Top 10 Questions to Ask the Short Sale Listing Agent Before Making an Offer

Admin Note: Over the coming weeks, I will be discussing short sales here at Buy Home Blog. I found an excellent article from an experienced short sale realtor’s perspective.


1. What is your experience representing sellers in short sales?

Dealing with a knowledgeable and experienced agent who has successfully closed many short sales is the sine qua non for a successful short sale.

Thousands of agents are now taking short sale certification programs and presenting themselves as short sale specialists. Many of these agents have never closed a short sale in their lives. In fact many of the people teaching certification classes have themselves never closed a short sale.

Knowing the mechanics of a short sale is not enough. Lots of agents now have this information from taking one of the many certification classes now prevalent. It will not get the job done.

Ask the agent how many short sales they have closed representing sellers in the last year. I would also ask them if they have closed any representing a seller with the particular loan servicer who is the third party approver(s).

(Representation of buyers in a short sale counts for nothing in terms of short sale experience since all the approval action goes on with the listing side.)

The listing agent needs to know how to escalate a deal to get an approval. Some loan servicers – BOA immediately comes to mind – reflexively decline short sales and, I believe, manufacture values, notwithstanding what their appraisal or BPO says, hoping to extract the maximum dollars from the buyer and agents.

(Understandable perhaps, but if they really wanted to get the most money from the short sale, they should provide a target number up front, not spend months jerking buyers and sellers around).

The agent needs to know how to get to management to get an approval with Servicers like this. In fact the listing agent needs to know how to do this just as reflexively as the servicer who is going to reflexively decline the deal.

Negotiating price prior to getting to the Management level is going to prolong the process, not shorten it. But the listing agent has to know how to get around the lower level negotiators.

2. How many liens are there on the property?

First or first and second or HELOC, HOA, Condo, Special Assessment, Tax?

3. Who is/are the servicer(s)?

BOA, for example is extremely difficult to deal with. Much more so than Wells Fargo. So unless you just get lucky it will take a much more experienced and savvy agent to get an approval from BOA than WF.

4. Who is the investor or insurer on the loan?

Fannie Mae, Freddie Mac, FHA or VA or Conventional or PMI.

Conventional loans are the Wild West for servicers since they can approve or deny anything they want.

Fannie Mae loans frequently have PMI which means, nothing is happening without the PMI companies approval, so even if there is only one lien, there may be two approvals required.

FHA has a proscribed process which allows servicers little latitude for game playing.

5. Is the listing agent going to have one contract signed and submitted or do they say they are going to submit the offers to the servicer to decide which one they want?

I would personally advise my buyers to run away from any deal where the agent says they are going to submit multiple offers to a servicer. That tells me the listing agent is clueless. Why would you send multiple offers to a loan servicer who takes months to approve one deal? If the agent can’t figure out which is the best deal in a multiple offer situation, they should get out of this business completely.

6. Has the servicer previously approved a deal which the buyer walked away from or has the servicer disclosed an acceptable price?

This may shorten the process, but not necessarily. Some servicers will force the agent to start all over from square one again with a new buyer, including ordering a new appraisal.

7. Does the agent have any financial modeling program to determine whether the offer is going to yield more cash to the investor than foreclosing?

This is how the lenders ultimately decide whether or not to approve a deal. Absence of this is means you are pretty much throwing darts with a blindfold on.

8. Has the property been priced appropriately?

I still see short sale listings where it is obvious the property is priced at a number which would pay off all of the liens. Ridiculous. Don’t even think about showing your buyers this property.

9. Do the agent comments say something like “commission paid on net sales price” or “50% to selling agent of approved commission”?

Either this agent is clueless or they don’t know how to handle commission negotiations with the lender. This is a run away, don’t walk situation.

10. Does the agent purport to be an expert?

I would be very, very wary of anyone who purports to be an expert. The only experts I am aware of are the guys sworn in as such in court rooms. We have 10 to 15 short sales in various stages of approval all the time and I see new twists on servicer tactics and processes every day – and there are dozens of servicer representing hundreds if not thousands of different investors. And don’t forget HAMP or HAFA.

Bonus Question:

11. Will an Attorney get you a better deal on a Short Sale?

Think about it. Until this year, most attorneys would have turned their noses up at dealing with loan servicers on short sales. Suddenly, they’re experts in short sales.

(The inspiration for this blog post was a question asked me by another agent at a meeting of the top agents in the Anne Arundel County Association of Realtors in Annapolis).

Copyright – 2010 – Michael Davis

Michael Davis is a Realtor with Davis-Resnick Group, LLC. He is a short sale specialist in the suburban Washington, DC and Baltimore area and Residential Sales: Anne Arundel Real Estate and Annapolis Real Estate. Visit his site today at

Buying a Home: Your Step-by-Step Guide

Admin. note: Here’s a good home-buying overview article. We will be going more deeply into each step of the process of buying a home over the coming weeks. As we always stress – don’t get emotionally over-sold in the process, and don’t skip a step that you see below. There are plenty of homes in the sea of real estate.

Buying a piece of real estate for the first time is an exciting life event and can be somewhat of a challenging process. There are so many things going on, with so many parties involved. It’s easy to get confused about what to do next in what seems to be an overly complex maze of legal formalities. This article will explain, in easy terms for the inexperienced buyer, how the process works.

Step 1. Loan Pre-Approval

The first thing to do when you are looking for a home is to get yourself pre-approved for the home loan. This will involve completing paperwork about your income and assets. Once you complete that process, you will know how much money you have available to spend for your home purchase.

Step 2. Searching for Your New Home

Start looking. It is good to begin your search in earnest already having defined what you actually want. You can define your ideas in a systematic way, by making a list.

Step 3. Identify Home

When You find your dream home, you’ll know it. The right home for you might be the very first home you find or the thirtieth.

Step 4. Making the Offer

Before making a formal offer, put some appropriately serious research behind it. Learn what properties in the area have recently sold for. Make a fair offer — if it is too low you could all too easily alienate the seller; if it is too much you could end up paying more than you have to. In most cases, when you make an offer, you will need to put up anywhere from 1% to 3% of the asking price in “earnest money.” Your offer will cover the terms and contingencies that you want in addition to price, such as inspection, any needed repairs, and your desired closing date.

Step 5. Acceptance of the Offer

After a little negotiation back and forth, the seller and you will reach agreement on terms.

Step 6. Title Review

A title review, in most jurisdictions in, is normally conducted by a real estate attorney who researches the title, or ownership history of the home, and gives a formal opinion as to whether the seller’s title is clear and meets the terms of the contract to which you have agreed. In some states this is done without a lawyer but almost without exception there will be a requirement for a title search.

Step 7. Home Inspection and Necessary Repairs

Getting an independent inspection is important. An inspection can reveal problems that could be significant, from a furnace problem to a crumbling fireplace. If the inspection shows problems, you will have to discuss and negotiate repairs.

Step 8. Appraisal

An appraisal is a formal estimate of the home’s true value. No lender will be able to lend you a larger amount than the appraised value of the property. If the appraisal comes out lower than the selling price, your deal is in serious trouble. Solutions include the buyer adding in the difference in cash, the seller agreeing to lower the selling price to match the appraisal, or the seller and the buyer getting a different appraisal. This subject has come under increased scrutiny recently, so be careful.

Step 9. Final Loan Commitment

You will feel a big sense of relief when the lender completes a final review of your documents and approves your loan.

Step 10. Final Walk Through

The walk through takes place a few days to a few hours before closing. During the walk through inspection, ensure that the home is in the shape in which you agreed to purchase it. All repairs required of the seller need to have been accomplished satisfactorily. The final inspection is your chance to ensure that the home has not been damaged or altered since you contracted to purchase it.

Step 11. Closing

Closing is the transfer of title to you, as the buyer,. As the buyer you will have to pay the down payment on the property and your part of the closing costs. Before the day of the closing find out exactly how much money you will need to bring at closing.

That’s it! You’ve made it through. Once you’ve accomplished these steps, you’ll have your dream home.

This article was made available by your Broomfield Colorado real estate experts, Automated Homefinder.