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Q: I'm thinking about making an offer on a short sale. What questions should my agent and I ask the listing agent 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 agents with little or no short sale experience can cause considerable headaches to buyers. 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 listing agent 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 you decide whether the lender timeline matches your 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 agents, attorneys and mortgage brokers are the only individuals that can legally negotiate a short sale. If the negotiator is a real estate agent, 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?
If the negotiator is a real estate agent, negotiating the short sale is part of the service that they provide when they list or co-list the property. There is no additional fee to anyone.
Attorneys typically charge a fee of 1-2% of the purchase price to negotiate a short sale. The lender may be willing to pay their fee, but more and more often they’re not. The seller typically is undergoing economic hardship and doesn’t have the funds. That leaves the listing agent, buyer or buyer’s agent to pick up the attorney’s fee. 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.
Martin Goldberg is a Windermere broker in Bellevue, WA and co-founder of Washington Property Solutions, a short sales negotiating company. Since 2003 he has helped more than 900 homeowners sell their homes. A Bellevue native, Martin graduated with honors from the University of Washington Law School and is a Certified Distressed Property Expert. He loves to travel and has visited 49 of the 50 states. You can learn more about Martin here or at www.washortsales.com.
