Many real estate agents will say that they can help with a short sale, but without the proper experience, they are destined to fail – increasing the chance that you will lose your home in a foreclosure. Here are several tips for determining whether an agent has the skills to negotiate a successful short sale on your behalf:
Does the agent specialize full-time in short sales? Some agents will take a class or two in short sales and market themselves as a short sale realtor. But, the classes only teach the process – they don’t teach realtors how to negotiate a short sale with a bank. If you were choosing a doctor, would you want one that just took a class, or one that has extensive training and real-life experience? When your family’s home is at risk, you want to make sure your agent is prepared to manage the entire short sale process from start to finish.
Does the agent have a team? Short sales take a lot of time, and agents often spend many hours on the phone negotiating with the bank and lien holders, collecting documents from the buyers, and managing extensive paperwork. If an agent is working alone, their time will be consumed by all of these administrative and logistical activities, leaving little time to manage negotiations effectively. What’s more, if they are listing and showing other properties without the support of a team, they will not have adequate time to devote to your short sale.
Can your agent prove their track record with short sales? If your agent claims to have successfully negotiated a short sale in the past, ask them to show you a productivity report from MLS, the realtor listing system, to prove that they were the listing agent and that the home was in a short sale. Bear in mind that if they’ve only done five or six short sales, you’re gambling the success of your short sale with an amateur. To truly understand the process and have the necessary expertise, a realtor needs to have at least 50 short sales under their belt. With countless lenders and ever-changing regulations and requirements, if an agent is not doing large volumes of short sales, they are not in tune with what is going on in the marketplace.
How does the agent establish a sales price that the bank will accept? The agent should base the price of the home on the market price. If the agent just throws out a number or a “discounted price,” most banks won’t go along with that. Market price is determined based on what similar houses in that neighborhood sell for. Seasoned agents will be able to pull reports from the MLS system to gather this data.
How will the agent help ensure the bank values the home correctly? When you start the short sale process, the bank will send a third party to determine the value of your house. This is commonly known as a BPO, or broker’s price opinion. The agent should have a plan to work with that BPO to ensure the bank gets the correct value and does not ask too high a price for the short sale. In a short sale, you want to bring the value down, so you don’t want to emphasize upgrades – instead, you want to look for ways to have the house priced at market value or less. For example, the agent should point out problems and needed repairs with the house or the neighborhood that may devalue the home. This will make it easier to sell the house at a lower price and find a buyer quickly.
How will the agent manage price changes? When you put a house up for short sale, if it’s not getting offers or showings, the agent should have an active program to drop the price at least every two weeks. The size of the drop at each stage will depend on the value of the house. For example, a $5000 drop is negligible if you’re selling a million dollar home, but if you’re selling a $50,000 home, it might be too much.
Just like when you look for a qualified doctor or car mechanic, you want to work with a short sale agent who has extensive real-life experience and a track record of success. At Oyezz Real Estate, all we do is short sales, and we have been doing them for a long time. If we can answer any questions or otherwise be of service, please give us a call.