How to stop Short Sale Buyers from walking away?
More than ever before Short sales likely will be a part of the housing market for years to come. One of the major obstacles for a short sale to reach a successful closing, the seller’s lender must approve the short sale. Before it would get to that point the negotiation is only between the seller and the buyer and their real estate agents.
I have and have read that Short Sale Buyers walking on more than one occasion, the major reasons for this the buyers are not committed, uninformed of the short sale process or simply are in fact false buyers. The Effective Date dictates the timeline of the contract for sale and purchase. An Effective Date occurs when the last one of the buyers and sellers has signed or initialed the offer or the final counteroffer. In a traditional sale, at the time of the effective date or within days of the effective date, the buyer is required to make a reasonable good faith deposit, follow up with a timely inspection and meeting financing contingency as stated in the contract. This can also be achieved when there is a Short Sale.
There are measures to keep buyers from walking away during a Short Sale:
- Buyer must be committed to a longer waiting period – at least six months
- Buyer must have pre approval letter from a reputable lender
- Buyer must make good faith deposit upon acceptance of contract
- Buyer must make timely inspection after effective date
Sellers should not accept any offers because they are desperate. The offer must be at fair market value which is determined by an experienced real estate agent who is knowledgeable of the short sale process. Banks don’t want to foreclose, it costs them more than a short sale but they are not willing to approve a Short Sale contract with an unrealistic purchase price.
I hope you found this post useful! If you need help finding or selling your Lakeland, Florida home, please contact Petra Norris - REALTOR(R) at 863-619-6918. If you’re new to Lakeland, I’d especially like to extend a warm welcome. I value my clients and provide them with honest, reliable service. Allow me to introduce you to the Lakeland FL real estate landscape and all it has to offer.
And consider presenting a Buyer packet for the lender to review. But it all starts with do you have a short sale buyer who is appropriate to that potential property. If they need to live some where soon, well no they are not good candidates. On behalf of your buyer you will want to ask the seller some pretty important questions too so your buyer is not going on a wild goose chase after property that lenders will never appove. Just cause a seller wants to sell short doesn't mean that they have done their part.
Good points all around here. I take the time to really get into the nuts and bolts of the short sale process with my buyers. If they just can't get it I tell them maybe we should avoid short sales. For the most part they understand and don't mind waiting as long as the listing agent knows what they are doing.
Mary - exactly my point when representing buyers, they must be committed and qualified. When representing the sellers, I make sure the seller is qualified for short sale before listing the property and I have all paperwork required from seller before listing.
Nathan - knowing that the listing agent knows what he or she is doing must be clear before making an offer by asking questions and evaluating the response of the listing agent.
Great post! I require a lot of things from a buyer who is interested in one of my short sale listings- pre approval or proof of funds, wait time of at least 90 days, inspections completed within 10... just to name a few. I will not wrap up a property for a buyer who knows nothing about short sales, is unqualified, or is unwilling to wait.
Brandon - Thank you for the compliment. Educating buyers before looking at short sales is key, you don't want to waste yours and their time. I applaud you for making such requirements.