I never set out to become a short sale listing agent.  You would have to be absolutely crazy to purposely pursue this line of work.  However, my business partner and I have found that we are better than average at getting this type of transaction to the closing table.  However, not every REALTOR(R) is equipped to handle listing a short sale.  It is a difficult transaction to learn because the rules are always changing.  There are no rules to play by.  Each bank has their own agenda and their own process.  You need to be able to play hardball with certain banks and be “Suzy Sunshine REALTOR(R)” with others.  Learning to handle multiple lien holders in a single transaction can be tricky.  After two years of servicing short sale listings, I’ve come up with 8 questions a consumer should ask any REALTOR(R) they are thinking of hiring to list their home as a short sale.

1.  How many short sales have you listed? – All REALTORS(R) need to cut their teeth on their first short sale, but do you want their first short sale listing to be yours?  If your home will be their first short sale listing, be sure that their broker has a system in place that will help the agent navigate the short sale world.  You may also want to ask how many short sale listings the broker has represented and closed successfully. 

2.  How many short sales have you helped buyers purchase? – Understanding both sides of the short sale process goes a long way.  The buying side of a short sale transaction is very stressful.  An agent’s ability to use knowledge from both sides of a short sale transaction can help during negotiations with the bank(s). 

3.  How many of the short sales you represented closed? – It’s easy to list a short sale.  Heck, it’s easy to get a contract on a short sale.  It is much harder to negotiate a short sale with a bank and successfully get it to closing. 

4.  How will the short sale affect my credit score? – This is a tricky question.  I’ve seen some credit scores hit as little as 90 points.  I’ve seen others hit a couple of hundred points.  It will really depend on how the bank will report the short sale to credit agencies and how delinquent you already are on your mortgage payments.  An agent experienced agent will know that this is a case-by-case answer and won’t make any guarantees or promises. 

5.  Besides my credit score going down, what are some other ramifications of a short sale? – Many banks are now trying to mitigate their losses by having the defaulting party sign a promissory note.  Each promissory note is different, there are no standards.  Your agent may be able to help you negotiate your way out of signing a promissory note.  It will depend on your situation.  We’re not quite sure how lenders will look at credit histories with short sales on them.  Some people  may be able to obtain a home mortgage in as little as a year; others will have to wait much longer than that.  There could also be tax penalties for short selling your home.  Your agent should recommend a good real estate attorney to you, as well as an accountant to go over all the pitfalls of short sales.   

6.  Which banks have you worked with before and which ones were you successful at working with?- Ask this question before you tell them which bank(s) hold your lien.  It is always best if they have worked with your lien holder before.  Sometimes they will have special phone numbers and email addresses because of the prior relationship.  At the very least, the agent will be familiar with how the bank handles short sales.  Again, each bank has a different process.  And each bank hates when the REALTOR(R) doesn’t follow their process.  You don’t want an angry bank! 

7.  How long will it take to get short sale approval? – This is always a loaded question.  Each bank works on their own timeline.  That’s right, they don’t care what your contract says the close date will be.  They review your paperwork when they get it.  Traditionally smaller banks have shorter timelines.  However, some larger banks are beginning to streamline their process and their approval times are getting shorter.  Anyone participating in a short sale should expect 4-6 months for approval and be happy if it comes in early.  Some agents and sellers may decide that turning in straw contracts will speed up this process.  Well, if you get caught, you could be guilty of mortgage fraud.  Avoid fraud.  If there is a 2nd lien holder involved, each bank will need at least 3 months to come to a decision. 

8.  What documents do you need from me to start the process? – This will vary with each banking institution.  The first document you will need is authorization your REALTOR(R) to talk to the bank on your behalf.  Even without this letter, the agent should be able  to call your bank and ask what the short sale package should contain.  Some banks require extensive documentation; others want as little paperwork as possible.  Your agent should have a broad idea of the documents you should find and have ready for when an offer is ratified.