Eliminate Short Sale Surprises

surpriseWe all know that short sales can be messy, bumpy, frustrating, nerve-racking, hair-pulling-out experiences. But there are two critical documents that can make your short sale SO much easier if you implement them correctly, at the right time, and use the appropriate language. However, most real estate agents either don’t use them at all OR have no idea how they can be used to help them.

In this blog post, I’ll quickly discuss the first of these documents, The Counter Offer, and the second in a subsequent post. 

How to Use The Counter Offer Effectively in a Short Sale
Every agent knows what a counter is and generally how and when to use it. However, when listing a short sale, most agents either don’t issue a counter offer (simply having the seller accept the offer) or only counter on the price, escrow/title and maybe some housekeeping items. However, the Counter Offer is one of the most important tools in a transaction to:

1) Maintain your client’s rights in regards to the terms of the short sale
2) Help protect you and your client from legal issues
3) Safeguard the transaction from falling through, particularly at the last moment

So how do you do this?

1) Include a statement in the Counter Offer like the following:“Final acceptance of this offer is subject to seller’s acceptance of the negotiated terms and conditions of all lienholders.” This simply means that the sale of the property cannot proceed until the homeowner has reviewed and approved the approval letter(s) and negotiated settlements from any lienholders. This is critically important because sometimes approval letters contain language that is not in the best interest of the homeowner (i.e. right to pursue deficiency, cash at closing, tax consequences, etc.).

2) Counter out any ancillary or non-customary services the buyer has requested that the bank will likely not approve (i.e. homeowner’s warranty, inspection fees, appraisal fees, termite, HOA docs, retrofitting, etc.). If you don’t want to counter them out, make sure and at least have a verbal (better yet email) conversation with the buyer’s agent telling them to inform their buyer that many of their requested items will likely not be approved. This just helps avoid any last minute buyer cancellations.

3) Specify all timelines such as escrow (i.e. 30 days), contingencies and when these timelines start (i.e. upon seller’s acceptance of the approval letter).

4) Tell the buyer’s agent to open escrow upon seller’s acceptance of the purchase agreement (i.e. now).  Having the buyer open escrow now keeps more buyers connected to the transaction throughout the entire process rather than submitting offers on other properties.

5) Do your due diligence when informing seller which offer to accept.  The best offer in a short sale is not from the buyer with the highest offer but from the one that is the most committed, financially flexible and will close.

I hope these suggestions were helpful. Please feel free to contact me with any questions or to find out how our short sale processing services can help you close more deals this year.