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Permission To Talk Does Not Equal Short Sale Authorization

Ever have a listing agent place a property in the MLS as a short sale without speaking with the bank first?

Just because the homeowner agrees to list the property as a short sale does not mean that you, the buyer, are dealing with an actual short sale. 

Did you know that the seller/homeowner/borrower has to give their written permission to the representatives of their choice to speak to their lender regarding their situation?

Did you know that sometimes each lending institution has their own forms that they require be used? If and when the representative fills out the required form(s), it still does not mean the property is a short sale, only that the lender's loss mitigation department will allow that representative to talk with them regarding the seller's loan(s).

Did you know that I get really witchy when my buyers offer the full asking price of a short sale, only to have the binder go nowhere because the short sale is not really a short sale because it was never approved by the bank.

If you didn't know that not doing your job could flip my b-switch, well, now you know...  

Put Short Sale Authorization Pending in the remarks section people.

Seriously... It is something that my buyer and I would really like to know...

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Comment balloon 18 commentsC Tann-Starr • February 01 2009 06:26PM

Comments

I have seen that time and time again...an agent puts a home on the market..and has no idea what they are doing...or the process that is involved....

Posted by Konnie Mac McCarthy, Broker/Owner - VA & MD "Time To Get A Move On!" (MacNificent Properties, LLC) almost 12 years ago

Konnie, it is a crying shame because my buyers love the house, are pre-approved, have the down payment and closing costs and are devastated they are not purchasing this home. Being brand new and first time buyers they had high hopes. It was not the ideal way to start our buyer's brokerage relationship, especially since there were other homes in the range they specified that were not a "short sale" that they could have bid on and missed out on because we were "waiting patiently" with the dud... We thought we would spend the money helping a family in distress. Now the sellers and the buyers are very unhappy... I am unhappy... I hate wasting my time...

Posted by C Tann-Starr (Tann Starr & Associates, Inc.) almost 12 years ago

There are alot of agents that are listing short sales that really don't know how to handle them, I'll give you that.  That said, it's next to impossible as the listing agent to be able to say that you'll get your offer approved, even if it's for the listed price, if it is a short sale.  Banks do not pre-approve a short sale price, so as a listing agent, you have to price the property where you think it should be and then pursue a short sale once an offer is in place.

Now, all this is assuming that the listing agent did in fact put in the notes that it was a possible short sale.  That is required here.

Posted by Roger Johnson, Realtor - Hickory NC Real Estate (Hickory Real Estate Group) almost 12 years ago

Good comments C. No real authorization can keep you spinning for months.

Posted by Kathy Knight, BROKER, ABR, CRS, GRI, SFR, SRES (Intracoastal Realty Corp) almost 12 years ago

C...

It's only the tip of the ethical iceberg.

What about all of the property owners that are nit short sales that are trying to sell their houses in the same neighborhood, but can't, because the idiot down the street has an active listing for $100K less?

Featured in the Group "Whacked!!!"

Posted by Richard Weisser, Richard Weisser Retired Real Estate Professional (Richard Weisser Realty) almost 12 years ago

Roger, very true and sometimes it is helpful if agents use the range feature to show a home $375K-$475K with the short sale target falling in the mid range. A lot of agents do that in New York so if a bid comes in that will get the homeowner out debt free they can take it.

Also, when the agent makes the listing appointment and discovers the homeowner wants to do a short sale, the listing agent has the option to reschedule the appointment during business hours so that they can talk to the loss mitigation department with the homeowner present. I have met people at their jobs for breakfast, lunch, and dinner, sat in my car and call conferenced with clients on speaker phone with lawyers, mortgage brokers and lenders.

It gives the bank, agent and homeowner an opportunity to establish that the agent will be representing the sellers regarding the short, will give the agent the opportunity to make an outline of what the bank requires in order to get the approval expidited and the listing can be entered appropriately into the system. If the agent does not want to reschedule the listing appointment, or meet people where they are, then he/she/they should hold off entering the MLS info and call conference with the bank and sellers ASAP from their office. 24 hours will not kill anyone.

Posted by C Tann-Starr (Tann Starr & Associates, Inc.) almost 12 years ago

Kathy, it is a crying shame because everyone wants the same thing, to sell the home.

I think the banks are a little difficult in making up their mind because they want to figure out if it is better to try and get all of the equity out of the home at an auction as opposed to losing a portion of the money they planned to make off of the loan. Either way, time is on the lending institution's side because they control the fate of the home unless they are paid in full. 

I am of the school of thought that the home should always be placed on the market for close to market value, leaving some  built-in-equity for the buyer so when the purchaser makes their down payment they are walking into a positive investment. I usually pass over over-priced homes unless a buyer insists they have to have it. I do the calculations right in front of the buyers and always explain my reasoning for being for or against an offer price.

I had a buyer just recently like a home priced at $330K, which was reasonable for NYC. However, when we started researching the history of the home and market value for the last five years, we discovered it was assessed at $295K. Suddenly, that $330K price was no longer attractive. We offered $300K and are waiting for a reply.

Posted by C Tann-Starr (Tann Starr & Associates, Inc.) almost 12 years ago

Richard, thank you for the feature. I appreciate it. :-)

I know exactly what you are talking about. There are houses in Forest Hills, NY that sellers are listing at $1.2M when the property is assessed for $850K. One home went under contract and when the appraisal came in, the contract was canceled.

Then you have the ones who brought their home in 1979 for $35K who leave it to their kids who use it as an ATM machine until they realize they are going to lose the home. They will put it on the market for $100K over what they owe, thinking they are doing great because it's a "free home" and they want to start over. The home will sell, but the market value of the homes surrounding it will take a hit because if enough people undervalue their homes the whole zip code will suffer.

Add the pre-foreclosures slashing their prices in competition with each other and the next thing you know Mr. and Mrs. X who worked very hard all their lives maintaining and upgrading their home can not even get a lookie-Lou through the door because no one wants to pay a decent price for a pristine stellar home.

People have got to get a grip when accepting a listing. I may act silly and flippant on-line, but I do know my neighborhoods and numbers.

I take this job very seriously. I have a lot of bills that need to be paid. When you are renting, paying a mortgage, have crazy kids and going to college, it all adds up... ;-)

Posted by C Tann-Starr (Tann Starr & Associates, Inc.) almost 12 years ago

I'm fighting dealing with short sales and/or foreclosures. You reinforced my determination.

Posted by Susie Blackmon, Ocala, Horses, Western Wear, Horse Farms, Marketing almost 12 years ago

Susie, I hope that is a good thing (LOL). They can be very useful for everyone involved if both sides are on the same page. I do not mind waiting on the bank when the answer is a possibility. I do mind if there was never an answer forthcoming because the package was never in play to begin with. One should never use a buyer as a gambit to get the short sale. It puts a bad taste in the buyer's team mouth, making us want to steer clear of doing business with specific firms in the future.

Posted by C Tann-Starr (Tann Starr & Associates, Inc.) almost 12 years ago

Learning to handle a short sale is not rocket science.  Any agent can find information on the process.  Here's a tip-  Call the fricking bank and ask!  This agent is a lamebrain!!!!

Posted by Melody Botting, You Deserve The Best (Broker Associate PenFed Realty) almost 12 years ago

C,

This would totally burn me up!  As does/would not returning a call concerning a listing...

Ann

Posted by Ann Hayden 636-399-7544, SelectAnn.com (Berkshire Hathaway HomeServices Select Properties-St. Louis Missouri) almost 12 years ago

LOL @ Melodious. Hmm... ;-)

Ann, I second that. :-)

Posted by C Tann-Starr (Tann Starr & Associates, Inc.) almost 12 years ago

C, Wow! When the other Realtor doesn't do their job, that flips my b-switch too. And a little advice to new Realtors. Ask questions. Ask your broker questions.

Posted by Robin Scott, Broker, CRS, ABR, SRS, REALTOR® - Austin Texas (Robin Scott, REALTOR®) almost 12 years ago

I agree.  Short sales are hard enough without waiting longer than you thought you had to because the work was not already done.

Posted by Ricki Eichler McCallum, Broker,GRI,ABR, e-Pro, TAHS (CastNet Realty) almost 12 years ago

Robin, I have been bouncing off the walls with this. :-)

Ricki, very well said. :-)

Posted by C Tann-Starr (Tann Starr & Associates, Inc.) almost 12 years ago

It's about setting expectations for your clients and asking all of the right pointed questions b/c 95% of the agents claiming they know what they're doing with a short sale - don't have a clue.  For those who take the time to build relationships with contacts within loss mitigation with major banks it can be a huge benefit & great niche market.  Ask the tough questions & figure out if it's in the best interest of your clients to stick with it or move on to another property.

Posted by Michael Neville, Intown Atlanta Realtor (Keller Williams Realty Atlanta Midtown) almost 12 years ago

Michael, very well said and excellent talking points.

Posted by C Tann-Starr (Tann Starr & Associates, Inc.) almost 12 years ago

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