Here are common short sale mistakes we often see people make.
Common Short Sale Mistake #1: Not ordering a title search before negotiating the short sale.
Many people do all the work of negotiating a short sale payoff, only to find out that the property has liens or second mortgages. Many different things can attach to a property, including homeowner’s association fees, judgments, tax liens, levies, etc.
Make sure your agent orders a title search when your house is first put up for sale. That way everything can be factored in up front.
Common Short Sale Mistake #2: Unrealistic Pricing. Because of the threat of a pending foreclosure, short sales need to be done as quickly as possible.
If you price a property more expensively than similar homes, then buyers won’t be interested. As a result the home won’t sell and risks being foreclosed upon.
On the other hand avoid a low asking price. If the short sale offers are too low, they will be rejected by the lender.
I recommend finding the fair market value and listing the house at that price. Price adjustments can be considered on a regular basis from there.
Common Short Sale Mistake #3: Not using photos of the inside and outside of the home in marketing. Most buyers start their home search online. They browse lots of different websites looking for the one that works for them.
If a buyer likes the pictures of your home, then they will schedule a showing. But, if there are no pictures, then it is unlikely they will ever look at it. With all the homes for sale, they have lots of homes with pictures to choose from.
Common Short Sale Mistake #4: Not doing research to find the decision maker on the loan. Most loans are not owned by the lender you are dealing with. In fact, between 60% and 75% of all loans are owned or insured by Uncle Sam.
50-55% of all loans are owned by Fannie Mae or Freddie Mac. These two entities are owned or closely controlled by Uncle Sam. In addition, Uncle Sam insures mortgages thru FHA and VA.
In these situations Fannie, Freddie, FHA, or VA make the decision to approve or deny the short sale offer. Let’s say that your research shows that FHA insures the loan.
If you are familiar with the FHA short sale guidelines, then you know whether or not a short sale offer will be approved. The same goes with the rest of the loan types. Their guidelines for short sales are easily obtained.
Common Short Sale Mistake #5: Not understanding the short sale process. Most lenders have a similar short sale process.
However, lenders are busy. The short sale negotiator you are working with may have 200 files on their desk. They don’t have time to babysit everyone and explain the process.
Make sure the person dealing with your lender is familiar with the process. It can’t hurt if they have done short sale with that lender in the past.
Common Short Sale Mistake #6: Submitting low ball offers to the lender. Some buyers think that since a property is a short sale the lender will take any offer submitted. This is not true. Lenders are business people.
They have systems in place to reduce losses. The owners of the loans also have rules about what type of offers to accept or reject.
Before they can approve a short sale the lenders are required to check the home’s value. They will hire an appraiser or licensed real estate agent to determine the fair market value.
They do not want to discount to much from the value that person gives them. Some lenders will discount 2-5%. Others will discount as much as 10%. But, they won’t accept an offer for substantially less than the fair market value.
Thinking about a short sale? I can help you short sale your property. Send me an e-mail at StephanieWeissMoves@gmail.com. I will contact you for a free consultation.
