Santa Clarita Short Sale Realtors | Why Short Sales Fail

Why Most Short Sales Fail

We know you have heard to horror stories about short sales not being ‘so short’; there are many reasons why they can take so long or even fail. It all comes down to the Realtor who is representing you and the education they have received to navigate through the many pitfalls associated with short sales. Many may say it’s the banks, they are the sole problem, yes they have stacks and stacks of short sale proposals to work on but they have a system in place. If your Realtor from the beginning of the transaction gets the basic foundations of a short sale wrong your chances of a successful short sale diminish! As a homeowner considering a short sale, it is important you understand the process and screen Realtors about their short sale knowledge and practices before you hire anyone. The following are some examples of the most common mistakes short sale agents and homeowners make when handling a short sale.

The Listing Agent has Not Scrubbed the Seller Properly

Pitfall: Understanding the client's commitment and motivation to avoid foreclosure. This is the most overlooked mistake made with all transactions, and the most common reason a property goes to foreclosure. Understanding the foreclosure laws in your state is critical when setting expectations with your client.

o Solution: During your interview with the seller, should they indicate they are not willing to make a cash contribution this is a deal breaker.Scrubbing the buyer's agent and the buyer's are just as critical in the short sale scenario. Setting the expectations upfront for all parties involved will clarify If the buyer's agent and the buyer's are committed to working with you and are willing to contribute to get the deal closed. It's up to you as the listing agent to show your client what it will take for this transaction to be successful; otherwise this is not a viable short sale.

Your Property is Priced Incorrectly

Pitfall: Your Property is Priced incorrectly. This is the most common mistake made with all properties, and the most common reason a property doesn't sell.
Solution: Agent Providing Understanding and Transparency. Your real estate agent will go through a detailed listing price strategy with you, allowing you to see exactly where your property should be priced based on its current condition, and sales in your area.

Your Short Sale Proposal is Incomplete

Pitfall: Your Short Sale Proposal is Incomplete. This is one of the most frequently seen causes for the rejection of short sales proposals. The short sale package must contain everything your lender will be looking for.
Solution: Understand All Aspects of the Process. Your agent should understand the short sale process in detail and be able to explain it clearly. The agent should also be able to communicate effectively with both you and lenders to produce a complete and cohesive proposal.

There has been Inadequate Follow-up and Communication
Pitfall: There has been Inadequate Follow-up and Communication. As your property goes through each stage of the short sale process, an agent can jeopardize the transaction by not properly communicating with everyone involved. As the homeowner, you may not know that your file has been delayed, and that you again may run out of time to close and avoid foreclosure.
Solution: Select an Agent With Experience. The right agent knows exactly how to follow up to ensure that your lender's issues are addressed in a timely manner, and will make certain you do not have unnecessary delays. We stay in touch with the seller, buyers agent and the buyers lender on a weekly basis to make sure all parties know exactly where we are at in our transactions

Not Enough Time
Pitfall: There Isn't Enough Time. It is critical that your agent understands the foreclosure laws in your area. They should be able to show you an estimated timeline for the process, from start to closing. In addition, they should know how to communicate with your lender. Certain information can be provided to lenders to postpone your foreclosure for weeks or months in order to negotiate a sale.
Solution: Provide Accurate and Useful Information. Make sure you provide your agent accurate information as to exactly how many payments you have missed and any correspondence you have received from your lender. This will allow your agent to understand your situation and work to improve it.

Your Deal is Not Submitted Properly

Pitfall: Your Deal is Not Submitted Properly. If you do not follow the directions you receive for submission, then you are expecting an over-worked, under-staffed department to go out of their way to handle your file. There is very little likelihood of this situation working out in your favor.
Solution: Follow Instructions Closely. You must make sure you hire an agent that follows your lender(s) instructions. Any deviation from their instructions may cause your file to be rejected.

The Buyer's Offer is Too Low

Pitfall: The Buyer's Offer is Too Low. Many agents will encourage you to submit any offer that comes in. The reality is that a short sale is not the same as a fire sale. In order to have a legitimate chance of getting your deal approved, you must have an offer that as close to fair market value as possible, your lender is trying to minimize their loss severity.
Solution: Proper Negotiation. The right agent will work with you to properly negotiate any offer that you receive to get 'highest and best' from each potential buyer. This ensures you are presenting the best possible solution to your lender.

The Buyer's Contract is Not Strong Enough

Pitfall: The Buyer's Contract is Not Strong Enough. Especially in our current economic climate, willingness to make an offer on a property does not mean that a buyer is truly qualified to purchase. The reality is that buyers must to be pre approved for financing, closing funds must be verified, and their ability to buy needs to be confirmed.
Solution: An Agent Familiar with Qualifying Buyers. Your agent should be familiar with what must be verified in order to qualify a buyer to submit an offer on your property. Otherwise, these offers may have little chance of closing. Don't risk this process with an uneducated agent who does not appreciate this aspect of short sales.

While these pitfalls may seem overwhelming to all parties involved, we have the advanced training and experience to help you navigate your way to a successful closing. Don't endanger your financial future and the potential sale of your home with an agent who does not fully understand the process. As Santa Clarita Advanced CDPE agents, Gary and I have completed extensive training in the short sale process, and in assisting struggling homeowners who need real solutions. We understand what you are going through, and are here to serve and help save your family's interests.