Today, the V-shaped recovery continues for the housing market. Home sales jumped a record 21% throughout the country in June. The median price rose 3.5% from a year earlier to $ 295,300 with gains in every region of the country. Mortgage rates have broken the 3% barrier for the first time in the last 50 years. The housing market across the United States surged forward despite the economic headwinds resulting from the Coronavirus pandemic. This, in a nutshell, is where we are today. There is not enough short sale realtors in Chicago who specialize in this process.
The worst pandemic in a century is upon us and it may well determine. If this recovery will last or otherwise have a negative impact on the housing industry in the long run. It is therefore prudent to understand the world of distressed properties and short sales. We will explore the crucial role of the buyer’s representative and how they can aid the client through a smooth buying and selling process.
LISTING AGENT’S ROLE
The listing agent will usually be the first point of contact with the distressed seller and will assist them in navigating the short sale. The listing agent must be able to analyze the options available to distressed sellers, including refinancing, lender workout, selling and bringing cash to closing, short sale, deed-in-lieu of foreclosure and foreclosure.
To fulfill their advisory obligation to the seller, a listing agent must not only fully comprehend the various options listed above. Also understand the implications a short sale may have on the seller’s credit and their ability to purchase another home. For example, is a deed-in-lieu which stays on the seller’s credit report for four years a better option than a short sale, or foreclosure which stays on the credit report for seven years? Numerically, one may seem better than the other, but a detailed analysis of the variables will determine the appropriate course to take by the seller.
To be the trusted advisor to the seller, a listing agent must give the best advice as warranted by the situation.
To highlight this, let us look at a scenario: John and Mary own a home that you sold them a few years ago. Jim loses his job and they are able to barely survive on Mary’s income. They call you in a panic to list the house and negotiate with the investor / servicer on their behalf, as their listing agent. As a trusted real estate professional, should you:
1. Rush to list the property?
2. Advise them to stop making their mortgage payments?
3. Try to broker a deal with their lender to reduce their monthly mortgage payment so that Jim and Nancy can keep the house.
The answer is none of the above.
As a real estate professional and REALTOR®, your role is to serve as a resource for your clients, whether they are selling or buying and to recommend tax, legal and other professionals as needed.
BUYER’S AGENT’S ROLE WITH THE SHORT-SALE AND REO TRANSACTIONS
The buyer’s agent will need to analyze the fundamentals of the REO business, including REO Lifecycle and the existing opportunities for real estate professionals.
Let’s say a buyer you are representing has decided on a short-sale property and is ready to make an offer. Before writing an offer, you should pre-qualify the listing agent, the seller and the short-sale property by asking a few pertinent questions.
Has the seller’s hardship been verified?
If yes, by whom?
1. Has the seller submitted the necessary short-sale documentation to the servicer / investor?
2. For example, if this is a Fannie Mae short-sale, has the seller submitted the Borrower Response Package?
3. Continuing with our Fannie Mae example, has the servicer / investor established the price?
4. Has a foreclosure date been scheduled, usually triggered by Notice of Default?
Ensure that the buyer’s lender understands the buyer is intending to purchase a short-sale property. The lender’s familiarity with that process is especially important. Counsel the lender to order an appraisal after the property inspection has proved satisfactory. Lenders who are not familiar with the short-sale process tend to wait until the servicer / investor approval to order an appraisal, which might be too late. There is plenty of short sale realtors in Chicago however some of them are not experienced or don’t have a short sale certification from NAR organization.
The buyer’s agents also need to educate their clients on the elements of a good offer. Writing an offer on a short sale is unlike writing on a property that is not distressed. The buyer’s representative needs to be aware of what makes a good short-sale offer that has a reasonable chance of being accepted by the seller and approved by the investor. To communicate what constitutes a well-written short sale offer to your buyer client, it must address the following in your buyer counseling:
Price. Your offer must reflect fair market value of similar properties. However, note that the listing price of a short sale may or may not reflect market value. Some are priced extremely aggressively, with the goal of creating a bidding war, which may backfire if the offer accepted by the seller is not accepted by the servicer / investor.
If you’re looking for short sale realtors in Chicago, please call us. We offer a full spectrum of options. We will help you to go through the process smoothly and without foreclosing on your house.