Short sales are now a huge segment of the Southern California real estate market. Many real estate brokers, let alone buyers, do not understand short sales and then tend to avoid them. The first big challenge in purchasing a short sale is finding a broker willing to put the work in. Most don't want to show these for several reasons. The big three are short sales are much more work, buyers get very impatient, and short sales aren't exactly stress free.



Let me explain these three issues in order. First, short sales are significantly more work because in the place of a two party negotiation with just a buyer and seller, you have a four party transaction with the buyer, seller, and two negotiators. And in this situation the seller and two banks don't act the way a traditional seller would act. The person selling the house is upside down financially and really wants the banks of their back. They don't always care about getting the highest price which is wonderful for you. But the seller can also work a little against the purchase occassionally by not showing the house in the best condition or giving access to the house.

Meanwhile, the negotiators aren't owners, adhere to certain negotiating and can be difficult to get on the phone and negotiate with. Bank personnel often utilize agressive type strategies in their efforts to get the most money. In fact, the first and second loans negotiate among themselves because what one lender gets moneywise the other doesn't. And getting in contact with those closers require completed paperwork packages from the current owner and an purchase contract from a potential buyer before the clock begins to tick. Eventually there has be an agreement between two banks, a seller, and a buyer. By the time you get this all set, a period of 2-3 weeks can easily pass. Plus with the large amount of short sales on the market many banks are understaffed to handle the shear amount.

Once you are past that issue, the second major challenge is buyer impatience and lack of understanding. The most challenging type of home buyer for a short sale is often an excited first time purchaser unless they have a solid communication level with their broker. Because once the agent has everything in to the banks, the banks will take 10-14 working days to even examine it and forward it to a closer.

Asking an pumped up homebuyer to wait this out is rough. This is doubly true in Murrieta and the surrounding area's real estate market because there are a large supply of properties available. Plus, buyers today have everyone they know in their head whispering that they should get better price or more whatever when they buy. Buyer patience usually is the biggest issue and should be discussed long before short sale homes are shown. If the clients are able to handle their patience, they can get a huge discount!

Here is an example. Last month I mentioned a Murrieta home bank short sale to a buyer of mine where they could get a house for over 70k off the its real value. However, it might take a while for bank approval, perhaps up to 2-3 weeks. The listing was perfect for the couple and was move in condition. Their reaction was in this market they felt they should get a response no later than 24-48 hours.

I chose to risk my client contact and firmly told them that this great situation isn't for you because the banks and their workers don't care about your needs. They work 9-5 and have no feelings regarding the property and if you want to miss a fantastic deal, that is your choice. But I am willing to put in the time and effort if you can have the patience. And when we get approved, you will be happy and enjoy significant equity and I will secure your business for the next time. After further discussing the details, they put in an purchase offer, received bank approval, and will move into their new house this month. Good channels of communications, integrity, and patience are all you need!

The last hurdle is stress. Some of this has already been mentioned when dealing with patience. However, the stress of what the bank will do, what people are thinking around you, and how frustrating the process is can get to you. For the real estate agent, working with the other broker and banks is difficult at best. For the client, not screaming out your stress on your broker is vital. Much of the possible stress is reduced by a good understanding about the transaction and a periodical update two times a week. If the buyer finds out that the banks have not returned calls, they shouldn't go ballistic.

With all that said, why do I recommend examing short sales? Because short sales can offer a huge chance to get a ideal new home at a steep discount. They are usually in great shape than fully bank owned listings and often they are still being taken care of. Also, they can be the best for price negotiation for many of reasons.

Right now, banks are filled to the gills with in default properties and the last situation they want to deal with is another, especially when there is a solid buyer in the mix. Why on earth would they want to gain another when given the chance to sell one while more fees add up or the real estate market turns further down? Their deduction is your gain and your real estate agent's goal is to get you, the real estate client, the greatest situation possible for today and in doing so, earn your business tomorrow.