The telephone rings.  A possible listing.  

Everyone knows that the listing side of the transaction is the “easy” side, you simply list, fill out a few forms, place on the internet and MLS system, instruct the homeowner to keep it clean, then go on your merry way. A qualified buyer (OR TWO) come along and fight over the house. You’re ready for a quick, hassle-free closing.

To which I say “Is that what they told you?” Was selling real estate ever that simple?

REALITY. The homeowner is likely to be behind in their mortgage payment, with a   second, possibly delinquent. The real curve ball: the home is indebted in excess of the amount a new buyer is willing to pay. Increasingly, when you add the payoff for the mortgage(s), commission, taxes plus other required expenses you are upside down requiring the approval of a short pay-off.

Short sale transactions have become a larger part of the market. It would be wise to recognize the dangers associated with such transactions.

Appropriate disclosure.  It is critical that the listing contract, seller disclosure form and MLS sheet disclose;

1.      Requires lender approval of short sale.
2.   “As is”
3.       Extended response  time for offer and/or closing

It is critical that agent/BROKER have written authorization to disclose that the property is pre-foreclosure since this is disclosure of financial information.

Appropriately listed property.  A bankruptcy filing changes the availability of the home (no sale without court approval). You should withdraw a listing promptly if the seller has filed or if the spouse of the seller of jointly held property has filed.

Appropriately advertised commission. The commission will be determined by the lender based on their net loss. Recommended solution:  advertising coop as “50% of whatever the lender approves” on all short sale listings”.

Appropriate timeframe. Short sale is a pre-foreclosure activity. When the foreclosure has already occurred, the borrower no longer owns a piece of real estate to sell. Withdraw and move on.

More expanded training in this area would be a wise investment of your time so you learn where the dangers are in selling in our current foreclosure environment.

Mildred Wilkins, founder and president of Home Ownership Matters, LLC. She is the trainer for the (FIS) Foreclosure Intervention Specialist certification program. Visit her blog: HomeOwnershipMatters.blogspot.com or call toll free (866) 507-5105. Copyright © 2007. HOM, LLC. All rights reserved.