Buying Short Sale - The Waiting Game and Crossing Fingers- By: David Reinholtz
When new homebuyers, or even seasoned veterans, step into the current environment of home buying, they notice some incredible deals on the market. They may stroll around a high-priced neighborhood, like what they see, but feel that it's just out of their financial reach, and then ultimately stumble upon a deal that sounds too good to be true. Then, of course, they learn that it is not too good to be true, but that there are other things to consider beyond price.
Welcome to the wonderful(ly heart-burn inducing) world of short sales
When homebuyers hear the term short sale, some narrow their eyes a bit and wonder what that is. Others, who pay attention to current events and have at least some shred of a finger on the pulse of what's been going on in the world of the housing market, are somewhat familiar with the term. But being familiar with a term, as we all know, is not enough to understand the full prospect of making an offer on a short sale home.
There are countless stories in existence to date about short sale offers that have gone sour, leaving the homebuyer several months out of owning a home, sometimes several thousand dollars less in their bank accounts, and finding themselves back at the drawing board, looking for homes, knowing that their second or third choices were bought up months ago by buyers who were willing to pay a little extra to secure the deal and get on with their move.
Yet short sale prices can sometimes be so tempting that homebuyers are willing to take the chance and make an offer. When you have a client come through the door of your loan office who even hints at the prospect of making an offer on a short sale, while you certainly don't want to discourage it, you want them to be fully prepared for the journey that may await them. Who knows, they could get lucky and the deal could quite possibly go through without a hitch. However, it's also better to (as the Boy Scouts' motto states) be prepared.
Information is the gold of today
When you want to build a strong working relationship with your clients, and ultimately have them refer their friends and family to you in the future, then share information whenever you can. It doesn't cost you anything more than the time that it would take to discuss things with them. I recently witnessed homebuyers who had placed an offer on a short sale house, had it accepted, went through the inspection, passed it, and then waited. Waited. Waited. Waited. For months they waited to close, money held in escrow, tied up in this home, and hoping that the deal would go through.
Their agent didn't inform them of the possibility that the current owner might ask for an extension from their lender, and receive it. Week after week after week. It was very frustrating to stand idly by and watch this go on. These homebuyers were angry with their agent because they felt that she had not been honest about what could happen. They're not sure that they would have walked away had they known, but they would have preferred to at least have a choice in the matter.
Short sales can be undermined by anyone involved in the process, from the bank, to the seller to the buyer. Getting an offer accepted can pose the greatest challenge; if the buyer offers too much, then the price that attracted them will no longer be such a bargain. If they offer too little, they could very easily be outbid. Sure, some people love this kind of adventure, but in the end, most people prefer to keep things simple. And tame.
When you have clients coming to you for pre-approval for a home loan and don't know much about short sales, then this is the time to shine. When you let them know what they could expect, when the worst happens, you'll be the one they recall telling them all about. Even if their deal ends in disaster, they will still want to work with you in the future.
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David Reinholtz is a professional Mortgage expert in Real Estate Industry. David is also a sales and marketing expert and trains professionals in every career field. David has personally trained tens of thousands of loan officers, mortgage brokers, real estate agents and individuals through The Close More University Seminar Series, LoanOfficerSchool.com Classes, Correspondence and On Line Learning, and countless private engagements and training events throughout the country.
David is the Founder and CEO of LoanOfficerSchool.com, an approved education provider for The Conference of State Bank Supervisors and The National Mortgage Licensing Systems' (NMLS) required pre-licensing education and continuing education.