Three big reasons why not to deal with short sales.
I would like to start off by saying I have tried to take a business approach and it's hard to leave out my morale objections to some lenders practices as well as some homeowner's behaviors.
These are just some reasons why I personally avoid short sales as if they were the plague.
Homeowners and lenders of short sale properties are at such odds that coming to a negotiated deal are often a fantasy.
Let us look at a short sale in my area.
I will change the name and address but the scenario is quite real.
Bob and Sue own 123 Maple Street and paid $700,000 for it 5 years age.
They put 10% down and mortgaged $630,000.
They have never missed a payment and love their home very much.
Home prices have declined 30%, so their house is now worth $ 465,000.
Friends and family Are now telling them "Why keep paying for a house that's worth less money?" and this combined with the constant negative media spin on housing has finally convinced them to talk to a Realtor bypassing the first crucial step which should have been placing a call to their lender.
Reasons three "return on time" or simply put the average time a client and Realtor spend looking for homes, previewing homes, investigating homes, and submitting offers on short sales properties is astronomical.
The seller, Realtor, and buyer typically do not follow the steps in the proper order to streamline the short sale process causing the average short sale to fall out of contract multiple times with multiple buyers before it sells or as is the case more often; it gets foreclosed on and put back out on the market as an REO.
Reason two "loss of credibility" whether you're an agent, seller, or a buyer the constant uncertainty during a short sale transaction often causes the client to doubt the agent's professional capacity to close the deal.
Sellers often do not do what is asked of them by the lender causing credibility issues amongst the Realtor and seller.
Buyers become frustrated with losing out on or not being kept up to date with the transaction they are involved in ultimately blaming the Realtor.
I have personally benefited many times from other Realtors failure to explain the process and frustration that builds and the clients eagerness to find a solution.
Reason one "lost opportunity" spending large amounts of time looking at short sales will diminish your ability to find properties that are more appropriate for your client or for yourself.
If you do get your client or yourself in contract on a short sale they are legally and morally obligated to fulfill their duties to the contract.
The Realtor and buyer are not supposed to be making offers on other properties and technically need to be out of contract before making any such offer.
The average short sale takes between three and six months depending on the state and area, so imagine how many properties that would fit your client they will miss during that time frame.
Please feel free to contact me with any real estate question.