The Short Sale Listing:
How can you determine if the property needs to be sold in a short-sale?
The obvious answer is if the seller is upside down in the mortgage versus the property value, it's a short-sale. But are the conditions right for a short-sale? Does the seller have a hardship that will make a good argument with the lender? If the seller has missed payments, or is about to miss their first payment, the seller has experienced a true hardship (loss job, etc.), and the value of the property is less then they owe, you could have the makings of a short-sale. Just be careful, one mistake I have seen agents do after knowing I am available to them is to have tunnel vision. Everything is a short-sale! I mean why not? They are easy to sell, sellers don't bug you because they don't care what you get, and it's exciting! When their traditional listings are sitting and not selling, this gets the blood pumping again. Don't get this tunnel vision! Short-sale listings should be well thought out, and careful calculations formulated to determine the best course of action.
How do you price the short-sale, and what does the lender want to see?
I have no idea why this is different in each state, and maybe it's not, but I have seen different states do different things. The deals I do in Florida, the lender wants to see the house on the market for at least 30 days, yet here in New Jersey they never care. Any insight you may have on this, please feel free to post it here. When the listing is taken, make sure that you list the property at or near market value. Of course market value has a whole new meaning these days, right? You're the expert, again, do the calculations based on condition, market area, and obviously what is selling in the area. Remember, the lender at the very least will ask for a copy of the listing agreement. So don't lose your minds when creating this agreement. Don't price it insanely! Enter the listing into your MLS as listed, and for that beginning price. After that, there are really no formulas that the lender will need to see. It's now up to the individual agent. I start to drop the price within a few days. I have been doing this so long, that I have the lowest price in my head already. All based on all my prior calculations, lender formulas where I know it will be accepted, and other surrounding conditions. I run to that number pretty fast. I want all my short-sale properties under contract with-in three weeks! Once under contract, just make sure you can justify the selling price to the lender, or it's going to be a long ride for nothing!
What are some of dos-and-don'ts when listing a short-sale?
One thing I see inexperienced agents to is put "requires short-sale approval" in the public section of the MLS. This is a big mistake! If the lender sees this in the MLS, they will not be happy. The property did not have a fair chance to sell at close to, or at market price, because your post in the public notes brought out all the bargain hunters. However do make sure a notice is in the agent notes. Another common mistake is to put "Requires Short-Sale Approval", this is wrong! You're putting yourself and your seller in liabilities way. Make sure you put "Requires Third Party Approval" instead. This way if there are other liens you have to deal with (IRS, Judgments, Etc.), this disclosure covers that as well. There are many more dos-and-don'ts when listing a short-sale, but I can't give away all my secrets!
Best of luck in your short-sale business, I hope you all have a great 2008!
Frank Wible
Realtor, Loss Mitigation Supervisor
http://www.shortsalenj.com/
The Short Sale Listing: Making sure you're right!
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