Every week, we ask a real estate professional for their Short List, a collection of tips and recommendations on an essential topic in real estate. This week, we talked with Carolyn Goodman, a Realtor with Keller Williams Realty in Andover, on how to navigate short sale pitfalls.
9. Patience is a Virtue – Shorts sales are not only a test of time; they are also a test of patience. When entering into a short sale process, instead of location, location, location, it’s patience, patience, patience. Be prepared to wait and make sure all parties involved are well aware that this transaction can take a long time. How long, you ask? Ah, the million-dollar question. Communicate this information even before you put a name on the contract.
8. Can We Talk? – Communication is key. From the start of a short sale transaction, it is important to establish a great working relationship with all the parties involved. Instead of just emailing and texting, pick up the phone and give them a call. This opens the lines of communication. Hearing a voice on the other end makes this transaction more tolerable.
7. Negotiation – No matter who you are representing in a short sale transaction, whether it be the buyer or seller, it is extremely important that you know who is handling the negotiation. I can’t impress upon you how important it is to have an expert negotiator at the helm. And, yes, I do mean expert! This person can make or break the deal. An expert negotiator knows the ins and outs, the do’s and don’ts. As cliche as it sounds, you wouldn’t go to a dentist if you had a broken nose. Do your research on the negotiator. Find out how many shorts sales they have done, and how many were successful. When I say “successful,” I mean how many closed. Find out the average time frame. How many people will you be dealing with? If you represent the seller, sometimes there is a fee. Find out what that fee is. An expert negotiator knows how to navigate through this process. It will save you time and money.
6. Knowledge is Power – Prior to entering into a short sale, my advice is to educate yourself on the process of a short sale. Find out what the contract terms are. Take a look at the contract and read it thoroughly before entering into the short sale. If you don’t understand anything, contact the person or people handling the short sale. An expert negotiator will be able to answer your questions immediately. You want to be well-versed and knowledgeable so you can help your client.
5. Organize and Re-Organize – Make sure you keep copies of everything (even hard copies for all you die hards). You will be required to submit, duplicate and even triplicate documentation. See if you can work with someone who accepts electronic documentation and signatures. This alone will save you a ton of time. Also, keep everything orderly. I usually file documentation by date. I keep all emails and everything I receive that has to do with the short sale transaction. I download and keep it in a folder on my laptop identified by property address.
4. No Surprises – Stay on top of it! I communicate with all parties involved in a short sale on a regular basis. I also follow up my conversations with an e mail. This keeps everyone on the same page, and ensures that things move smoothly towards the success of a closing short sale transaction.
3. Dot your I’s and Cross your T’s – Keep all your contracts in compliance. If you are working with a short sale that requires all your documentation and monies up front, prior to an accepted offer, make sure your contracts do not expire. Keep those extensions going. All it takes is one mishap of not filing a document properly, and that can lead to the whole short sale transaction starting from ground zero – and no one wants to have that conversation.
2. Bend and Stretch – Be flexible. When I do a short sale, I allow the buyer to have an accepted offer from the lien holder, in hand, prior to them paying for an inspection. This may not be acceptable in all states, so please confer with an attorney or your real estate board. An inspection can be costly, as we all know, and if the inspection happens and their offer is not accepted, your client is out that money. Talk to the parties involved, and see if you can wait for an accepted offer before you have an inspection. Just make sure you remind the buyer that they must be immediately ready to have an inspection once you have an accepted offer. The price will not be negotiated if the inspection does not meet the buyer’s expectations. The inspection is just for the buyer’s own knowledge.
1. Namaste – Keep calm. Go in peace. Short sales can be very stressful for all parties involved in the transaction. Keep in mind that everyone is experiencing the same thing. Talk it out, help each other and find solutions; don’t add to the problems.
Good Luck to all of you on your present and future short sale transactions!
Carolyn Goodman is a Realtor with Keller Williams Realty in Andover. A Military Relocation Professional, Carolyn is also a Certified First Time Home Buyer Advisor.