The definition of a short sale in real world terms would be: The seller has arrived in a situation where there is no equity in the property when they decide to sell. I am using a lot of license when I say "decide" to sell. If the seller has lost a job, recently divorced, or any of the many issues that could plague a seller, there is the realization that this house payment is something they cannot afford at the current time. With that said, the seller may owe more on the property than the property is worth. For example, Mr. and Mrs. Seller bought a home for $400,000 and five years later they owe $500,000 with interest. They must sell and the real estate market has changed course. Instead of homes increasing in value in their area, home values have fallen. Now their home is worth $430,000. The lender obviously wants $500,000 but if Mr. and Mrs. Seller can manage to find a buyer for their home then the lender will agree to take a loss on what is owed to them.
Lately the market has changed with the rise in interest rates, the foreclosure of homes that had adjustable rate mortgages and the reduction of jobs to off shore workers. These are all contributing factors to why Mr. and Mrs. Seller are in this position. Not inclusive of other personal circumstances they may be facing.
If the lender agrees to take less then the buyers and realtors can continue their livelihood of buying and selling; economics at its finest, right? Well, is this the best idea for the client if the realtor doesn't know all the facts?
Fact #1: What if the lender does not agree to the offer the buyers present for the short sale? For example, a buyer offers a lower price than the current short sale price.
Fact #2: When the lender pushes back on the buyer's offer price, where does that leave our client that may not be able afford the increased counteroffer?
Fact #3: Buyers have needs and timelines, too. The timing for a short sale escrow could be 45 days and beyond, what is the touch factor for the buyer? In other words, how many ways can you say "I am waiting for the lender to get back to me?"
It is not about commission anymore it about what is best for the buyer (client) we service.
Any thoughts?