The South Bay area has seen a huge uptick in short sale activity. I’ve recently spent a fair amount of time with various clients looking at short sale real estate listings in Mountain View, Santa Clara and San Jose.
Buying a short sale property can be an excellent opportunity, but the process is full of headaches and there is a lot of competition. Below are 5 reasons that buyers and their agent’s hate the short sale buying process.
(1) Access to the property can be difficult. If the homeowner is still living in the property, they
sometimesalways make it inconvenient for a potential buyer to see the home. Last week, I had pre-set appointments to show several homes and yet we were unable to get into seven of them. The success ratio was about 1 in 3.
Reasons for not gaining entry into these homes ranged from: the listing agent forgot to put the lock box out, the house key wasn’t in the lock box, the homeowner must be present during the appointment (however, they apparently forgot that they had set up appointments with 3 sets of buyers). And a personal favorite, the home already has an offer approved by the bank. Apparently, changing the MLS data to reflect the property sale wasn’t a good idea.
(2) No interior photos of the home. Like buyers of non-short sale properties, buyers of short sale properties want to preview homes online before driving out to take a look at them. Is it asking to much for the agent, his/her assistant, his/her 12 year nephew to go out and take several interior shots of the home. Show the good and the bad of the house. You may get less showings, but I bet you’ll have a higher sales ratio.
Unofficially, I would say that over half of the short sale properties in San Jose do not have interior photos of the home. Buyers especially like it when there are some creatively/artfully taken interior shots that somehow omit the plethora of problems with the home. Problems like holes in the walls, missing/broken fixtures, broken windows and large piles of pungent dog droppings. It seems that the bathrooms in short sale properties have become especially shy when it comes to real estate photography.
(3) Lack of availability of the listing agent. Apparently, once a listing agent has put a short sale property on the Multiple Listing Service with the obligatory “fax offers w/short sale addendum, pre-approval letter, and verification of funds,” the agent goes “Dark Ops,” never to be seen or heard from until the bank approves (if it is approved) the short sale. One might have better odds at winning the lottery than getting a call back from a listing agent on a short sale property, especially on a home that is in demand.
Short sale properties are in demand because the seller must price them below market in order to get an offer (s). Without an offer (s), the bank won’t speak with the troubled homeowner about a short sale..
At least I can understand why the listing agent is so difficult to get in contact with (just a little). There are many more buyers (for short sale properties) than there are properties and the agent may be in over their head. The agent may have several properties and no assistance. Over worked and underpaid. However, agents clean out your cell and office voice mail and at least allow buyers/agents to leave a message. Once you have the message, return the phone call. That’s good business sense and that’s your job!
(4) Web sites that purport to detail the status of a short sale properties are pitiful. Many agents who “specialize” in marketing short sale properties think it is a good idea to create a web site that shows the status of a given short sale property.
At first glance, this isn’t a bad idea. Give potential buyers detailed instructions on how to submit an offer and “status updates” on where the home is in the sales process. However, the information is only as good as the person who updates it. If it is updated in real time, fabulous. But most are updated every few days. Information that is a few days old is worthless. It makes you want to call the listing agent to get the pertinent information! Now were back to problem of trying to get a hold of the listing agent. It’s a vicious cycle!
(5) Have a strategy for presenting offers and advise everyone about it. Normally, the seller and their agent will look at all offers and choose the best one and then submit the best offer to the bank for approval. However, I have found that there are no normal situations when it comes to offers on short sale properties.
First off, many short sale properties hit the market as “sale pending.” So much for that long drawn out sales process that everyone talks about. Many agents submit offers to the bank as they come in. Some may set a date and not accept any offers after that date. The MLS instructions will read, “Note: all offers have been submitted to the bank for review. At this time, we are not accepting any other offers.” I’m not too sure that this method doesn’t violate an agent’s duty to present “any and all” offers.
Two things may happen when buyers get frustrated with the process of buying short sale properties:
(1) They walk away and don’t buy.
(2) Buyers submit offers on multiple properties, site unseen, hoping that they get one. If the bank approves an offer, buyers will take their first look at the property. There is a decent probability that the home will fall out of contract. The end result may be that the seller may lose the house to foreclosure and the buyer moves on. Not a good result for anyone involved.
If the process were better, properties may sell for more and more properties would actually close escrow. Instead, people are scrambling.