Short Sale Q & A - This Process is Taking TOO Long, What is a Buyer to Do?
From a short sale buyer:
Q - I have had a purchase agreement on a short sale property since August 14th of 2009 and I still haven't received an answer from the bank. They keep telling us we will have an answer in approximately 1 week; then a month will go by and we still hear nothing. What can I do to help move this process along as the purchaser?
A -First of all, you are incredibly patient! There are several things that could be wrong here but, unfortunately, you have no control of the situation--no way to push this process along any quicker. You and the seller are in a hands-tied mode!
Both the listing agent and the buyers agent should have an understanding of the short sale process--the listing agent needs to be the one communicating with the bank and keeping all parties aware of the status on a weekly basis. The listing agent should be speaking to the negotiator on a 3X per week basis and keeping you posted once a week. 
This process can be a long and arduous one but, it isn't always and doesn't always have to be! Has the bank ordered a BPO (broker pricing opinion--an agent hired by the seller's lender to give his/her assessment of the market value of the property)? If that has not been done yet, then my guess is that the listing agent has not been in contact with the right people at the bank or the seller has not submitted all documents to the bank (that fact should have been conveyed to you by the listing agent though).
80% of the banks loans are sold to investors--sometimes multiple investors. Chances are that if you haven't heard from them and there HAS been a BPO, the banks are trying to get the investor(s) to agree to the short sale price and the resulting loss for them. The listing agent should be chatting with the bank on a regular basis to encourage them to get an answer as well as convey this information to you.
Another option is to get your Closing attorney involved--preferrably a short sale specialist--have him/her contact that listing agent to see if he/she can assist in the process.
Good luck!
Need information on short sales? Visit our short sales in Charlotte NC website.
(THE best Charlotte home search available - no kidding!)
Debe Maxwell, CRS/Realtor®/Broker
Broker@TheCharlotteScoop.com
Phone (704) 491-3310
Debe, I have negotiated several short sales in the past few months and as the listing agent I can tell people in this situation Be Persistent but not obnoxious, the negotiators hold the ease in which the transaction moves forward in their hands. Be nice, but call a lot...if you are not nice, you could very well go to the bottom of the current pile (which is getting higher and deeper by the day). Good Advice Debe, and continued success.
Debe,
Great advice. I also think Steve has a good point with Persistent but not Obnoxious. Although, I imagine that would be very tough when you are in such a frustrating position.
Hope all the work with BoA task force is going well. There's GOT to be a way to improve this process.
All the best, Michelle
Debe: It takes a lot of patience. SOme go quickly and some go slowly. That is just the nature of the beast.
The whole key seems to me to be the BPO. Until that's done(and it isn't usually assigned until a loss mitigator okays it) nothing can or will happen. If all the paperwork has been submitted properly, an escalation must be requested if more than 45 days has passed since submission and still no BPO or LM.
Thank you for the quality re-blog opportunity Debe!
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Vic Steele, Broker, CA DRE License No. 01349863
Valet Real Estate Services
571 N. Poplar, Suite H, Orange, CA 92868
Vic@SteeleGroup.net
Debe-Really great advice on short sales, I guess patience is a virtue
Good advice. There's a fine line between being patient and pushy
Great blog Debe! Many people find short sales a mystery...which they are.... They are anything but SHORT!
Well explained Debe. I always call the listing agent before I show the property to find out some pertinent information. How many loans? Is it sub prime? Has the BPO been ordered? Have you, Mr/Mrs./Miss Listing Agent, done a short sale before?
Debe, in these situations I always thing of my mom who always said "kill em with kindness" pretty much what Steve is advocating. I think it is a travesty how poorly these short sales are going, I don't think the banks or the anybody involved from the financial end realize how devastating it can be to these families that are trying to get help...
Debe, I am glad you are doing this series, I just sent a link to your post the the listing agent on the other end of my current short sale!
Everyone of these scenarios are different...that is for sure!! I just wish the banks were held accountable for their actions (or lack of action)!!!
Debe - Communication is key in any transaction, especially short sales. I can't count how many buyer's I've come across who submitted an offer on a short sale and months would go by without contact from their agent. I keep my clients updated weekly, even if it's a "nothing new" e-mail.
Great post Debe. Dealing with our local banks are much easier that some of the other "big banks". You have to be patient and keep on top of the communication.
I've been waiting on one for one of my listings since November.
She finally wrote back on Saturday. Weird huh. I will get a new HUD done on Monday.
It is frustrating, buyers get tired of waiting so I try to have a back up ready to go.
Here's my 2 cents.
1) Buyer's agent should ALWAYS include an addendum that gives you or your designee right to be first contact with the negotiator. Yes, there are downsides to this, so check your E&O. However, you want to drive the deal. Give them the value proposition "My buyer is qualified, motivated, ready to close. Be professional and precise. Be prepared for every call. Ask for 60 seconds of their time and do it in 30. Prioritize want you want to accomplish. Know your math facts, the NET to bank for short sale vs foreclosure. The deal structure.
2) Start at the top. Yes, the CEO! Look in SEC filings, get the corp phone number and CEO's name. Call the CEO's office and politely ask for person responsible for short sales. Use your 30 second pitch "My client is ready to close escrow with NET to bank of X. Can you refer me to the appropriate person to remove this non-performing asset from your balance sheet?" use exactly these words "non-performing asset from your balance sheet." You are likely to be referred to the someone in loss mit group who reports to the executive in charge. At Chase they call this Executive Resolution Group.
It's likely the person with whom you next will be speaking is college educated, a long term bank employee who won't be laid off when short sales disappear. In short, a banking professional
This contact won't have ability to close the deal, but is your internal champion to get your file moved to the top.
3) Always be closing. Always emphasize remove this non-performing asset from your balance sheet. Don't waste their time with history. Don't whine. Don't play upon their emotions. Don't guilt them. They don't care, and frankly, their management cares even less.
Great post on the short sale "patience" process... I am reblogging, as it's very important! Thanks for sharing.
Debe,
Great series....and great advice...I will be bookmarking this one!
Hi Debe, This is good advice. It seems to me that the agents involved can make a big difference in making things move more smoothly instead of simply complaining about the bank. The listing agent can communicate with both the bank's negotiator and the buyer's agent. The buyer's agent can keep as informed as possible and make sure his/her buyers understand that there is nothing short about a short sale. I have had buyers walk from my short sale listings after just a few weeks because their agent didn't properly educate them and they thought nothing was happening.
Great Q&A!! Especially the A!!
Looks like I commented on this several months ago. I wonder if this short sale is actually still going on. If it were, I would have abandoned ship by now--if I were the buyer.
Debe - The buyer has to be patient in a short sale and hope that the listing agent is doing what needs to be done.
I do not handle short sales nor call myself a short sale expert. Too many pitfallls. And since I am doing just fine without them, I am glad I do not have to deal with these hassles.
Cases like these are abundant. When will banks get that business as it stands is not working. We need to see more progressive short sale programs like Wachovia's in Northern, CA.
Great post and advice. Unfortunately, it's a mess and being patient is the best recommendation until the powers that be sort it out.
#16 is spot on. I contacted a bank's president of loss mitigation on behalf of one of my buyers. Long story short, he directed the "negotiator" to close immediately (after the negotiator told me the bank would be foreclosing, tough s%&t). Take it all the way to the top!
... and this is why we have buyers putting in multiple short sale offers... and this is why...yada, yada, yada.
Good post... until we "bottom out", we will never get out of this mess. That's my encouraging two cents for the day! ;-)
Debe, this is great - consider yourself reblogged!!
This seems longer than usual
Patience is key to any negotiation but more important is informing yourself with the "truth" so you can relay this to your client on their chances of success.
The deciding factor lies within the grasp of the Investor and/or Mortgage Insurance Co. on whether to approve a short sale or force a speedy foreclosure regardless if the homeowner is able to make payments.
I would highly recommend everyone to read this blog titled: "TARP Has Failed Homeowners" written by Gail Robinson here on ActiveRain.
http://activerain.com/blogsview/1999312/tarp-has-failed-homeowners
Anyone who is a realtor interested in short sales/reo must read this article thouroughly to strategized your options when pursuing this method of transaction because the truth of the matter is that the Banks whether they are servicers or not; these banks are not your friends even if they smile back at you and whisper hopeful words.
My buyers wait 45-60 days for approval and then have the option to cancel and get earnest money returned. It's in the contract addendum, and there is absolutely no way I would let a listing agent tie up my buyer for over a year with no progress.
This process is VERY painful. Thanks for the great post. A great deal of buyers do not have the patience to wait indefinitely.
Great post as usual Debe, I'd add that if you'recalling say 3x's a week -- that they make it very clear that's the what you plan to continue to do. Get the name of the person you're talking to, and then make sure to use their name as you kindly say, "I'll call you on Friday morning to see how your supervisor is doing on it, if she gets to it before then -- will you please take my number down so that I can tell the buyers immediately? You can probably imagine their anxiousness to move into their new home."
1) Get the name of anyone you're talking to, use it and ask for that person (and extension) again if possible
2) Give them the plan (tell them that you'll call them 3x's a week or on Tuesday morning at 9:30... whatever)
3) Give them your name and number. Be a person, not some faceless annoyance.
4) Remind them that even though the process is sterile on the bank's side, that there is a real family that is in limbo. Try to get them to relate on a personal level.
That won't get their bosses to sign off faster but it sometimes will win you an internal advocate that might push it a faster.
Only since August? Geesh they are just getting warmed up :)
It is so important that the right expectations are set up front. We tell all buyer sto expect 4 months MINIMUM. If it happens sooner we are the champions.
Thanks for the great information. I always enjoy gathering quality information like this.
August 2009??? That is now 16 months ago. Please, please tell us that by now the buyers are the owners or that they bailed and found a different home, Debe!
Most of the processors at the banks are so overwhelmed. A little kindness could go a long way. Otherwise, the buyer needs to be aware that this could be a very long process before they even get into a contract. It will much depend on whether they are in a hurry to relocate or can do so "whenever." Patience is definitely a virtue when dealing with short sales.
Great post, Debbie,
Short sales will be with us for some time to come. In our market, you might as well retire if you refuse to handle short sales.
Hi Debe -- You write so incredibly well. Very informative. The buyer has been waiting since August 2009? That is one patient buyer. It would be nice if the banks produced stats for how long short sales take by bank, by region, by loan type, etc., it could give a buyer some info to decide if they want to pursue it based on past transactions.
16 months is not unusual. The employees of the bank are chained to policies and procedures whether they make sense or not. Time after time banks are willing to drag out a short sale an extra year to hit some target amount, even if they end up netting much less.
Debe - You do such a great service to buyers when you write a post like this that helps to explain the short sale process. It's so sad that with all the potential foreclosures that are in the pipeline with the banks and homeowners holding out hope for an approved short sale that this process has yet to be streamlined to expedite these files.
These can/will test everyone's patience. And no matter how much you emphasize what to expect to your clients, it seems like the never believe us and are still shocked when the deal takes this long...
Short sales are a big waste of time, this is why I rarely write on them!
I have found that some banks are better to work with than others & some negotiators are better to work with than others. They are all challenging but if you know what you are doing & you keep the buyers informed you can close any short sale.
Unfortunately there are so many short sales out their that are not being handled by a listing agent with any understanding of the process. It's really sad for all.