Hi folks. If you list and sell Short Sales, as I do, then you know there is nothing worse than going through a 4 month Short Sale Approval process only to find out the Buyer has walked from the transaction. It wastes a lot of time and it places our Sellers one step closer to being foreclosed on. So as a Short Sale Listing Agent what can we do?
Here are a few things I highly recommend:
- Take a large non-refundable deposit.
- Make sure the buyer and their agent are fully aware of the process.
- Negotiate enough time in the contract to get the short sale approved. We use a 90 to 120 days short sale contingency.
- Be sure the Buyer is fully qualified or has cash ready to close within 30 days of Short Sale approval.
- Have the inspections done early in the process.
And most importantly, send out updates at least once a week through out the process. I use a personalized email that the Buyer's agent can just forward to their Buyer. If you take these measures your Buyers will stick around more often than not.
Below is a sample of my email update. Notice how I remind them of the time frame for approval and how far along we are in the process. The Buyer's agents love these emails as it helps them to keep their Buyers informed. I mean let's face it...they too do not want to have to go out and sell their Buyer another property. It's better to just work together and get this one closed. I hope this helps.
Hi Joe,
c.c. Mr Seller
c.c. Mr Seller
I hope you are well.
I have been in communications with the negotiator and things are going well.We've submitted a request to Fannie Mae to waive the 30 day late rule on this file. We haven't heard back yet but hope to early next week. If for some reason the request is denied the negotiator will issue the approval on July 1 when this requirement is met. So worse case scenario we should have the approval in 28 days.
Please be sure to pass these updates on the buyer. I want to make sure they stay motivated and excited about this purchase so once we receive the approval they are ready to move forward. Also, let the mortgage broker know we are getting close in case they need to update some docs. Time will be of the essence once the approval is received.
We are now 43 days into a 90 day short sale contingency. All is well.
Please feel free to contact me if you have any questions. Thanks
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BB/Andrew, the one issue we have here in CA is that the buyer that I have encountered are reluctant to put down a non-refundable deposit even if it is for a 90 days terms. Their reasoning is that the offer is not "officially" accepted by the lender so "technically" they would not risk their deposit even though it's held in a trust account. It is difficult performing short sale as it is but to have buyers walk after months of negotiating is rather frustrating. May have to try this again next time but this "non refundable deposit" is frowned upon by buyers here.
Question though. What if the deposit is made non refundable and the buyer forfeit the deposit due to the guideline set for the non refundable deposit. Who gets the deposit? Since property is a short sale, seller "supposedly" couldn't receive the funds as the lender most probably would not allow it.
Excellent! Thanks for the tip!
Very interesting, Bryant. I posted an article on this forum about one month ago which essentially stated the same premise- include a provision in the contract making the deposit non-refundable during the short sale approval process- and received nothing but negative comments. In fact, some people even went so far as to question my credentials and suggested it was nothing but a marketing ploy. Regardless, I'm glad to see that other agents are having the same success in keeping the buyer a party to the transaction by making similar agreements. This, coupled with good communication, should always keep buyers a party to the transaction for the amount of time needed to close the deal.
Andrew
Greater Boston Short Sales, LLC
David Dee, if a buyer is serious and motivated they will put submit a deposit. Most likely the short sales that fail are because the buyer is still shopping while they already have a property under contract. I for one am fine if a buyer wont put down a deposit, we simply wont work with them as a buyers agent OR if I am the listing agent, I will advise my seller to require a deposit or no deal.
The deposit is at time of contract acceptance by the seller, not unlike most real estate transactions and a short sale is still just a real estate transaction
BB, love the ideas. However, I know from our market here that most likely the buyer will not allow their deposit to be non refundable. I tried that before but the buyer refused to allow it since the timeline frame for shortsale approval is unpredictable. Also, what happens alot here in SoCal is that buyers tend to 'shop' around and put in multiple bids on shortsales and waiting for the 'first come, first serve' scenario.
Also, would the non refundable deposit be in effect upon submission of the offer or once shortsale is approved by lender in this case?
Make the earnest money deposit non refundable for 60 days...
Great post Bryant. Very important topic and one that needs to be spread around. I too use an email system called Friday Follow Up and include a follow up every week in order to keep everyone informed.
Great work . Keep it up we need it!