Pre-Negotiating a Short Sale on MLS
“Short sale professionally negotiated. Earnest money to be deposited and inspection contingency to be removed BEFORE the offer will be submitted to the lender for approval.”
–“Agent Remarks”; MLS
What’s the listing agent telling Buyers’ agents with the above language? (note: unlike “Public Remarks,” “Agent Remarks” are only intended for other Realtors).
Putting them on notice that if their clients are serious about buying the home in question . . . it’s going to cost them (both in time and money).
Given that the 5,000 square foot home is listed for just under $1 million (it’s in an upper bracket Edina neighborhood), and that earnest money is usually 1% – 3% of the purchase price, that means the Buyer must commit to putting something like $20k on ice for awhile.
Like, 4-6 months or even longer — the usual timetable for short sales to play out.
Requirement #2: the would-be Buyer must do their home inspection before there’s any indication that the bank(s) will agree to a short sale.
That means paying an inspector around $500 to inspect such a large home; another $150 or so to test for radon (strongly recommended); and spending a half-day or more shadowing the inspector, negotiating any resulting issues, etc.
As Minnesotans like to say: “Uff da!”
Moving on to Round #2
What happens after all that?
Only then will the deal be presented to the bank — or banks — holding the mortgages on the home, who can nix the sale unless they agree to accept less than what they’re owed.
Which is where the “professionally negotiated” short sale language comes in.
Whereas the typical short sale is approved something like 50% of the time, the success rate with professionally negotiated deals — typically handled by third parties, like attorneys — is supposedly . . . higher.
But see, “Experienced Short Sale Agent.”
Buyer Considerations; Quid Pro Quo
Why would a prospective Buyer go for these terms?
Two reasons: 1) they really want the house (it’s a good fit for them, in the right neighborhood, it’s a good value, etc.); and 2) Sellers usually have more commitment to the deal when the Buyer meets these requirements.
Which underscores yet another risk for prospective Buyers pursuing a short sale: until the bank(s) sign off on a deal, someone else can trump their offer with a better one.
To minimize that risk, it only seems fair that — in return for the Buyer doing its part first — the Seller promises not to show the home or solicit offers from other Buyers while the bank(s) are reviewing things.
See also, “Trying to Get Buyers to Bite on Short Sales, Cont.“
