As much as I would like to see short sales become a thing of the past there is some satisfaction in helping homeowners, who are having financial difficulties, avoid a foreclosure.  The Sacramento real estate market has been one of the hardest hit and unfortunately foreclosures and short sales are going to be with us for the foreseeable future.

Successfully completing a short sale certainly adds to the complexity of normal real estate transaction but the key to success is knowing what you are doing, having a process to handle them and experience in dealing with a variety of lenders.  At MagnumOne Realty we have had the opportunity to successfully complete a number of short sales and have a good handle on how to approach them.  We have developed a package for the homeowner that includes some basic documents we need to determine if the homeowner will be a successful short sale candidate, information our short sale team needs to get started quickly and some informative articles on what a short sale is, how they work, what will most likely be required and a general outline of how long it will take.

Getting started early is a key element in the successful short sale negotiations.  While the house is on the market we contact the lenders, provide them with the necessary authorizations and obtain their most up-to-date short sale requirements.  If they are a lender we have worked with before we talk with our contacts and let them know we would like to work directly with them again.  In addition we start working with the seller to develop a short sale package.  Because of our experience we can look at information provided by the homeowner and see questions the lender may ask and have those addressed so the first package we send is complete. 

Time is often not on our side when working with short sales.  We must have a complete package including an accepted offer prior to the home being foreclosed on.  Depending on when the homeowner hires us to help, this may be several months to weeks.  This means the marketing plan must be aggressive to attract a buyer.  Aggressive pricing will attract buyers but the sales price must be at or close to market as the first thing the lender will do is determine what current value is.   

An important element that too many Realtors are missing is that the home does not belong to the bank and it is the homeowner who negotiates with potential buyers.  This is exactly like any other sale with the only difference being that the contract is subject to lender approval as part of the short sale request.  Once the contract is accepted by the seller, it along with the short sale package and an estimated settlement sheet is sent to the lender.  We do not send multiple offers or send offers that come in later.  The potential buyer must be protected and their offer is the only one the bank will see unless the buyer withdraws.

Each lender is different and over time we have found that lenders change their process so it is important to maintain a steady dialog and use the contacts you have made over time to move the current short sale through the lenders organization.  Many of our Sacramento real estate clients have second and even third mortgages so we have to coordinate with the lenders and often negotiate between them to make sure each will release their lien.  We have found that most lenders are generally cooperative, understand the situation and will work with us to make the sale of the home a win for everyone concerned.  Occasionally we run into an overzealous negotiator who takes a position that won’t work for one or more of the other parties’ involved.  When this happens it often a good strategy to move the negotiation to the supervisor level or even get the homeowner to talk directly with the lender.

An important element in the short sale process that often goes overlooked is communication.  Not only between the short sale team and the lenders but with all the parties concerned.  Short sales take time, lenders are swamped and things you would think could be done quickly may take weeks.   During this time buyers can feel like they won’t get the house, seller’s start to think it would be easier to just let the bank foreclose and agents feel under pressure to get things done.  Frequent updates are vital to keep everyone up-to-date and focused on the sale and lender acceptance.

In conclusion, short sales are not easy for anyone but have a place in the current Sacramento real estate market.  They can be done successfully if the Realtor handling the short sale knows what they are doing, has a process to handle them effectively and has experience in dealing with a variety of lenders.

Julie Jalone is a Sacramento real estate agent and owner of MagnumOne Realty in Roseville.  She has extensive experience dealing with pre-foreclosure and helping clients avoid foreclosure through short sales.  If you or someone you know is having difficulty making their monthly payment contact Julie at 916 276-6883 or send her an email at juliej@jalone.com.   

If you have comments you would like to add to this article or questions for the author, please feel free to email me at juliej@jalone.com