Karen Fiddler has earned her stripes. She regularly contributes well thought out posts.... and this one is one of her best in my opinion. She is absolutely right about "short sales" being a something many of us have had to tough our way through, updating our learning set each time the process changes, and sometimes changing the way we work with each bank that holds the paper.
Thank you Karen for allowing me to repost this article and share your thoughts and insights with my readers. Well Done.
Brad Rachielles, REALTOR(R), Upland, CA
I'm working on an offer for one of my short sale listings. It started me thinking about how different I exercise my Fiduciary Duty to the seller when it's a short sale vs equity sale.
When I first got my license, the term short sale was never mentioned. The Fiduciary Duty to the seller seemed to be clearly defined in terms of activities.....those you did and those you didn't.
Do....Market the home at the best list price you can. Do....Negotiate the highest offer price you can. Do....Negotiate the repairs request and other terms to the best financial advantage of the seller.
Don't....Disclose any personal information or motivation of the seller to the buyer or their agent. Don't....Encourage an offer be accepted that is too low just because it's the first one. Don't....Consider that closing at any cost is success.
Short sales are different. First of all....time is of the essence when a seller is facing a Notice of Default and/or foreclosure. They often come to us late in the process, and we need to move fast. Next, list price is often the lowest we think we can market....not the highest. Again...since we are often racing the clock, we need to get it started as fast as possible, and a low list price generates interest and offers.
Another big difference is the way we interact with the buyer and their agent. In a short sale, the seller gets no proceeds...they have nothing to gain...so working with the buyer's agent is often a open conversation about what it might take to get the transaction closed and short sale approved. With the sellers permission, this could include disclosing the reason for the hardship, lack of funds for a cash contribution, and if the short sale had been approved previously....the price and terms of that approval.
For instance in the transaction I'm working on now, I already know that a previous approval included a $10,000 cash contribution, which can come from the buyer. So the buyer needs to know this and be prepared for the same terms in a new approval. We try and reduce/eliminate that, but full disclosure helps give the proper expectations. Often the more open you are with the buyer and their agent, the better chance you have of keeping them engaged and ultimately it can create an environment where last minute hiccups can be addressed as a team.
The Fiduciary Duty to the seller is essentially about care. Care for their financial well being. In a short sale....that duty is still there, in fact it's more important than ever, but the way we perform this duty is different, in fact our actual activities could seem counter to an equity sale. In the end, we are working to ensure a close for the parties, and avoidance of foreclosure, and protection of the seller's funds.
The Fiddler Realty Team/eVantage Real Estate
Lic # 01494165
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It's All About YOU! Brad Rachielles, REALTOR, Upland, CA. BRE# 01489453
Brad Rachielles, REALTOR. Helping Inland Empire Buyers and Sellers with their Real Estate needs in the Communities of: Upland, Rancho Cucamonga, Fontana, Claremont, Ontario, Chino, Chino Hills, Pomona and La Verne, CA.
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