Short sales are unique because both the realtor and homeowner are focused on getting the seller out from the mortgage, rather than increasing the value of the home to bring in offers. In a traditional sale, the homeowner is motivated to sell their house; they will do what they can to get the most money possible and make sure the sale goes through. In contrast, the short sale client is losing their house. Their level of motivation is different, and they may even have a bad attitude about the short sale, which can be a challenge for the selling agent. Setting expectations up front about the short sale process can make the transaction much easier.
One of the first expectations to set is that the client will have to allow showings for prospective buyers, inspections, and Broker Price Opinions (BPOs) in order to short sell the house. Whereas traditional sellers often are more than happy to throw open the doors to their home, with a short sale, a client may become depressed and lack the energy or motivation to allow people into their house. Of course, refusing to show the house essentially kills the short sale. We tell every client up front that it may be difficult to let people walk through their home, but they have to do it. If they don’t cooperate, we will stop the short sale process, and the bank likely will foreclose on the property.
In addition, we always encourage the seller to continue to live in the house. Having someone in the home adds a level of security, so we don’t have to worry about things like vandalism or the bank changing the locks. We set the expectation up front that the seller has to move out before closing but ask that they remain in the house until that point. In rare cases, we’ve seen sellers who don’t attempt to move because they don’t grasp that they are actually selling the house with the short sale. In those cases, we have to make it clear that we are not trying to salvage the house, but rather attempting to sell the house to avoid a foreclosure.
Finally, you should make it clear to short sale clients that the banks will ask for updated bank statements and financial records every month throughout the short sale process. Set the expectation with the seller that when they receive a checking or savings account statement, retirement account statement, pay stub, or any form of income statement, they need to send you a copy immediately. This way, you won’t be chasing the client down every few weeks to provide the bank with the required financial documents.
By sitting down with the client early in the short sale process to have a clear and direct conversation about your expectations, you can improve the chance of completing a successful short sale. In the end, the client will be grateful because they can get a fresh start in a new home and get back on their feet financially.