LOTUS REALTY GROUP
How to avoid offer reductions on short sale listings
REALTORS, have you experienced a situation where the buyer of your short sale listing has either reduced their original offer or withdrawn their offer completely right after approval has been issued from the lender? Suddenly you are scrambling to find a new buyer to avoid losing the approval and meet the short sale lenders deadlines. It is nerve racking but also in my opinion unnecessary. Let me share with you why.
There are 4 reasons why this happens:
1. Expectation is not set with the buyer;
2. Buyer learns that the property has termite damage which is not covered by the lender;
3. Buyer does their home inspection where they uncover damages to the property; and,
4. Buyers are not truly qualified to buy the property.
Tips to avoid buyers reducing their offer on your short sale listing:
Typically, when the buyer puts in the offer a home inspection and a termite report are only performed after the approval is issued. Once the buyer learns of defects to the property they often decide to reduce or withdraw their offer. Here are some tips I believe will help to mitigate this problem at such a crucial time in the transaction...
1. Get the termite report done immediately after taking the short sale listing. If there is termite damage you want to know up front so you are able to give full disclosure to all potential buyers. This is also a requirement of the short sale lender.
2. Have your seller fill out the TDS up front. Know your listing inside and out. Have your seller disclose all known damages and repairs on the property up front and take pictures. This not only helps with the short sale lender but also to gives all potential buyers full disclosure up front reducing the chance of any unpleasant surprises.
3. It is my suggestion that the listing agent invests in a home inspection report at the time the listing is accepted. It is a small investment that will maximize your chances of successfully closing the deal, saving you time and thereby making you money. The alternative is to waste your time with buyers reducing or removing their offers after approvals are issued. This can lead to foreclosure which hurts your client and earns you nothing for all of your effort.
4. Have the buyers sign the counter and addendum setting expectation. (I sent this in my last newsletter. You can find it in my archives under tips for agents at www.lotusrealtygroup.com)
5. Finally, once you have gone through this process and accepted the right offer, keep lines of communication open with the buyer and his or her agent so they know they are not lost in the mix. Even if there is no new news to report, communicate with them anyway. This will make them feel more secure.
REALTORS, please keep in mind that when you work 3-6 months of your life fighting with lenders to get approvals it is frustrating to see buyers reduce or withdraw their offers. It lessens our credibility with negotiators that most likely we will be working with again. Furthermore it slows down the process and puts us at risk of losing the approval. Taking these extra steps, putting forth the extra effort and perhaps a little money for a home inspection will save you time, money and all of your hard work going to waste. Moreover it will set you apart from your competition and will make you a true short sale expert.
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"Do more than belong: participate. Do more than care: help. Do more than believe: practice. Do more than be fair: be kind. Do more than forgive: forget. Do more than dream: work." |
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William Arthur Ward |
LOTUS REALTY GROUP
PROFESSIONAL SHORT SALE NEGOTIATORS
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