“Preapproved Short Sale” (and Other White Lies)
If your parents don’t have kids, you won’t either.
What’s that line got to do with real estate?
Put it this way: if your listing doesn’t get showings . . . it ain’t going to get offers (or a Buyer), either.
In a nutshell, that seems to describe the marketing I’m seeing lately in connection with short sales.
Short Sale Challenges
If you’ve been in a cave for, oh, the last 3-4 years, a “short sale” is when a home is worth less than the mortgage(s) against it.
When that’s the case, an owner who wants to sell has two choices: 1) bring a check for the shortfall to closing; or 2) persuade the bank(s) holding the mortgage(s) to accept less than what they’re owed.
If the shortfall is relatively small, and the owner can afford it, they opt for #1.
However, homeowners who are facing a big shortfall — and may have lost their job, to boot — don’t have that choice.
If the homeowner doesn’t want to default, their remaining option is to pursue a short sale.
Option #2
Active Realtors (and their buyers) know all about this, of course.
They also know that over half of all short sales (still) are rejected by banks, and proceed to foreclosure; that the difficulty factor goes up dramatically when multiple banks are involved; that the timetable for a response can be anywhere from several weeks to more than six months; and that the expertise (or not) of the listing agent is a critical variable in determining the outcome.
If you’re a listing agent representing a short sale and know all those things, what do you do?
Reassure Buyers’ agents that things will go smoothly (and relatively quickly).
“Buyer (Agent) Beware”
So, to stimulate showings (or more accurately, avoid losing them), listing agents are increasingly broadcasting one or more of the following:
–That they are experienced handling short sales and may even have the related credential (“CDPE,” for “Certified Distressed Property Expert”);
–That there’s only one bank involved, and that it will respond quickly;
–That the (one) bank has preapproved the short sale at the current list price.
When all those things are indeed true, the odds of consummating a short sale improve significantly.
The catch?
The only way for a Buyer and their agent to determine the veracity of the foregoing . . . is to put an offer on the table.
Which, of course, means first showing the property . . .
P.S. The same mindset explains why some Realtors use too-flattering photos to market their listings (see, “The Far-Away(?) Buffet“).
