Jul 19, 2009

10 Reasons Why Realtors Hate Short Sales

I hate shorts sales. They are not short and they are seldom sales.

At the risk of sounding heartless, people at risk of foreclosure who are considering a short sale should exhaust all other options before taking the short sale path. Read my post about why sellers hate short sales. Buyers should also run the other way from a short sale. Read my post about why buyers hate short sales.

A short sale is designed to help a seller fend off foreclosure. But they usually end up in frustration for all parties involved - including the real estate agents. As a Realtor, I hate short sales. Here are a few reasons:

  1. They are a huge waste of time. They usually don't end up in a sale after dragging on for months. No sale, no pay day.
  2. The government is involved. Now that the feds have stepped in to the mortgage mess, we're basically dealing with government entities. More paperwork, more steps to the process, ...
  3. Lawyers are also involved. Their fees and billable hours will be collected regardless of if the property sells. They do not share the same motivation to complete the transaction in a timely manner that a Realtor does.
  4. They entail spending hours on the phone calling a lender's mitigation department in hopes of reaching someone who can answer questions and/or has the authority to release information and/or give a definitive answer to a question (like when can we close?). Three months of aggravation to have the lender tell us that our offer is rejected is not a productive use of my time.
  5. They involve 5 times the work for half (or none) of the pay. The lender selling the property will often discount the commission to the buyer's agent at the 11th hour. Not wanting to let the commission get in the way of getting your buyer the property they want, the agent takes what they can get at that point. They are stuck with what the bank wants to pay them instead of being fairly compensated for their work.
  6. I don't like being the bad guy. The lender is taking a loss on their investment and I'm nagging them for decisions. The seller isn't making a dime on their sale and I'm pushing them to help get it sold. Many folks feel like the Realtor is the only one making money on the deal. They often think 'If we're not making anything on this, why should you?'. I didn't take the risk of buying or lending on this property. And I shouldn't be forced to work for nothing (#1 reason why I no longer do short sales).
  7. My blood pressure can't take it when the bank requests completely updated documents and paperwork because they delayed so long in responding. Now that months have passed, the financial information isn't current. They need updated paperwork from both buyer and seller. Some how they also manage to lose paperwork (they often prefer to work with faxed documents instead of emailed documents).
  8. Buyers get frustrated and go away. Who wouldn't? Unfortunately they often think it is their agent's fault and don't want to work with that agent any more. I steer buyer clients away from short sales because it is not in their best interest to pursue them.
  9. We're stuck in the middle. Loss mitigators at the banks are overwhelmed and don't have time to take my calls or call me back. Buyers want to take advantage of this buyers market and purchase a property at the best terms - they don't want to sit on their hands for months waiting to do that. Sellers want to avoid foreclosure and irreparable damage to their credit. Realtors want to make it happen for everyone and get paid for their work.
  10. There is usually nothing the agent can do to speed the process. We can't make the lender become reasonable or flexible, we can't reduce the paperwork or the time to get an approval or rejection, ... Everything is in the hands of the bank and the seller. But mostly the bank. Did I mention that the government is now controlling many of these financial institutions? Go back to reason #1.

8 comments:

Smarry said...

Very nice article thanks for the sharing................

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Smarry
The only Satellite Television Delivers the Best Value in Entertainment

short sale specialist said...

Hey Lydia,

I am agree with you. If you had some way of rating posts I would for sure give you a high rating my friend!

darrell said...
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darrell said...
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Anonymous said...

Sounds like you're in the wrong business

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