, 2010 at 5:14am
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Hi Margaret - I do think just "slang and sloppiness" causes some to use offer and contract interchangeably, as you say, they are not the same thing. However, I disagree that a back-up contract is not a contract. If it is signed by both parties, it is. It just has different contingencies than the primary contract. OK I am not an attorney, but that is my take on it. I strongly agree with the philosophy to send one strong contract to the short sale lender, with closing costs I know will be accepted. Thank you for bringing up the topic.
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Comment by Bryant Tutas on January 1, 2010 at 4:39am
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Margaret, Your post is spot on. Have the seller negotiate the best deal possible and sign it. Then submit the CONTRACT to the lender so they can remove their contingency. Then close the deal. It's not complicated.
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Comment by Mike Warfel on January 1, 2010 at 1:35am
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Yes - all that you have said sounds true. Stop by and talk to some Fore Sale By Owners (FSBOS) and pick up some listings to work with. Do it is the best teacher.
Good Luck
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