Central Florida Short Sales: June 2010

Hi folks. Here's a video I took today to show you how real estate has changed. This particular property was sold by me back in 2005 for $170,000. Today I placed it on the market to help the current Seller avoid foreclosure. It's now listed as a Florida Short Sale. Hopefully we'll get $30,000-$35,000 for it. Incredible for a 3 bedroom 2 bath pool home. Enjoy the tour!

Hi folks. I wrote this post almost a year ago but feel I need to bring it back to the top of the stack. Short Sales are another year older and it just seems like buyers and their agents would "get it" by now. You can't just walk away from the Short Sale Contract. If you do.....my Seller is entitled to your deposit money. A Short Sale contract is STILL a contract. Buyers that feel they can just walk are wrong.

Here is my opinion on why Buyers feel this way. They are misinformed.

A Short Sale contract is no different than a regular contract with the exception of the 3rd party approval contingency. This contingency is related to the Lender approving the “Short” NOT approving the contract. The lender has no authority to approve the contract since they are not a party to the contract.

They do however have the authority to approve or disapprove the Seller’s request for a “Short” payoff.

A contract is binding and legally enforceable when:

1. It has a legal purpose
2. The parties are legally competent
3. The offer has been made and accepted
4. There is consideration
5. The parties have willingly consented to the terms

There may also be contingencies in the contract. Contingencies are: Conditions which must be met if a contract is to be performed.

Some contingencies may be to protect one of the parties:

1. Survey
2. Inspections

Some contingencies may need to be removed in order for the purchase to be completed:

1. Title
2. Short sale approval
3. Financing

The Short Sale approval is just one more contingency in the purchase contract. And just like any other contingency it should have a time period to be removed.  

If it can’t be removed in the time allowed then the parties can either extend the time period or cancel the contract and return the escrow deposit.

If it can’t be removed at all because the Short Sale was denied then the contract becomes  “null and void”. The Seller is now unable to perform. This is no different than when the Buyer’s financing is denied. He too is now unable to perform.

Folks....this stuff is NOT complicated. It’s Real Estate 101. Stop trying to complicate matters by treating the Short Sale as anything other than what it is…..a contract contingency.

If your Short Sale listings are not closing. Get training. You’re doing something wrong.

If your Buyers are getting frustrated then you are not setting the right expectations.

These are my thoughts. What are yours?

***I am NOT an Attorney and this is not legal advice. I am however a Licensed Florida Real Estate Broker and this IS my opinion.

Property:

3 bedroom 2.5 bath townhouse in Kissimmee Florida.

Hardship:

Investor owned property. Loss of income. This is the 3rd Investor Short Sale we have completed for this Seller.

1st Mortgage with Citi Mortgage for $92,000. Agreed to accept $54,442 or 60% of the balance owed.

No Seller contribution or promissory note. Citi Mortgage issues a waiver of deficiency. It doesn't get any better than this.

This Kissimmee Short Sale transaction took 35 days from listing to closing!!!

Challenges:

None. The property was placed on the market on May 18th. It went pending May 21st. The Kissimmee Short Sale was approved June 21st. We closed June 23th.

Sometimes things just fall into place.

Folks. This Lakeland Florida Short Sale has room to roam with 4 bedrooms/2.5 baths with 2885 sq ft of living area and built in 2005.

Located in Hunters Greene.

Hi folks. This question has been on my mind for months now. "What percentage of Short Sales really close?" Most folks throw out numbers of 20% to 25%. But my opinion is that they are not only wrong but they are way off. I have been pulling data for several days now from my MLS trying to come up with some empirical proof. But it just ain't happening.

The problem is I can't tell how many withdrawn and expired listings were actually re-listed and closed. I guess I could flag the current listings and monitor them over a period of time. But hey...I have to work for a living so I'll pass on that. Anyway here is my unscientific conclusion.

First, I think I can agree that only 20%-25% of Short Sale TRANSACTIONS close. I can base this on my own experience. I know that it normally takes multiple transactions to get any one Short Sale closed. On some I have had as many as 5 different buyers before one actually stayed in the game through closing.

However, the percentage of transactions closing is far different than the percentage of Short Sales that actually close. Short Sales, in this case, meaning the property. My percentage of PROPERTIES that are being sold as Short Sales that close is well above 90%. And I also know that MOST of the agents that list and sale Short Sales regularly close 90% or more. The reason our percentages are so high is because experienced Short Sale agents qualify their Sellers at time of listing. Our Sellers are educated and are prepared to go the distance. Educated Sellers are willing to participate in the Short Sale transaction.

Too many Buyers Agents, on the other hand, are just throwing transactions out there and hoping they stick. I know this from experience too.  Even when we (listing agents) fully disclose the Short Sale process and negotiate a contract with 120 days for Short Sale Approval, Buyers and their agents, STILL get antsy after 45 days and start looking for ways to get out of the Short Sale contract.

I guess...."What percentage of Short Sales close?".....depends on who you ask. Ask an inexperienced agent and they'll tell you 20%-25%. Ask an experienced  Short Sale agent and we'll tell you 90%. Both are right. I can think of no better reason to hire an experienced Short Sale agent if you are needing to sell your property as a Short Sale.

So let me ask you this...."What percentage of YOUR Short Sales close?"

Hi folks. Over the past few years I have had some heated discussions with Investors about Short Sales. The biggest discussion is usually about price. Investors of course are out to purchase the Short Sale as cheaply as they can so they can turn around and flip it for a profit. Their argument of course is that the Seller can't receive any funds from the deal so the price shouldn't matter to them.

Of course, I totally disagree with this thought process. Sellers DO care how much their property sells for. And it does matter. It matters when they get stuck with a tax bill. It matters if they end up with a deficiency and a collector going after them.  

Some Investors will argue this point until they are blue in the face. In fact they pretty much feel that real estate agents should stay out of the "property liquidation business".

And that my friends is where the problem lies. Investors approach Short Sales as a liquidation. Agents handle Short Sales as a salvage mission. We are trying to help our Sellers salvage what's left of their credit and dignity.

This is a fundamental difference that will always create a barior between Investors and Agents. At least that's my opinion. What's yours?