The Art of the Deal: The Short Sale

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Things I learned about ‘short sales’ (definition below) today from Palmdale Realtor Donna Oehler:

--Most Realtors Don’t Like Them: Most Realtors don’t like to handle short sales, and there are good reasons: The commission, at 5%, is lower, the transaction is complicated, there is more paperwork, and months of hard work can be erased in a heartbeat if the bank or lender vetoes the sale.

--No Fire Sales, Yet: Even in the Antelope Valley, there are no fire sale prices on short sales. Buyers are often investors looking to remodel and resell quickly. And banks are not yet accepting real lowball offers.

--Mystery Sellers: Banks are playing their cards close to the vest. How much are they willing to lose on a house to avoid foreclosure? That’s the key question, and banks usually won’t say up front.

--No Staging, Please: If you’re the listing agent, you don’t want the ‘short sale’ house to look perfect. If it looks too good, the bank is likely to believe the house is worth more and veto the short sale. ‘Dead grass helps,’ Donna told me. That is, it helps convince the bank that they ought to accept a ‘short sale’ offer.

Read on for InmanWiki’s definition of a short sale (What’s an InmanWiki? Read on for that too).

Short sales: (From InmanWiki):

“In real estate, a short sale refers to the sale of a property in which the sale price is insufficient to pay off all encumbrances and pay the expenses of sale. If the lender is convinced that the owner, for various reasons, is unable to continue making the payments the lender will often agree to take less that the full amount owed to allow the sale to close escrow. The incentive for the bank to approve a short sale is to have the property sell before the loan becomes a problem account on their books.”

What’s InmanWiki? The real estate news and information site Inman.com’s reader-generated Real Estate encyclopedia. Check it out here.