Q: My buyer wants to make an offer on a short sale. What questions should I ask the listing broker to make sure the transaction goes smoothly?
Fiona in Mill Creek, WA
A: Short sales are complicated transactions even for those highly experienced in short sale negotiation. Properties that are represented by brokers with little or no short sale experience can result in transactions that are a nightmare for both you and your buyer. Here are a few questions you can ask to determine whether you want to move forward with an offer.
Who are the lien holders?
The amount of time it takes to process a short sale varies greatly from lender to lender. The broker should be able to tell you who the lien holders are, and the average number of days the lenders take for closing. This will help your buyer decide whether the lender timeline matches their timeline.
Who is negotiating the sale? How many short sales have they closed? Do they have experience working with the seller’s lien holders?
Real estate brokers, attorneys and mortgage brokers are the only individuals that can legally negotiate a short sale. If the negotiator is a real estate broker, they must be listing or co-listing the property – they cannot legally negotiate the sale unless they are part of the listing agreement.
Because of the complexity and ever-changing nature of short sales, you want to make sure the negotiator is highly experienced. That means they’ve closed a minimum of 100 short sales and have worked with a broad range of lenders, including the seller’s lien holders.
Are there any additional costs to negotiate the sale? If yes, who pays those costs?
Before you make an offer make sure you have in writing who is responsible for the negotiating cost.
Is there someone dedicated specifically to follow up with the lender? How often do they follow up?
For a short sale to progress smoothly it is essential that the negotiator has a system to follow up regularly with all the various lender departments that are involved with the short sale. The negotiator can never assume that just because they have sent the correct paperwork, the lender is moving forward on the sale. We call lenders daily to make sure the right people have the right information to close the sale in the shortest possible time.
Here is more information to help your buyer decide whether buying a short sale is right for them. If you have any additional questions, we’re happy to give advice. Call Richard Eastern at (206) 612-5541.