Competing for Short Sales
Posted 10/24/2009 - 07:55 by Beth Mergens
One of my favorite things to do is cook and one of the first rules is to make sure you watch the heat source so it doesn’t burn the food. It seems to me that real estate is similar in nature and our market has been on a slow simmer all summer long but appears to be heating up according to all the economic reports. This is also evidenced by the multiple offers I’ve experienced and heard about, not only below the $300,000 range but in the properties priced up to $700,000 as well. So how do you ensure that you get the property when you know there are multiple offers on the table (even though it is a short sale) and you still have to wait for a bank approval?
Glad you asked! Savvy agents are now requiring that the buyers deposit their earnest money checks with the escrow company upon acceptance of the offer by the sellers. This does not mean that the bank has approved the short sale but only gives some reassurance to the sellers that the buyers won’t walk away from the deal half way through the transaction. This issue has been brewing for some time and it’s starting to cause listing agents to change their counsel so rule number one is expect to put cash in escrow.
It’s not unusual for buyers in this market to write multiple offers but they must let that be known to all parties involved. There is no rule against writing multiple offers and when that happens it’s best to include some verbiage on the offer. This has been happening quite a bit lately and the result is that buyers are not acting responsibly when cancelling contracts. Sloppy buyer’s agents are NOT taking the lead here and the result is a lot of frustration in the real estate community. So rule number two is cancel all previous purchase contracts and let the listing agents know in writing!
This market has allowed a record number of new buyers into the market by way of low prices and government backed loans which typically do not require a lot of money down (zero down for VA). Brokers caution sellers against anything that could jeopardize the sale of the home and low down offers are at the top of the list. If listing brokers advise against accepting offers without money being deposited we could see many buyers unable to purchase due to their lack of cash flow. Locking out buyers in this market is not a particularly happy thought so respect the sellers and alert them to any changes that will affect the sale, you don’t want to contribute to a negative backlash. So rule number three is to communicate any changes to the seller’s in writing.
I would like to express my caution to buyers (and their agents) that are indifferent to real estate procedure and their impact on this market. As we have seen the fall out of the wildly loose lending practices by way of stricter lending policies I suspect we will also see real estate brokers revert to stricter standards regarding buyer’s offers. Additionally, since a lot of the newbie agents who got into real estate at the height of the market are now gone we can be assured the established agents will once again cut the path to protect consumers. Most of what I have blogged here is standard operating procedure but unfortunately not practiced by some agents. I hope that those previously unable to buy a home will respect the process and get to enjoy their slice of the American dream.
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One of my most frusterating experineces while tying to sell my home a couple years ago wer ebuyer who the agent (and bank) were pre-qualified but once it came time for closing they weren't really qualified. It wasn't just the buyers that were lying - everyone was.
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