Odds are that most of you are already knowledgeable when it comes to short sales – and likely have dealt with them from time to time – but do your clients understand the differences that come with a short sale? Furthermore, do you know how to guide them through the process?
Many buyers – first time and returning alike – can be thrown off by short sales, understanding the meaning but not knowing what to expect throughout the process. So here are a few simple guidelines – a list of 5 things which every buyer should know going into a short sale.
- Brace for a wild ride
Imagine that every bank is like the bank in the Harry Potter novels — operated by goblins with a dragon and an actual roller coaster in the back.
Your offer could get stabbed with a basilisk fang, or just sit on a manager’s desk in perpetuity; better to assume the bank will reject it. Assume you will never hear anything ever again.
Don’t start mentally moving in. Keep looking at other houses. When your offer does get accepted, you will be pleasantly surprised.
- Get busy waiting
It takes somewhere between a few months and the entirety of existence for a short sale to be either rejected or accepted. Real money is on the line, and all stakeholders need time to do their due diligence.
Get used to uncertainty and waiting. Don’t call your agent every three hours asking if she has news. (Actually, don’t do that to anyone.)
- Be ready to work (or spend money)
It’s very clear that at some point the previous owner knew he wasn’t going to get any money out of the sale and put both of his middle fingers up to even basic maintenance. He allowed his pet to let loose on the carpet. I found a TV and a weight bench in the bushes behind the house … and then the bushes turned out to be old Christmas trees.
Neglect is unfortunately common in short sales, and chances are better than great that the seller will never pay for any pending repairs. Expect to have to put work or money into your short sale.
- Set your sights low to set your sights high
My house was and will be an aesthete’s wonderland: a beautiful midcentury modern home with high ceilings, giant windows, and an open layout in a neighborhood I love.
If it were in better shape when I bought it, it would have been out of my price range. Look past the surface stuff (but don’t ignore it) and maybe plan to live on foraged berries for a few years while you renovate.
- Think about selling it
Even if you want to live in your house for a long time, it’s an excellent idea to think every once in a while about selling it. Because the price you paid for your short-sale home was probably depressed in more than one way, the value can escalate quicker than you expect and perhaps you will want to parlay that into something else.
I added tens of thousands of dollars in perceived value over the first few days of living at my home just by cleaning up.
Do you think these guidelines will help homebuyers through a short sale? Do you have any other suggestion that we’ve missed? What are your thoughts?
You can read the full story here: