Setting Expectation with a Buyer in a Short Sale

LOTUS REALTY GROUP



Buyers who are putting offers on short sale listings have been a revolving door now more than ever. This is not good for all parties involved. When a lender issues an approval they want to close in 30 days and extensions are harder and harder to get approved. I recently had a short sale transaction that I had been negotiating for a REALTOR for 3 months. I obtained an approval within a month of submitting the package. A 6% commission and a credit to the buyer were also approved. However, while I was negotiating these terms the REALTOR had already lost the first buyer and buyer #3 was withdrawing their offer. The short sale negotiator was so frustrated with amount of times she had to change the numbers, fax over a new approval and postpone the sale date that she informed me that there will be no more extensions given regardless if there is another offer or not and she was firm on this. Where we stand as of now is we are forced to try and get another committed buyer and try not let a perfectly good approval go to waste. TBD….



How frustrating. After putting together a perfect deal the deal is now in jeopardy because of a lack of commitment from the buyer. We cannot afford this kind of turnover. Lenders are tightening their standards and they are just looking for a reason to reject a file. We are not doing a good service for the homeowner in default if we can’t hold on to a buyer and we are wasting our time. I understand there are certain circumstances that are out of our control but there are things that we can do to minimize the risk of losing a buyer.



My goal is to help you succeed with the right tools so that everyone wins with the least amount of unnecessary stress and frustration. It has been my experience that if we set the proper expectation up front and then stand firm on those expectations, we have a better chance of minimizing our risk. Following are some tips to bear in mind when accepting an offer on a short sale listing. I am hopeful that these will help you become more effective and efficient, offering the highest level of customer service for all parties involved.



Tips to getting a committed buyer:



1. The moment you get an offer submitted, send a counter and addendum explaining the following:


Counter:


a) Buyer agrees to keep offer active for a minimum of 60 days from seller acceptance and that credits from seller to the buyer may not be approved by lender.



b) Property to be sold strictly as is with no repairs or termite clearance to be provided by seller or lender.



c) Seller to select all services except for termite and home inspection companies.



d) Buyer to provide DU approval from their lender and proof of funds immediately.



e) All parties to agree to extend original offer dated ( enter date)




Addendum:



a) Buyer shall deposit a minimum of $1,000 into escrow within 17 days of seller acceptance. If buyer decides to exit this contract prior to the 60 day commitment period, buyer to forfeit $500 of good faith deposit.



b) Buyer to remove all inspection contingencies within 17 days of seller acceptance.



c) Seller shall deliver property disclosures and any reports in seller’s possession within 7 days of seller acceptance of this offer.



d) All parties understand that this is a short sale. All terms and conditions are subject to lender approval, including but not limited to price, commissions and cost.



e) Property being sold as is and buyer to pay for any third party fees incurred by seller but not paid by seller/short sale lender including but not limited to property taxes, title fees, liens, HOA fees, for a total amount not to exceed ( enter amount).



f) Buyer agrees to close escrow 30 days after receipt of lender’s final approval of short sale. Buyer understands that the lender may charge per diem penalties to buyer should buyer fail to close within the 30 day time frame.



2. Have a conversation with the buyer in addition to getting these signed. Should the lender not approve seller credits is the buyer able to still proceed with the transaction?



3. Once the offer has been accepted lines of communication need to remain open at least once a week informing the buyer and the buyer’s agent of any new break through. Even if there is no new news to report, still communicate with them so they know you are actively working on the file.



If we can set the expectation up front and lay it all out on the line for the buyer and they still sign the contract and follow our procedure, we have increased our chances by more than half of having a committed buyer in place.



Buyers have been this deals number one killer. In short sales we must do all we can to find a solution. Though buyers may still remain a revolving door, I believe if we do our part we will minimize the chance of the deal falling through due to a weak buyer. If the old way is not working then we have nothing to lose so it may be time to try something different.



(Quote) Don't tell people how to do things, tell them what to do and let them surprise you with their results.

George S. Patton

LOTUS REALTY GROUP



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