I recently had a fellow Realtor suggest that I stop sending listings to my buyer once there is an agreement between the Buyer and Seller (but not the lender) with regard to a short sale of home. This is so the buyers don’t get nervous about the deal given the short sale can take some time while the market changes around them.
Now, this Realtor does a good number of short sales representing the seller and so her perspective is from the point of view of the seller. I can respect that other Realtors have different operating methods and practices. However, in this regard, I respectfully disagree.
Having represented buyers for numerous short sale transactions in the Phoenix real estate market, I absolutely recommend that my buyers keep searching out properties as backup options until we have a fully executed contract with lender approval. It may be extra work but often the end result can pay off.
Here’s my reasons why buyers should:
- The short sale can take any indeterminate amount of time. I have had agreement with a lender for a short sale within days but most can take many weeks and months. As such, until the lender(s) actually provides an approval letter for the short sale and sign off of the actual contract documents, there is no guarantee that the transaction is going to happen. Signoff by the actual current owner is definitely a positive sign but until the lender(s) sign, it’s literally just paper and anything can go wrong. Imagine if the short sale takes two months before any final word on whether it will go through, and then the answer is that it won’t. It happens.
- Realtors in the past have not conducted their short sale listings with a great deal of respect with regard to buyers. Specifically, I have seen numerous instances where the Realtor continued to market the property after receiving more than one offer. On several occasions, my buyers’ offers were strong offers only to be beaten out by better offers because the property was still being marketed two weeks after contract acceptance by the owner. Practices have more recently changed locally to stop this but once you experience it, you have to make adjustments to protect your buyer. As a Realtor, I am obligated to report this behavior when I see it and I do so.
- The market can change in the meantime. If the short sale is taking a considerable amount of time, the buyer risks that the market is changing around them and the value of the home declining. A stronger value and more compelling home may come up in the meantime. Or, the buyer may need to renegotiate.
- Because buyers request to be sent the listings anyway. Buyers are smart. They don’t want to put all their eggs in one basket when it comes to a short sale. This is a learned behavior. They have either been on the receiving end of disappointment with a short sale or heard about it from someone else.
- By working to mitigate or insulate them from the potential disappointment, I am preserving my reputation with my buyers. I prepare them for what can happen. So, if disappointment does come from a short sale, there were aware of the downsides and possibly have a backup option. I believe my clients appreciate the level of concern I have for them.
To summarize, I am doing my best to win the right home for my clients. The Phoenix real estate market is a highly volatile one with much uncertainty. Given that, as long as there is a significant probability that a transaction is unlikely to go through, then I have to keep working to find the right property as a backup option. This is a market reality and combined with my focus on my clients, the right thing to do.
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