Thinking of listing your home as a short sale? or looking to buy one? You better be well armed!

Why am I comparing short sales to the wild west? Because this short sale market reminds me of Tombstone, no rules, no accountability, basically chaos! I keep heating Ike Clanton muttering " Law don't go around here law dog".

Here are just a few examples of what I am talking about from just the last couple of months.

I put together a custom search page for buyer clients of mine the other day, and based on the criteria they provided I came up with 43 possible homes in the area they are interested in. Now our local board refuses to make short sale a defined category no matter how many times I ask, so you have to wade through the results to try and determine which are short sales. This is where things start to get interesting, and after sorting through these things for months I find they fit into a few different categories.

The Hidden Short Sale:

This can be one of the most frustrating types. Since there is no category for short sales, you are basically required to rely on the listing agents description or private remarks for information. Well the truth is some agents don't want you to know it is a short sale until after you have showed the home or gotten buyers interested. I have seen abbreviations used, trying to sneak by a SS in the description, I have come across a couple of situations where it wasn't even disclosed until an offer was made, and then came across the one example I feel topped them all:

This is basically what the description said - ".....fenced yard, full unfinished basement, hardwoods on the main level, short sale, granite countertops and stainless appliances" now to me that is a blatant attempt to hide the fact that it is a short sale, and should not be allowed.

The "Approved" Short Sale

Apparently not everyone has the same definition of approval in their copy of the dictionary, but once again there are no rules in place to control what people are allowed to claim regarding the status of the short sale. Time and Time again I have inquired on behalf of clients about these "approved" or "fully approved" or my favorite the "preapproved short sale" only to find out that they are not even close to being properly started never mind "approved".

Now I am not saying they don't exist, they are out there, and we have closed them. But when you run into one of these misleading "approved" it can be a disaster. I understand the purpose of this is to get the buyer invested in the process with hopes they will stick around through closing but how is that fair to buyers or their agents? While buyers are waiting around for the "approved" answer to come back who knows how many other homes they have missed out on.

The "To Good To Be True" Short Sale

This is far and away in my opinion the biggest problem with the short sale market. An example, a listing in Bridgemill a few months ago that I ended up having to show multiple times - Amount roughly owed on the loan $580,000, listed asking price for the short sale $325,000, Now I can't speak for all markets, but I can guarantee that in my market there is no way the bank would ever consider anything close to that price. After a little investigation not only had the bank already turned down a full rice offer, they had turned down an offer almost $100,000 higher, yet there it was still listed at $325,000.

That is just one extreme example, but I see it all the time. Buyer's call up all excited wanting to rush over and see a home right that second, and when I pull up the home it is a short sale. The house being a short sale isn't the problem, it is when the house is ridiculously priced that the problems start. "this house is priced 120K below anything else in the area" and my answer is always the same, "yes it is, which is why the bank will never accept this offer"

Without fail there are always buyers who want to make the offer anyway, so we go ahead and do so, and the same thing happens every time. The house is listed at $325,000, bank is owed around $580,000. We make an offer of $325,000 and almost 2 months later the bank comes back and counters with $559,00. The worst part of the entire deal is that while we waited for the answer, the buyers second choice (which was actually in their price range) went under contract.

And in case you were wondering, of the 43 homes, 27 were short sales

These are just a few instances of some of the hurdles you may face if you consider attempting to buy or sell a short sale. As Certified Distressed Property Experts The Muller Realty Group has the experience and training to guide you through the process. If you are selling your home and potentially facing a short sale situation, or looking to make an offer on a short sale in Cherokee County, Cobb County or Surrounding areas contact us for more information.