Sunday, November 7, 2010

Massachusetts Short Sale Pitfalls

Over the last four years I have been diligently helping Massachusetts home owners successfully complete a short sale. If you look at the national success rate of these distressed properties you may be surprised to find out that many of them do not reach the closing table. The other day I was reading that less than 30 % of all short sales actually close!

Why does this happen? Often times it is because the Realtor who is working with the seller does not understand the short sale process. Unfortunately many Massachusetts home owners who need to short sell their home do not realize that you can't just hire any Real Estate agent and expect a short sale approval.

The Realtor you hire to complete your short sale needs to know what they are doing or more than likely you will find yourself facing a foreclosure. It is really aggravating to see Realtors who don't know what they are doing taking listings from home owners who will are trying to avoid losing their home. Watch the quick video below.

Trust me it only touches the surface on some of the foolishness that you see from agents handling these transactions. I will also emphasize that not all RE/MAX agents have short sale expertise. It just so happens that this short sale video does a nice job portraying the lack of knowledge of some of the Realtors listing these homes.



So what are some of the biggest Massachusetts short sale pitfalls that I see from Real Estate agents that don't know what they are doing? Here is a run down on a few of them:
  • Underpricing or overpricing the short sale property ~ Pricing a short sale is really an art that should not be taken lightly. If you overprice the home and do not find a buyer in a timely fashion the seller is going to be that much closer to getting a foreclosure notice. On the other hand if a Realtor under prices the home the lender probably will reject the short sale. When a short sale contract is submitted to a lender, they will send out an appraiser or a Realtor to do a BPO (broker price opinion) in order to establish the value. The contract price accepted is going to need to be in close proximity to actual market value.
  • Another common pitfall I see often is Realtors sending multiple unsigned offers to the lender. Remember the seller still owns the property. The lender is only there for one thing and that is to accept or deny the short sale terms submitted. When a seller does not sign a Real Estate contract the buyer can walk anytime. As a seller this is the last thing you want! Making sure the contract locks in the buyer is essential. In all of my Massachusetts short sale contracts the buyer's have to wait 90 days or they won't be buying the home!
  • Having the seller sign a contract with terms that do not make sense. A short sale contracts terms should be set up the same as any other Real Estate sale. For example the short sale home inspection should be done right away NOT after short sale approval. A listing agent that allows a home inspection to occur after short sale approval is clueless! 
  • The rest of the terms like the signing of the purchase and sale and the time allowed for a buyer to get financing approval are like any other transaction. There are buyers agents that think they are saving their buyers some money by doing a home inspection after approval in the event the short sale does not happen. The problem with that is if there are issues there are NO negotiations after approval. What would you rather do save a few hundred dollars or give up the chance to potentially negotiate thousands of dollars?  
  • It is quite possible that your Realtor will be approached by an investor who wants to purchase your property. On many occasions the investor will ask to take over negotiations with the lender. Realtors should never let a short sale investor negotiate with a lender. Why a Realtor who has been hired to help a seller with a short sale would ever do this is beyond me.
  • Another common pitfall is a Realtor not explaining that when you short sell a home in Massachusetts there can be short sale tax ramifications. If you are selling an investment property and not a primary residence you will more than likely get a tax bill.
  • One of the biggest considerations when doing a Massachusetts short sale is the debt removal. One of the things that whoever you have hired to negotiate your short sale should be doing is to make sure the negotiate the best terms possible regarding the short sale deficiency. Make sure you read the article I have written on short sale debt removal.
Here are some other short sale articles that I have written that are worth taking a look at:
    If you are needing to complete a  short sale of your home or condo in Ashland, Bellingham, Framingham, Franklin, Grafton, Holliston, Hopedale,  Medway, Mendon, Milford, Hopkinton, Southboro, Westboro, Natick, Northboro, Northbridge, Whitinsville, Upton, Uxbridge, Shrewsbury, Worcester, or Douglas Get in touch! I would love to interview for the chance to represent your best interests.

    Completing a short sale remains a much better option than letting a property go to foreclosure for a number of reasons centering around credit and your ability to buy another property in the future.

    I am successfully completing short sales through out the Metrowest Massachusetts area as well as parts of Worcester County. As of this writing in almost four years, knock on wood, I have a 100% success rate for short sale approval!

    I work hand in hand with a local short sale Real Estate attorney who knows how to get short sales done! I will admit there is some luck involved in my success rate but the team I have put together does a stellar job.

    About the Author: The above Real Estate information on Massachusetts short sale pitfalls was provided by Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-435-5356. Bill has helped people move in and out of Metrowest Massachusetts for the last 24+ Years.

    9 comments:

    Conveyancing Adelaide said...

    What most sellers fail to realize is that there are agents who really specialize in short sale. Those are the ones that they should be looking for if they want the short sale process to be successful.

    - John Wake

    HIS Real Estate Network said...

    The metro west Massachusetts homes blog is very interesting regarding the Massachusetts Short Sale Pitfalls. Thanks for visiting my Real Estate Blog.

    JD said...

    Bill, I want to thank you again for helping us climb out of the short sale pitfall you described so well in this post.

    It wasn't until I read your post that I realized that our agent might have been the best realtor on earth -- but did not have the sense of immediacy you have to have when it comes to short selling.

    It's a different mentality when you are three weeks away from the auction block.

    Your sense of urgency and clear knowledge got the ball and the potential buyers rolling our way.

    You and your blog saved the day!

    Kind regards, JD

    Bill Gassett said...

    John it was my pleasure to be able to help you out. Your situation was the perfect example of the frustration I have with Realtors listing short sales when they do not have the proper knowledge to do so. I am so glad I was able to step in and save you from foreclosure!

    shortsalehut said...

    Very informative. It is true, not every agent specializes in short sales. Please choose wisely. We also have informative blogs.
    http://shortsalehut.com/

    Kevin Vitali said...

    Bill- Funny video... but the scary part is I have had conversations not unlike this video with agents who shouldn't be handling short sales.

    Bill Gassett said...

    Kevin - I hear you loud and clear. There is no doubt that most agents are not properly educated about short sales. I am constantly explaining why we do things the way we do in order to increase the chances of getting short sale approval.

    Anonymous said...

    Hello Bill,
    Back to a conversation we had about a short sale a few days back where we had offered $20,000. more than another offer. I understand the seller is not obligated to us, but the real estate agent never showed him our offer. Was she not obligated to at least tell him there was another offer on the table?

    Honey Erwin

    Bill Gassett said...

    Honey if the property is under agreement and the listing contract states that the agent doesn't have to continue showing the property and collecting offers then the answer is no. If the property was not under agreement and no such language exists the ALL offers MUST be presented.