How Not To Short Sale

Article Written By: Cory Boatright

It is essential to know what a short sale is all about before understanding how not to short sale.

Initially, a short sale is not a case where a property goes into foreclosure. In this case no sale is conducted whatsoever, instead the lender is just taking back the investment to cover or restrict its losses. Additionally, a short sale is not a case where the seller agrees to decrease the asking price of a house, consequently making less profit, to encourage a faster sale.

What a short sale is, is when the homeowner can no longer afford the property and therefore wishes to sell. They might, however, find that the property is valued at less than the outstanding amount of the loan meaning that if they did sell, they still have a deficit to make up. In this instance, the lender may settle to relinquish the outstanding balance on the loan in order to restrict their losses and avoid a foreclosure.

In this case, what the agent, should keep in mind is that in a short sale all decisions lay with the lender and the homeowner is left without a say on the price. Although it is true to say that the lender would, obviously, be happy with a higher sale value the agent shouldn't get greedy and hold out for a higher value. This is because a fast sale is essential and too many delays might lead to the lender cancelling all negotiations and proceeding with foreclosure.

On the other hand, the agent should not try to rush the sale by selling at a very low price. Again, the lender is the decision maker and if the value is too low then they will not accept and go ahead with foreclosure. Whatever be the reason for it, if the bank wishes to foreclose then the seller loses their house and credit rating, while the agent loses any potential commissions.

Another thing that an agent should not do when it involves short sales is leaving anything open for negotiation at the back end. Once the proposal has been submitted to the lender the terms of that proposal, if accepted, should be adhered to unerringly. If at any point after the proposal has been submitted and accepted, either party wishes to alter anything, then the lender is likely to pull out of the deal completely and proceed with foreclosure.

Because of this it is important to have everything finalized before submitting any proposal to the lender. This includes all negotiations on price in accordance with results from a home inspection, to the commission received by the agent.

The chief factor in achieving a successful short sale is to not forget that the lender is the final decision maker and should be appeased at all times. When it comes down to commissions, price and timing, the seller has no say in the matter as the house is effectively no longer theirs.

Remembering this would help you to concentrate on the priorities of the deal and help to ensure a quick resolution which is best for all the concerned parties.

About the Author

Our products are built for small businesses and individuals who want to take their Real Estate or Shortsale Businesses further. Through powerful educational tools and automation we hope to help you make your businesses grow. Visit http://www.shortsaleology.com and know more about shortsales, foreclosures and short selling.

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This Article Has Been Published on Fri, 7 Jan 2011 and Read 244 Times

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