Every week, we ask a real estate professional for their Short List, a collection of tips and recommendations on an essential topic in real estate. This week, we talked with Bert Gor, the president of The Short Sale Group, Inc. with RE/MAX Professionals Select.
8. Use an attorney that specializes in short sales, and who has a staff to properly handle the volume – We are real estate brokers, not attorneys. When dealing with short sales, we are dealing with very serious legal matters, and it is imperative that the seller have proper representation.
We are not licensed to interpret legal proceedings/documents the homeowner may receive related to a pre-foreclosure; that does not mean, though, that once you have a buyer, you just hand off the transaction and check out. You must police the transaction and know what is going on every step of the way, and know in advance what the objections may be.
7. Identify if there is a real hardship – Do they really have a hardship, or is it a strategic default? The short sale has to be far more important to the party needing the short sale than to your commission; convenience is not a hardship. Understand that the outcome for an owner occupant can be far different than an investor.
6. Do not make promises you can’t keep – You do not want to be telling potential short sellers that they will be walking away from the balance on a successful short sale if their lender historically does not forgive debt. There are plenty of lenders that do not forgive debt.
5. Do not send incomplete short sale packages – As far as I am concerned, I will not even list the home unless the borrower fills out the entire short sale packet. If they cannot do that upfront, what makes you think they will do it in a timely manner once you have an offer?
4. Market the home just like a normal home – A short sale needs the same marketing attention as a normal sale. Perform virtual tours, write up a nice remark section and make sure the home is being well maintained.
3. Meet the appraiser and the BPO agents – BPO agents are getting paid less than it takes to fill my SUV to perform the value orders on short sales. You need to meet them and make sure they understand the property; they need to understand that you have done everything you can to get the highest sale price possible, so share with them any comps you feel are in support of the offer. Also know, though, what criteria the lenders will consider for their comps, so that you are not wasting their time.
2. No dual agency – Although dual agency is allowed in Illinois, this is a very sensitive subject when related to short sales. You are representing a seller that may risk a deficiency. If there is any risk of a deficiency, you cannot fairly represent both sides. There is never a question of whose best interest you represent in a short sale if you did not represent the buyer. Plus, the bank will reduce the commission anyway in dual agency to where it might not even be worth it. Refer the buyer out.
1. Screen the buyer – It is imperative that you do not advise your seller to accept just any buyer’s offer; you must know, in advance, what range makes sense. Accepting and just letting the short sale lender counter can be a waste of time.
Furthermore, a large majority of short sale lenders that process their short sales – Equator, for example –basically make you start over with each offer, and the outcome can be different with each offer. You must make sure that the buyer understands that this is going to be at least a 60 to 90 days’ wait. Therefore, do not accept offers where the buyer has to close in 45 days; you know it is not going to get approved that fast.
Bert Gor is the president of The Short Sale Group, Inc. with RE/MAX Professionals Select. He has been recognized as a top producing short sale agent with RE/MAX Northern Illinois and has also been ranked in the prestigious RE/MAX Top Five of all Northern Illinois agents in recent years.