Types of Listing Contracts

There are several different types of listing contracts, but very few of them are used. The “Exclusive Right to Sell” is the most common, but there is the “open listing,” the “exclusive agency listing,” and the “one-time show.”

Open Listing

The “open listing” is mostly used by people trying to sell their home by owner who are also willing to work with real estate agents. Basically, it gives a real estate agent the right to bring buyers around to view your home. If their client buys your home, the agent earns a commission. There is nothing exclusive about an open listing and a home seller can give out such listings to every agent who comes around.  For that reason, no agent is going to market your home or put it in the Multiple Listing Service. If your home fits the criteria for one of their clients, and it is convenient, they may be willing to show it to their client. That is all an “open listing” is good for.

One-Time Show

A “one-time show” is similar to an open listing in many respects, as it is most often used by real estate agents who are showing a FSBO (for sale by owner) to one of their clients. The home seller signs the agreement, which identifies the potential buyer and guarantees the agent a commission should that buyer purchase the home. This prevents the buyer and seller from negotiating directly later and trying to avoid paying the agent’s commission.  As with an open listing, agents will not be spending money on marketing your home and it will not be placed in the Multiple Listing System.

Exclusive Agency Listing

An “exclusive agency” listing allows an agent to list and market your home, guaranteeing them a commission if the house sells through any real estate agent or company. It also allows sellers to seek out buyers on their own.  This is not a popular type of listing agreement. The reason is that there is not much incentive for agents to spend money marketing your home. If you come up with your own buyer, they have spent money they cannot earn back through the real estate commission. Plus, it is too easy for a greedy buyer to go around the agent and negotiate directly with the seller.  If you find an agent willing to accept such a listing, do not expect too much from them. They will probably just place it in the Multiple Listing Service and sit around to see if something happens. A good agent would never accept such a listing, and you probably want a good agent.

Exclusive Right to Sell

Giving a real estate agent the “exclusive right to sell” your property does not mean that there will not be other agents involved. Your agent is the listing agent and part of his or her job is to market your home to other agents who work with buyers. Those agents will show your home to their clients. Regardless of who sells the home, even if you sell it yourself to a friend at work, your listing agent will earn a commission.  An exclusive right to sell is the only type of listing an effective real estate agent will accept. This is because they have a reasonable expectation of earning back any money they spend on promoting and marketing your property.

When Your Selling Price is too High, Beware!

Meeting With Real Estate Professionals

So you’ve decided to sell your home and have a fairly good idea of what you think it is worth. Being a sensible home seller, you schedule appointments with three local listing agents who’ve been hanging stuff on your front doorknob for years. Each Real Estate Professional comes prepared with a “Competitive Market Analysis” on fancy paper and they each recommend a specific sales price.  Amazingly, a couple of the Real Estate Professionals have come up with prices that are lower than you expected. Although they back up their recommendations with recent sales data of similar homes, you remain convinced your house is worth more. When you interview the third agent’s figures, they are much more in line with your own anticipated value, or maybe even higher. Suddenly, you are a happy and excited home seller, already counting the money.

Which Real Estate Professional do you choose?

If you’re like many people, you pick Real Estate Professional number three. This is an agent who seems willing to listen to your input and work with you. This is an agent that cares about putting the most money in your pocket. This is an agent that is willing to start out at your price and if you need to drop the price later, you can do that easily, right? After all, everyone else does it!  The truth is that you may have just met an agent engaging in a questionable sales practice called “buying a listing.” He “bought” the listing by suggesting you might be able to get a higher sales price than the other agents recommended. Most likely, he is quite doubtful that your home will actually sell at that price. The intention from the beginning is to eventually talk you into lowering the price.  Why do agents “buy” listings? There are basically two reasons. A well-meaning and hard working agent can feel pressure from a homeowner who has an inflated perception of his home’s value. On the other hand, there are some agents who engage in this sales practice routinely.

What Happens Behind the Scenes

Whichever the case, if you start out with too high a price on your home, you may have just added to your stress level, and selling a home is stressful enough. There will be a lot of “behind the scenes” action taking place that you don’t know about.  Contrary to popular opinion, the listing agent does not usually attempt to sell your home to a homebuyer. That isn’t very efficient. Listing agents market and promote your home to the hordes of other local agents who do work with homebuyers, dramatically increasing your personal sales force. During the first couple of weeks your home should be a flurry of activity with buyer’s agents coming to preview your home so they can sell it to their clients.  If the price is right.  If you and your agent have overpriced, fewer agents will preview your home. After all, they are Real Estate Professionals, and it is their job to know local market conditions and home values. If your house is dramatically above market, why waste time? Their time is better spent previewing homes that are priced realistically.

Dropping Your Price…Too Late

Later, when you drop your price, your house is “old news.” You will never be able to recapture that flurry of initial activity you would have had with a realistic price. Your house could take longer to sell.  Even if you do successfully sell at an above market price, your buyer will need a mortgage. The mortgage lender requires an appraisal. If comparable sales for the last six months and current market conditions do not support your sales price, the house won’t appraise. Your deal falls apart. Of course, you can always attempt to renegotiate the price, but only if the buyer is willing to listen. Your house could go “back on the market.”  Once your home has fallen out of escrow or sits on the market awhile, it is harder to get a good offer. Potential buyers will think you might be getting desperate, so they will make lower offers. By overpricing your home in the beginning, you could actually end up settling for a lower price than you would have normally received.

Getting Your House Ready to Sell

Introduction – Emotion vs. Reason

When conversing with real estate agents, you will often find that when they talk to you about buying real estate, they will refer to your purchase as a “home.” Yet if you are selling property, they will often refer to it as a “house.” There is a reason for this. Buying real estate is often an emotional decision, but when selling real estate you need to remove emotion from the equation.  You need to think of your house as a marketable commodity. Property. Real estate. Your goal is to get others to see it as their potential home, not yours. If you do not consciously make this decision, you can inadvertently create a situation where it takes longer to sell your property.  The first step in getting your home ready to sell is to “de-personalize” it.

De-personalize the House

The reason you want to “de-personalize” your home is because you want buyers to view it as their potential home. When a potential home buyer sees your family photos hanging on the wall, it puts your own brand on the home and momentarily shatters their illusions about owning the house. Therefore, put away family photos, sports trophies, collectible items, knick-knacks, and souvenirs. Put them in a box. Rent a storage area for a few months and put the box in the storage unit.  Do not just put the box in the attic, basement, garage or a closet. Part of preparing a house for sale is to remove “clutter,” and that is the next step in preparing your house for sale.

Removing Clutter, Though You May Not Think of it as Clutter

This is the hardest thing for most people to do because they are emotionally attached to everything in the house. After years of living in the same home, clutter collects in such a way that may not be evident to the homeowner. However, it does affect the way buyers see the home, even if you do not realize it. Clutter collects on shelves, counter tops, drawers, closets, garages, attics, and basements.  Take a step back and pretend you are a buyer. Let a friend help point out areas of clutter, as long as you can accept their views without getting defensive. Let your agent help you, too.

Kitchen Clutter

The kitchen is a good place to start removing clutter, because it is an easy place to start. First, get everything off the counters. Everything. Even the toaster. Put the toaster in a cabinet and take it out when you use it. Find a place where you can store everything in cabinets and drawers. Of course, you may notice that you do not have cabinet space to put everything. Clean them out. The dishes, pots and pans that rarely get used? Put them in a box and put that box in storage, too.  You see, home buyers will open all your cabinets and drawers, especially in the kitchen. They want to be sure there is enough room for their “stuff.” If your kitchen cabinets, pantries, and drawers look jammed full, it sends a negative message to the buyer and does not promote an image of plentiful storage space. The best way to do that is to have as much “empty space” as possible.  For that reason, if you have a “junk drawer,” get rid of the junk. If you have a rarely used crock pot, put it in storage. Do this with every cabinet and drawer. Create open space.  If you have a large amount of foodstuffs crammed into the shelves or pantry, begin using them – especially canned goods. Canned goods are heavy and you don’t want to be lugging them to a new house, anyway – or paying a mover to do so. Let what you have on the shelves determine your menus and use up as much as you can.  Beneath the sink is very critical, too. Make sure the area beneath the sink is as empty as possible, removing all extra cleaning supplies. You should scrub the area down as well, and determine if there are any tell-tale signs of water leaks that may cause a home buyer to hesitate in buying your home.

Closet Clutter

Closets are great for accumulating clutter, though you may not think of it as clutter. We are talking about extra clothes and shoes – things you rarely wear but cannot bear to be without. Do without these items for a couple of months by putting them in a box, because these items can make your closets look “crammed full.” Sometimes there are shoe boxes full of “stuff” or other accumulated personal items, too.

Furniture Clutter

Many people have too much furniture in certain rooms – not too much for your own personal living needs – but too much to give the illusion of space that a home buyer would like to see. You may want to tour some builders’ models to see how they place furniture in the model homes. Observe how they place furniture in the models so you get some ideas on what to remove and what to leave in your house.

Storage Area Clutter

Basements, garages, attics, and sheds accumulate not only clutter, but junk. These areas should be as empty as possible so that buyers can imagine what they would do with the space. Remove anything that is not essential and take it to the storage area.  Or have a garage sale.

Fixing Up the House Interior

Plumbing and Fixtures

All your sink fixtures should look shiny and new. If this cannot be accomplished by cleaning, buy new ones where needed. If you don’t buy something fancy, this can be accomplished inexpensively and they are fairly easy to install. Make sure all the hot and cold water knobs are easy to turn and that the faucets do not leak. If they do, replace the washers. It is not difficult at all.  Check to make sure you have good water pressure and that there are no stains on any of the porcelain. If you have a difficult stain to remove, one trick is to hire a cleaning crew to go through and clean your home on a one-time basis. They seem to be wonderful at making stains go away.

Ceilings, Walls and Painting

Check all the ceilings for water stains. Sometimes old leaks leave stains, even after you have repaired the leak. Of course, if you do have a leak, you will have to get it repaired, whether it is a plumbing problem or the roof leaks.  You should do the same for walls, looking for not only stains, but also areas where dirt has accumulated and you just may not have noticed. Plus, you may have an outdated color scheme.  Painting can be your best investment when selling your home. It is not a very expensive operation and often you can do it yourself. Do not choose colors based on your own preferences, but based on what would appeal to the widest possible number of buyers. You should almost always choose an off-white color because white helps your rooms appear bright and spacious.

Carpet and Flooring

Unless your carpet appears old and worn, or it is definitely an outdated style or color, you probably should do nothing more than hire a good carpet cleaner. If you do choose to replace it, do so with something inexpensive in a fairly neutral color.  Repair or replace broken floor tiles, but do not spend a lot of money on anything. Remember, you are not fixing up the place for yourself. You want to move. Your goal is simply to have as few negative impressions upon those who may want to purchase your property.

Windows and Doors

Check all of your windows to make sure they open and close easily. If not, a spray of WD40 often helps. Make sure there are no cracked or broken windowpanes. If there are, replace them before you begin showing your home.  Do the same things with the doors – make sure they open and close properly, without creaking. If they do, a shot of WD40 on the hinges usually makes the creak go away. Be sure the doorknobs turn easily, and that they are cleaned and polished to look sharp. As buyers go from room to room, someone opens each door and you want to do everything necessary to create a positive impression.

Odor Control

For those who smoke, you might want to minimize smoking indoors while trying to sell your home. You could also purchase an ozone spray that helps to remove odors without creating a masking odor.  Pets of all kinds create odors that you may have become used to, but are immediately noticeable to those with more finely tuned olfactory senses. For those with cats, be sure to empty kitty litter boxes daily. There are also products that you can sprinkle in a layer below the kitty litter that helps to control odor. For those with dogs, keep the dog outdoors as much as possible. You might also try sprinkling carpet freshener on the carpet on a periodic basis.

Costs of Repairs

Do not do anything expensive, such as remodeling. If possible, use savings to pay for any repairs and improvements – do not go charging up credit cards or obtaining new loans. Remember that part of selling a house is also preparing to buy your next home. You do not want to do anything that will affect your credit scores or hurt your ability to qualify for your next mortgage.

Fixing Up Outside the House

Most real estate advice tells you to work on the outside of the house first, but unless there is a major project involved, we believe it is best to do it last. There are two main reasons for this. First, the first steps in preparing the interior of the house are easier. They also help develop the proper mind set required for selling – beginning to think of your “home” as a marketable commodity. Second, the exterior is the most important. A homebuyer’s first impression is based on his or her view of the house from the real estate agent’s car.  So take a walk across the street and take a good look at your house. Look at nearby houses, too, and see how yours compares.

Landscaping

Is your landscaping at least average for the neighborhood? If it is not, buy a few bushes and plant them. Do not put in trees. Mature trees are expensive, and you will not get back your investment. Also, immature trees do not really add much to the appearance value of the home.  If you have an area for flowers, buy mature colorful flowers and plant them. They add a splash of vibrancy and color, creating a favorable first impression. Do not buy bulbs or seeds and plant them. They will not mature fast enough to create the desired effect and you certainly don’t want a patch of brown earth for home buyers to view.  Your lawn should be evenly cut, freshly edged, well watered, and free of brown spots. If there are problems with your lawn, you should probably take care of them before working on the inside of your home. This is because certain areas may need re-soding, and you want to give it a chance to grow so that re-sod areas are not immediately apparent. Plus, you might want to give fertilizer enough time to be effective.  Always rake up loose leaves and grass cuttings.

House Exterior

The big decision is whether to paint or not to paint. When you look at your house from across the street, does it look tired and faded? If so, a paint job may be in order. It is often a very good investment and really spruces up the appearance of a house, adding dollars to offers from potential home buyers.  When choosing a color, it should not be something garish and unusual, but a color that fits well in your neighborhood. Of course, the color also depends on the style of your house, too. For some reason, different shades of yellow seem to elicit the best response in home buyers, whether it is in the trim or the basic color of the house.  As for the roof, if you know your house has an old leaky roof, replace it. If you do not replace a leaky roof, you are going to have to disclose it and the buyer will want a new roof, anyway. Otherwise, wait and see what the home inspector says. Why spend money unnecessarily?

The Back Yard

The back yard should be tidy. If you have a pool or spa, keep it freshly maintained and constantly cleaned. For those that have dogs, be sure to constantly keep the area clear of “debris.” If you have swing sets or anything elaborate for your kids, it probably makes more sense to remove them than to leave them in place. They take up room, and you want your back yard to appear as spacious as possible, especially in newer homes where the yards are not as large.

The Front Door & Entryway

The front door should be especially sharp, since it is the entryway into the house. Polish the door fixture so it gleams. If the door needs refinishing or repainting, make sure to get that done.  If you have a cute little plaque or shingle with your family name on it, remove it. Even if it is just on the mailbox. You can always put it up again once you move. Get a new plush door mat, too. This is something else you can take with you once you move.  Make sure the lock works easily and the key fits properly. When a homebuyer comes to visit your home, the agent uses the key from the lock box to unlock the door. If there is trouble working the lock while everyone else stands around twiddling their thumbs, this sends a negative first impression to prospective home buyers.

Is real estate investing  right for ME?

For many real estate investors, the deals they make are about a lot more than building profits or increasing cash flow.  Many real estate investors love what they do because they can and do help people.  You can structure deals that earn you income while helping a family with little, bad or no credit achieve the dream of owning a home. As a real estate investor, you can help people facing foreclosure get their lives back by creating a deal that stops the foreclosure while earning money for you, the investor.  By coming up with creative solutions, you can help people solve their problems while earning excellent returns from your real estate investments.  These are real win-win situations for all involved. There is no better feeling than knowing you are able to meet your own dreams and goals while helping other people solve their problems. People just like you are helping solve problems for others while achieving their own financial freedom all the time.

Where do I start if I am new to real estate investing?

If you are new to real estate investing you may be overwhelmed by the options you have seen or heard about. You may be concerned that you do not have the money or credit to get started with investing. You may even wonder if real estate investing is right for you.  There are proven real estate investment methods where no credit or cash is needed, such as flipping houses, lease options, “subject to” transactions, and other “no money down” options. These methods are low-risk and can net you many thousands of dollars with each successful investment.  You may be thinking that this is not possible, or that there is a catch somewhere. The only catch is that you need to educate yourself about these investing opportunities. When you learn how to structure these scenarios, you can not only get started with no money down, you can earn serious money on your investments.

Strategies that make you money in real estate with little or no risk.

There are a number of real estate investment strategies that will get you started on the road to financial freedom with little or no financial risk or outlay on your part. These strategies include:
•Use a lease options. This allows you to make a commitment to buy a property with almost no money down and with an extended period of time to arrange financing.
•Quick flipping houses. This strategy allows you to make money by finding sellers who need to sell the property quickly. They are willing to sell for way less than what the home is worth. Then “flip” your contract to a new buyer who will pay you more than what you agreed to pay. In most if not all cases you never put a dollar at risk.
•Taking “Subject-To”. This mean taking title to the property subject to the existing mortgage that is already in place on the home. The terms of the note that were initially created with the lender stay the same, including the name on the loan. Simply put, you are not assuming the loan.

Profitable investments for more experienced investors.

Investing in commercial real estate can be the most profitable option for experienced investors. Just be aware that higher profits may and usually do carry a somewhat higher risk. Diligence is a mandatory.  Investing in foreclosures and bank foreclosed real estate (REOs), either with or without a short sale, usually will also produce substantial profits on investments.  Rehabbing a home is also for more experienced investors. If you know what you’re doing, you can make bigger profits than with flipping houses or lease options, but you also have more potential risk. The most important rule here is: Do not be the handyman! Hire a professional who knows what their doing.  Many investors enjoy buying and holding single family houses as rental properties. That way you can get a cash flow every month, decent tax deductions yearly,  and the possibility of a large profit when you decide to sell the investment. If you’re interested in rental property, be sure to learn everything you can about landlording before jumping into this type of investment.  Experts in discounted mortgages, trust deeds, and other “paper” understand the power of coupling real estate transactions with real estate paper. By combining the two, you have the ability to out-negotiate, out-maneuver, and outsmart your competition.

Broad real estate expertise from Anthony DiDonato you can depend on to take your investing success to its maximum potential!

•Investing in commercial real estate
•Make more cash flow as a real estate landlord
•Leveraging retirement funds for real estate investing
•Investing in rehab properties
•Strategies that allow you to profit from properties that have no equity
•Methods to improve your monthly cash flow
•Strategies to profit from foreclosures and short sales
•Ensuring you know how to protect your hard earned assets
•Creative (and traditional) ways to fund your deals

Contact Anthony DiDonato for help or advice on any of the above information at:

Buyers pursue short sales to get great deals on distressed properties. So when you see a low price listed for a home that you think is too low for the neighborhood, before you jump on that price, ask your agent to call the listing agent to find out if the home is a short sale.

You might want to think twice about making an offer on a pre-foreclosure, short sale home. It’s not as simple as you may think, and very few if any can close in 30 days or less.

Many of my Delaware County PA  home buyers have waited 4 to 6 months to close on a short sale, a lot of times much longer.

What is the definition of  a Short Sale?

A short sale means the seller’s lender is accepting a discounted payoff to release an existing mortgage on a home. Just because a home is listed with short sale terms does not mean the lender will accept your offer, even after the seller accepts it.

Be aware that the seller need not be in default,  to have stopped making his  mortgage payments, before a lender will consider a short sale. A lender may consider a short sale if the seller is current but the value has fallen. The seller may have over-encumbered, owe more than the home is worth, so a discounted price might bring the price in line with market value, not below it.

Check the Public Records

Do your research before making an offer to purchase a short sale home. Your agent can find out who is in title, whether a foreclosure notice has been filed and how much is owed to the lender(s). This is important because it will help you to determine how much to offer.

If there are two loans, you could have a problem. The first mortgage lender’s position is protected by the second lender, unless the second lender does not want to foreclose. If a seller owes $160,000 on the first and $40,000 on the second, offering $160,000 leaves nothing for the second. The first will need to give something to the second to gain its cooperation.

Hire an Agent with Short Sale Experience

It’s one strike against you if the listing agent has never handled a short sale, but it’s even worse if your own agent has no experience in that arena. You need an experienced short sale agent.

An agent with experience in short sales will help to expedite your transaction and protect your interests. You don’t want to miss any important detail due to inexperience or find out your transaction is not going to close on time because no one has followed up in a timely manner.

Qualifying the Property and Seller for a Short Sale

A lender is unlikely to agree to a short sale unless the seller has no equity and is unable to repay the difference between your sales price and the existing loans. Sellers need to provide a hardship letter to the lender. Sellers may also owe taxes on the amount of debt that is forgiven.

A seller I know once demanded that the buyer slip the seller $1,000 to be given the right to purchase the seller’s property. We said no. This is fraud. The lender legally pursued that seller. Do not be lured by sellers who suggest this practice. In a short sale, the seller receives no money because the lender is losing money.

Submit Documentation and Purchase Offer to Lender

Once the seller has accepted your offer, send it to the lender for approval. You do not have a deal until the lender accepts. Also, send the lender a copy of your earnest money deposit. Do not be astonished if the lender asks you to increase it.

In addition, the lender will want to see that you have your own loan available and you are preapproved. Send a preapproval letter to the lender. It will help if your agent sends a list of comparable sales that support the price you are offering to pay for the home.

Give the Short Sale Lender Time to Respond

Make your offer contingent upon the lender’s acceptance. Give the lender a time frame in which to respond, after which, you will be free to cancel.

Some lenders submit short sales to committee, but most can make a decision within two to three months. Get a name and phone number for the appropriate contact at the lender. Don’t send an offer blindly to a department.

Understand Short Sale Commissions

Regardless of the commission the seller has agreed to pay, the lender is actually the entity paying the commission. The reason is the seller is not receiving any money with which to pay a commission. Since the lender is losing money, the lender will likely negotiate the commission directly with the listing broker, who will then share the commission with your agent.

If you have signed a buyer’s broker agreement with your agent, ask if the agent will waive the difference due or you might have to pay it out of your pocket. Some brokers feel it is unfair to penalize the agent, but the lender is calling the shots.

Reserve the Right to Conduct Inspections

Generally, the lender will not pay for customary items that a seller would pay. These include home protection plans for the buyer, buyer credits of any kind and pest / termite inspections. A buyer will be asked to purchase the property “as is,” which means no repairs. It is extremely important that a buyer obtain a home inspection.

Here are 11 Reasons Why Buyers Might Not Want to Buy a Short Sale:

1) Sellers Paid Too Much.  If a home sold for $500,000 a few years ago and is now for sale at $400,000, that doesn’t mean the buyer is picking up $100,000 of equity for free. It means the seller paid too much in a rising market and now the market has fallen. It means the seller has no equity.

2) Sellers Borrowed Too Much.  Banks that were eager to lend money in appreciating markets sometimes allowed borrowers to over-mortgage the home, meaning the borrower’s loan balance exceeded the value of the property. Appraisals are subjective, and not all appraisers will place the same value on a home. Although against the law, some appraisers are pressured by banks to appraise at the amount the home owner wants to borrow.

3) Stringent Qualifications.  Inexperienced or unethical real estate agents might push a seller into considering a short sale when the seller does not qualify for a short sale. Sellers must prove a hardship and submit evidence of the hardship to the lender for approval. Some agents list homes as short sales without ever talking to the lenders or pre-qualifying the sellers.

4) Homes Sell at Market Value.  Lenders aren’t naive or unaware of the value of a home. Lenders will insist on a comparative market analysis, known as a CMA, or broker price opinion, known as a BPO. If a lender believes a better price can be obtained by taking the property in foreclosure over a short-sale offer, the lender may hold out for a higher price. That price will be close to market value. Lenders accept short sales when the home is worth the short-sale price, which means market value.

5) Homes Sell “As Is”.  If a mortgage company agrees to a short sale, it is most likely also paying the closing costs in the transaction. Lenders ask buyers to purchase the home in its present condition. Lenders typically will refuse to pay for:
• Suggested repairs disclosed on a home inspection.
• Pest inspections or work necessary to issue a clear pest report.
• Roof certifications or roof repairs.
• Home protection plans for the buyer.
• Deferred maintenance.

6) Length of Time to Close.  Depending on when the Notice of Default was filed, the lender’s back-log of foreclosures and how much paperwork the seller has already submitted, it could take anywhere from two weeks to two months to get a response on a purchase offer from a lender. In addition, if two lenders are involved because there are two loans secured to the property, it could take longer to satisfy the demands of the second lender.

7) Lenders Can Change Conditions.  Some lenders reserve the right to renegotiate the terms of the short sale at the last minute. If the market changes, new laws pass or new information crosses the lender’s desk, the lender can attempt to change the terms of the contract. Lenders generally have lawyers at their disposal, and ordinary buyers do not.

8 ) Lenders Discount Commission.  Generally, only lenders who have sold loans to Fannie Mae or Freddie Mac are paying traditional real estate commissions to real estate agents. The rest may want a discount. Moreover, agents end up doing two to three times the work of a conventional transaction and don’t appreciate getting paid less to do more work. If you have agreed to pay your agent a certain percentage under a buyer broker agreement, you could be liable for the difference between what the lender will pay and what your contract stipulates, if your agent refuses to waive the difference.

9) Higher Buyer Closing Costs.  Because lenders rarely will pay for any extras, like a seller would be willing to do, if you want any of those extras, you will pay for them yourself. Sometimes lenders will refuse to pay for standard seller closing costs such as transfer taxes, too. If you want specific inspections, you will probably pay for them out-of-pocket.

10) Lose Control of Transaction.  If you need to close escrow by a specific date, lots of luck with that. A short sale home closing process takes an indefinite amount of time. The seller’s lender calls the shots, not the buyer nor the buyer’s lender. If you are trying to close escrow concurrently with the sale of your home, it might not happen.

11) Little Seller Motivation.  When the seller discovers that the short sale effect on credit is close to that of a foreclosure, there is little incentive for a seller to cooperate with a short sale. Although sellers may qualify to buy another home in 2 years after a short sale versus 5 (with restrictions) on a foreclosure, some have no intention of ever buying another home again.

Finding Short Sale Listings

Most short sales are listed by real estate agents. You will find these listings on local web sites and in MLS feeds. Some lenders have complained about advertising that identifies the home as a short sale, because the lenders feel it puts them at a disadvantage when it comes to home pricing. They are right. A buyer generally offers less when it’s advertised as a short sale.

If you have access to search terms, first look where the term short sale appears. It might be under “status modifier” or it might be contained in the marketing comments. Choose that field as your search term.

Read the listing carefully. Agents slip in words that identify the listing as a short sale. Look for the following terms:
Subject to bank approval.
Pre-foreclosure
Notice of Default
Give the bank time to respond.
Pre-approved by bank.
Headed for auction

Above all, hire an agent who is well versed in handling short sales and can advise you of the procedures. If you have legal questions, please ask a lawyer for advice and guidance.

Here are some of the common mistakes sellers make with short sales:

Short Sale Mistake #1: Priced Wrong.  Short sale prices remind me of the story of Goldilocks and the Three Bears. Some are too high, some are too low and some are priced just right. Short sales that sell are priced appropriately. The price should be attractive to the following parties:
The Short Sale Bank
The Buyer
The Buyer’s Agent
The Seller
The Buyer’s Lender

Appealing to all five of these entities may seem impossible to do, but it is possible. There is an art to pricing a short sale. I can honestly report that all my short listings in Sacramento — in our soft market — receive multiple offers, and they close.

Short Sale Mistake #2: Inexperienced Listing Agent.  Particularly in falling markets, agents who have little business are attracted to short sales like moths to a flame. Sellers should find out how many short sales a proposed short sale listing agent has actually closed apart from the number of short sales the agent has listed.

If many of the agent’s listings have been on the market for more than 90 days without an offer, something is seriously wrong. Agents who succeed in this business have a minimum of two years of experience negotiating with short sale banks.

Short Sale Mistake #3: Bad Marketing.  Some agents believe pricing alone will sell a short sale, and they persuade sellers to place a ridiculous price tag on the home. Then the agent purposely refuses to adequately market the home. Not only does the price need to be reasonable, but the home deserves the same type of treatment as any other listing.

Short sales should be exposed to the widest possible pool of buyers, which means plastering that listing on all the major web sites, and includes doing direct mail marketing and networking.

Short Sale Mistake #4: Showing Restrictions.  Buyer’s agents, bless their overworked and tired hearts, will sometimes take the path of least resistance. If the listing requires an appointment, a buyer’s agent might pass over that home in favor of a listing without appointment restrictions.

When a buyer’s agent calls to announce a showing, the response should be, “Come on over. We’re ready!” Short sale listings that restrict activity such as no showings on Sunday, for example, may never get shown at all.

Short Sale Mistake #5: No Photographs.  Submitting a listing to MLS without multiple photographs — or worse, no photograph at all — is like slamming the door in the face of buyers. Buyers aren’t likely to return. A listing with missing photographs sends messages that say nobody cares if the home sells and there’s probably something wrong with it.

On some web sites such as Realtor.com, listings with the most photographs are ranked higher, and those without drop to the bottom.

Short Sale Mistake #6: Poor Property Condition.  Short sale homes benefit greatly from home staging. Sellers need to prepare the home for sale and keep it in pristine condition. If beds are unmade, toys are scattered about and the kitchen sink is filled with dishes, buyers can’t see past the mess. Moreover, some buyers are worried that if the home is in disarray during a showing, the sellers may trash it upon vacating.

Short Sale Mistake #7: Uncooperative Sellers.  Sellers need to submit required documentation to the bank in a timely manner. If the package is incomplete, the bank won’t process the file, and that will delay approval.  If a seller refuses to submit personal financial information and a reasonable hardship letter, the seller will not qualify for a short sale.

If you’re looking to buy or sell “short sale” real estate in Broomall, Media and surrounding areas in Pennsylvania and in New Castle County Delaware,  Contact Anthony DiDonato Call 610-659-3999 {Smart Phones Click to Call}