Lem Marshall, Special Counsel for the Virginia Association of Realtors gave a presentation this morning called "Advanced Short-Sales". It proved to be an excellent presentation that probably should have been called "What Realtors REALLY need to know about short-sales to successfully deal with one".
Some of the things in the presentation that Lem covered were:
- The history of economics and lending in America, how credit markets work and why we're in this mess.
- Prices may not be at the bottom yet. It may take another 12 to 18 months to get there.
- Knowledge is the key. Make sure you get everything out on the table regarding the seller's financial and personal situation. You can not properly help them without knowing all the facts and their overall situation - past, current and future.
- Make sure you get the borrower's permission, in writing, in order to publicize the fact that it's a short-sale. You must have the seller's permission to disclose personal and financial information about them, which is what you're doing by publishing that it's a "short-sale" or stating "subject to third party/lender approval".
- Make sure that you correctly word the "subject to third party approval"/bank contingency. How you word this will directly affect whether you face potential issues in the future or not.
- If the bank says that they want the commission lowered from what you've agreed upon with your client, don't give in so easily. Many Realtors in attendance said that they said "no" to the bank's request and that the bank was okay with it.
- If the bank insists on lowering your commission, try asking them to counter at a higher price that covers both your and the Selling Broker's commission.
- Remind the Selling Agent (Buyer's Agent) that the process of approval by the bank can take 60 to 90 days, if not longer. This will help alleviate an upset agent and buyer down the line.
- Short-sales can be messy. Be prepared to do much more work than a traditional resale or even a foreclosure.
There were many other great points that Lem made that Realtors can use on a daily basis when dealing with short-sales. I recommend watching the video of Lem's presentation once it's up on the Dulles Area Association of Realtors' web site sometime next week. I'll publish a quick post when it's up to alert everyone so you can go check it out.
{ 8 comments… read them below or add one }
Thanks for posting the summary report. Great information!
Welcome. Thanks for stopping by and reading it.
Don’t know if Lem covered this, but when you make an offer of compensation to another broker in your MLS, whether it’s in dollars or a percentage, then that’s what you owe the selling broker, should you get it to the settlement table. If you short change that selling broker, the listing company and agent could find themselves in arbitration.
Thanks for posting this valuable information to us. We need all the help we can get when dealing with short sales!
Lots of good info. However, there seems to be differing opinions as to when a short sale is ratified. Is it when the Seller agrees or when the third party agrees? Which dictates when the Purchaser’s deposit is received/deposited by Listing Agent?
Adele,
IMHO, the definition of “ratification” is that all parties with the ability to either ok or veto the sale of a property have signed the contract and the contract has been delivered to all parties.
What that means to me is that the buyer, the seller and the bank/investors have signed off on the contract and all addendums and they have been delivered back to the buyer. Until such time, I don’t believe that it’s ratified.
And until the contract has been ratified, the EMD check should not be deposited.
But that’s just my opinion. I would contact your broker as well as Lem Marshall for further guidance.
For those in MRIS area, check the rules and FAQs.
You are a very smart person!