Short sales are becoming a large segment of the Southern California real estate marketplace. Many agents, let alone buyers, lack an understanding of short sales and then tend to avoid them. The first big issue in pursuing a short sale is finding a broker willing to put the extra effort needed. Most don't want to show these for quite a few reasons. The big three of which are short sales are a lot more work, buyers lack of patience, and they can be stressful if done wrong.

Let me explain these three challenges in order. First, short sales are significantly more work because instead of a two party situation with just a homebuyer and homeseller, you have a four party deal with the buyer, seller, and two negotiators. And in this situation the seller and two banks don't act the way a traditional homeseller would act. The person selling the house is upside down financially and just wants the loans of their back. They don't always care about getting the highest price which is good for you. But the seller can also work a little against the sale occassionally by not letting people see the house in the best of shape or at all.

Meanwhile, the negotiators aren't attached to the house, adhere to certain tactics and can be difficult to reach and negotiate with. Bank personnel often utilize agressive type methods 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 access to those people require completed paperwork packages from the seller and an purchase contract from a potential buyer before the clock begins to tick. So at some point 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 nowadays many banks are understaffed to handle the increased workload.

Once you are over that hurdle, 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 homebuyer unless they have a good understanding with their real estate agent. Because when the agent has everything forwarded to the financial institutes, the banks will take 10-14 working days to even look it and send it to a deal maker.

Preparing an pumped up homebuyer to wait this out is difficult. This is especially true in Menifee and neighboring real estate marketplace because there are a large supply of properties available right now. Plus, housebuyers today have everyone they know in their ear advising them they should get better price or more service when they buy. Buyer patience can be the most important variable and should be discussed before any short sale homes are visited. If the homebuyers have the patience and a good agent, they just may get a huge discount!

Here is an example. Last month I mentioned a home in Menifee for possible short sale deal to a client of mine where they could get a house more than 75k off the market price. However, it might take a bit for bank approval, perhaps up to 3 weeks. The house was perfect for their family and was turnkey condition. Their response was in this market they insisted on getting a response no later than 24-48 hours.

I took a risk with my buyer contact and told them this great situation isn't one you should go after because the banks and their workers don't remotely care about you. They work 9-5 and have no feelings regarding the property and if you want to miss a fantastic deal, that is up to you. But I am willing to put in the work if you can have the patience. And when we get approved, you will be moving in with significant equity and I will earn your business and referrals for the future. After a little more detail, they put in an low priced offer contract, got approval, and will close at the end of this month. Good channels of communications, integrity, and patience are all you need!

The last major challenge is stress. Part of this has already been mentioned when dealing with patience. However, the stress of what the bank will do, what people are advising you to do, and how frustrating the process is can drive you nuts. For the real estate agent, dealing with the other agent and banks is not a lot of fun. For the client, not taking out your stress on your broker is vital. Much of the tension is relieved by a thorough understanding about the situation and a periodical update two times a week. If the buyer finds out that the banks have not returned calls, they shouldn't get upset.

With all that said, why do I suggest looking into short sales? Because these situations can be a huge chance to get a ideal property at a incredible discount. Short sales homes are usually in much better shape than fully bank owned houses and many time they are still being maintained nicely. Also, they can be great for purchase price negotiation for lots of reasons.

At this time, banks are overflowing with foreclosure properties and the last thing they want to deal with is another, especially when there is a solid buyer available. Why would a bank ignore the opportunity while more expenses add up or the market goes down further? Their loss is your gain and your real estate agent's goal is to get you, the client, the best situation possible for today and deserve your business the next time.