When NOT To Take A Short Sale Listing

Today, I turned down a listing. It was not easy. It was a short sale. When listing a short sale, there are certain parameters that must be met. Here they are:

1. The seller must allow you to set the price. You know the market.

2. The seller must allow you to adjust the price based on your judgment.

3. The seller must provide all financial documentation necessary to complete the sale in a timely manner.

4. The seller must authorize you to speak with the lender on his behalf.

5. The listing period must be longer than six months. Allow time for short sale processing, so make it one year.

6. The seller must be reasonable with his expectations for a short sale.

7. The seller must trust you.

Short sale outcomes are not guaranteed. The seller may have to bring a cash contribution to the closing. The seller may have to agree to a promissory note. The seller will probably get a 1099-C for cancelled debt. He may get a deficiency judgment and be responsible for the remaining balance. Or the short sale may be denied.

In the case today, the seller had returned my listing agreement marked up with additional terms. He added that the short sale lender would remove negative reporting from credit bureaus, not issue a 1099-C, waive all rights to a deficiency judgment and relieve the seller of any further obligation.

I informed the seller that these demands were not likely to be met. I would not agree to an undertaking with unreasonable expectations. He insisted. I declined the listing. Would you?

It's Wendy!

Destin Short Sales

Call toll-free 1-877-ITS-WNDY (1-877-487-9639) or local 850-650-7883 ext 204

Email Wendy: [email protected]

Views: 84

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Comment by SanJuanita Guerrero Nelson on November 2, 2009 at 2:34pm
What part of Short does the seller not understand? We have plenty here in the OC especially Santa Ana CA. Loan Amounts of $400k-$600k for 1950ish houses. Down to earth approvals with $225k-$255k that's the range, no discussions and yes take a one year lsiting. Any sooner in closing is a bonus. On MLS- I Note agents to alert buyer of 4-6 month closing. Thanks for the tips-SJ
Comment by Wendy Rulnick on October 26, 2009 at 3:18am
Nelson, You are tough! Good idea!
Comment by Nelson Mateo on October 25, 2009 at 7:35am
Great Call Wendy!!!

In order for me to take the listing everything and I mean EVERYTHING shall be provided to me the first appointment!!
Bank Statements
Hardship
Lenders Autho
Taxes
Autho to adjust the sells price every 2 weeks
and so on-......
Comment by Wendy Rulnick on October 25, 2009 at 3:40am
Deborah - You got that right!!
Comment by Deborah Smith, Broker Associate on October 24, 2009 at 2:51pm
Excellent post and list! The seller sounds like he thinks he knows more than you do - those kind can be very difficult to please and not appreciate our efforts in the end. I'd run the other way :)
Comment by Marcia Hicks on October 23, 2009 at 3:35am
I'm sure it was hard to turn the client down, but you are much better off for it. I would love to read comments if you post " When to Cancel an agreement". I'm on the verge of doing just that myself.
Comment by Wendy Rulnick on October 23, 2009 at 2:51am
Debe - That is the perfect analogy. Not my style!
Comment by Debe Maxwell on October 22, 2009 at 6:00pm
ABSOLUTELY! Unreasonable expectations up front = unreasonable, difficult, pain-in-the-___ client during the entire process!

It's like finding out your fiance is a jerk before you marry him--a whole lot easier to get rid of him BEFORE you're married to him! :-)

Debe
Comment by Wendy Rulnick on October 22, 2009 at 8:21am
Petra - I felt good afterwards.
Comment by Wendy Rulnick on October 22, 2009 at 8:20am
Tad - That was my worry....

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