Association of Mass Buyer's Agents Cautions Consumers About Short Sales
‘Despite All the Activity in the Short Sale Market, Many Never Close,’ says MABA President
Boston, MA – February 6, 2012 – Short sales, for some time now touted as a way for sellers to get out of homes that are “underwater” and for buyers to get that dream house at a bargain price, may not be delivering on either count. Despite all the activity in the short sale market here in Massachusetts, many of these transactions never close, says Sam Schneiderman, president of the Massachusetts Association of Buyer Agents.
If you’re not familiar with how short sales work, here’s a brief rundown. The short sale is an option for a homeowner who may be facing foreclosure – or is simply looking to move or divest of a property. The bottom line is the seller can’t get enough money for the property to pay off the mortgage balance in full. The process can become quite complex as the mortgage holders are under no obligation to accept any offers by prospective buyers. The homeowner must convince the lender or lenders to accept less than the total amount due. Some will, some won’t – depends on the lender, the property involved, market conditions, and the seller’s financial position.
Schneiderman, who has been in the real estate business for the past 28 years, has been tracking short sales for MABA and says the figures don’t lie. “I found that depending on the community, 30 to 50 percent of these deals never closed,” he says. “There’s this excitement, this fantasy about short sales, because they appear to be good deals, but the reality is quite different and consumers need to beware of the challenges and difficulties associated with these transactions.”
According to Schneiderman, many buyers who pursue short sales have little or no idea what they’re getting into. They don’t understand the process or know what questions to ask – who is the lender or are there multiple lenders, are there other liens on the property, how are offers to be submitted/reviewed, etc. – and vastly underestimate how long a successful (yes, some go through) short sale can take. It could be six months or more.
If you’re inclined to pursue a short sale, teaming up with a qualified buyer’s agent who has a thorough knowledge of the short sale experience is essential, says Schneiderman. “First off, they’ll know the fair market value of the property, and they’ll know what questions to ask up front, and what documents to request and review. And while it doesn’t guarantee that the short sale will work out for you, at least you’ll know what you’re getting into and with the right agent – one who is both committed and loyal to you – your interests will be protected.”
Here are some key questions that Schneiderman and MABA recommend asking buyer’s agents before making the decision to work with them on a short sale or other real estate transaction; additional tips and resources can be found on the organization’s website at www.massbuyeragents.com.
What specific training and designations do you have as a buyer’s agent?
How long have you worked as an agent and how long have you worked on the buyer’s side?
What types of properties and transactions are you most knowledgeable about?
Do you show For Sale by Owner (FSBO), short sales, and foreclosed properties?
How will working with you give me a competitive advantage when I make an offer?