If you have been shopping Orlando for homes and finding a lot of listings but not much available, that’s probably because you have been shopping for short sales that are not really for sale. The homes that you want to go after are those which have already negotiated a value with the short sale bank. They may say “bank has approved this price” or “BPO has been completed”. These are indications that the agent has successfully engaged the short sale bank, making it more likely that the property is listed at a price that has been approved by the bank. If you find these, you are likely to get a confirmation that you can buy the house at a specific price in a relatively short time period.
Unfortunately many listings are not really for sale. Sometimes this is done intentionally as the homeowners are using the short sale listing as a tool to attempt to delay foreclosure. More often, however, the agents are not experienced and make unnecessary mistakes. To name a few:
1) Top Dollar Short Sales. Many agents are so focused on getting the highest value that they over price their listing and never get an offer. The argument is that the bank will not let the home sell if they don’t believe the agent has tried to get the best price. Unfortunately the owner never has the opportunity to negotiate their debt because the bank will not negotiate without an offer. We pulled some samples of homes that went into foreclosure and were later sold by the bank as an REO. Of these homes, 30% were sold for a discount in excess of 20% of their previous short sale list price! The bank, the owner, the agent, and the market would all be better off had the listing agent done a better job processing the short sale.
2) Over-Negotiate the Buyer. A short sale bank is not going to invest their time and money on a short sale unless a Buyer is secured. For this reason, securing a Buyer is critical to the success of the short sale. Too often a listing agent will start heavy negotiating up front and push the buyer to their limit. This is a huge negative because they may lose a buyer immediately and will very likely lose the buyer during the course of the short sale as most buyers keep watching the market and will jump at the opportunity for a better deal. Agents should let the bank do the negotiating directly when they are ready to approve the contract.
3) Passive Processing. Some agents disappear once they have a contract secured and then they show up again at closing. They need to keep the Buyers aware of the progress being made with the short sale bank. Agents also need to be aware of the foreclosure case, if any, so that the listing doesn’t get sold off at the courthouse. Getting the short sale to closing demands the active participation of the listing agents.
