How Can We Get Our Short Sale Offer Accepted in a Seller's Market?
Question: How Can We Get Our Short Sale Offer Accepted in a Seller's Market?
A reader asks: "We've been having a terrible time trying to buy a home. I don't know if it's because our agent doesn't know much about short sales -- and everything seems to be listed as a short sale -- or because it's a seller's market or both. We're about to write offer #11. We keep losing out to other buyers. We're finding all of this very depressing. We offer more than list price but we're still getting turned down. What can we do? How can we get our short sale offer accepted in a seller's market?"
Answer: It's really difficult to be a home buyer in a seller's market, so I feel for you. There are a few things you can do, of course, such as try to be the first offer and to write a very clean offer. But the truth is you can follow all of my 10 short sale offer tips and still get rejected. That's because there is one very important factor to consider that is often overlooked.
You can offer the seller a few days to move out, for example, and that will strengthen your offer because the seller is probably not motivated by sales price. But you're limited in what you can offer the seller to make your offer sweeter. The seller is also not motivated to accept an offer based on incentives because there are no real incentives to the seller. The bank's arm's length agreement prohibits incentives or secret agreements between the parties.
Your Ace in the Hole to Short Sale Offer Acceptance
Don't overlook the importance of the role played in the short sale by the listing agent. Sellers may look to their agent for advice on which offer to accept. If all of the offers are very similar to each other, there is one thing you can do to stand apart. You need to appeal to the listing agent. Not to the seller.
A very savvy real estate agent made an offer on a Sacramento short sale I had listed. He sent me an email with his offer. In the email, he hit every one of my hot buttons as a listing agent. By the time he was finished, I realized that his buyer should be given priority. I laid out my case before the seller. The seller agreed and accepted this agent's buyer's offer without hesitation.
The key, in case you're wondering, is to make the listing agent's job go smoothly. No drama. No complications. And only an experienced agent who has closed short sales would know what to say. Now, you will, too.
How to Get the Short Sale Listing Agent on Your Side
Most short sale listing agents want one thing, and that one thing is to close the escrow. To close the escrow, it takes a committed and dedicated buyer. Here are the tactics used by that successful buyer's agent, and the promises made on behalf of his client:
- We will not call and bug you every week asking for updates. This is huge because it's really time consuming to have to stop my daily workflow and respond to a buyer's agent who asks for an update. Often, they ask if we have the approval letter yet. If we had it, they would have it. Since they don't have it, we don't have it.
- I have educated the buyer about the process and explained in detail how a short sale works. The only reason to need a blow-by-blow description of what is happening with the short sale lender is if you don't believe the listing agent is doing her job. Either that, or the buyer's agent doesn't know how to explain the short sale process to the buyers.
- The buyer is willing to wait up to 6 months for short sale approval, if it becomes necessary. No listing agent wants to find that after 3 months of work on the file, the buyer bailed. She doesn't want to have to sell the home again and again. Once is enough.
- We understand the home is sold As Is. Even though I routinely warn buyer's agents after approval that there are no repairs nor concessions, I still might receive a Request for Repair. When an agent calls and asks where he should send the Request for Repair, I tell him the truth. The North Pole.
- The buyer will release the earnest money deposit to escrow upon seller's acceptance. A buyer who has skin in the game is more likely to be committed and to wait for approval than a buyer who refuses to release a deposit. It speaks volumes about the character of the buyer.
- We will work with the bank if further demands are made. You never really know for certain what will always happen in a short sale. The bank might ask for more money. The bank might not authorize payment of a fee. The second lender could require a larger contribution. A buyer who is willing to be flexible and step up to the plate, if needed, is sometimes exactly what a seller needs to close that short sale.
In short, you're telling the listing agent and her seller: You know all of those horrible things that happen with buyers in a short sale? Those things that make your life a living hell? If you pick my short sale offer, none of those awful things will happen to you. Who can resist that logic?
At the time of writing, Elizabeth Weintraub, DRE # 00697006, is a Broker-Associate at Lyon Real Estate in Sacramento, California.