"'Possible' Short Sale"

Warning: Use of "May" May be Problematic

For the uninitiated, let me decode "possible short sale":

The odds of it not being a short sale are about as high as the following bad things not having occurred (which is to say, infinitesimal):

"I may have scratched the car." (wife to husband -- or vice versa)

"The disposal may not be working right." (child to parent, after dropping rocks into same)

"We may have lost your reservation." (uttered at the car rental desk)

"The plane may be delayed."

"We may have damaged your one-of-a-kind, antique lamp." (furniture movers to customer)

"Mommie, I think something may be wrong with the goldfish."

The kiss of death?

A "possible short sale" being handled by "an experienced short sale agent."

P.S.: It's interesting how many of the above are travel-related. Hmmm . . .

"Traditional Seller" -- Decoded

Mom, Apple Pie -- and No Banks

Probably the most popular term on MLS at the moment -- right after "mint," "move-in condition," and "experienced short sale agent" -- is "traditional seller."

No, that doesn't mean the owners believe in "Mom and apple pie," dress conservatively (no face jewelry or tattoos), or otherwise have an "Ozzie and Harriet" profile (if you're too young for that reference, think, Phil and Claire Dunphy from Modern Family).

Rather, it means that: a) the Sellers have title to the home, not a bank (it's not a foreclosure); and b) they don't need the bank(s) that hold their mortgage to take a haircut for them to be able to sell (it's not a short sale).

Listings with this language are most common in areas where foreclosures and short sales are dominant, and "traditional sellers" need a way to distinguish themselves.

"Last Chance to Buy This House Before the Price Drops Dramatically!"

Houses on the Verge
(of Foreclosure)

As sales pitches go, it's not quite as lame as the infamous National Lampoon cover at right ("If You Don't Buy This Magazine, We'll Kill This Dog").

Still, you wouldn't exactly label as "enticing" a house that sought to attract Buyers with this hook: "Hurry! Act now before the home goes back to the bank!"

That's because homes that go into foreclosure typically fall dramatically in price, usually after an interval of 6-8 months off the market (and the same period of neglect).

Other disincentives: homes about to be foreclosed on frequently already suffer from neglect (who's got money for maintenance?); and, by definition, homes usually get foreclosed on when they're saddled with a too-big mortgage -- an issue that *foreclosure at least resolves.

Most Buyers, rationally, tend to run from -- not towards -- such "opportunities."

*In theory, short sales are the other way that debt-burdened homes can be relieved of some of that debt. In practice, however, banks haven't been willing to do that . . . and something like 75% of all would-be short sales progress to foreclosure.

Short Sale Bank: 'No Games'

"It'll Go Fine -- Really"

Short sales deservedly have a reputation for being aggravating time sinks for home Buyers (and their Realtors!).

Even when they work out -- which is less than one-third of the time -- the Buyer can easily wait months for the bank(s) holding the mortgage(s) to agree to take a haircut on what they're owed, clearing the path for a deal. (If they don't -- the usual outcome -- the property progresses to foreclosure.)

In the meantime, many banks continue to collect offers, which they're allowed to do because they haven't finally signed off on anything (the typical short sale purchase agreement contains one or more contingencies, which serve as "outs" should the bank receive a better offer).

The foregoing means that short sale Buyers need to have A LOT of patience, and accept that they can either be "bumped" or have to increase their offer at any time if they really want to buy the property in question.

"Masochism Quotient"

With all that as prelude, I saw the following in the "Agent Remarks" field on a short sale that hit the market yesterday:

Subject to bank approval. Seller will sign only one P.A. & submit to bank all other offers will be back up. Process started with bank. Agent experienced in Short Sales.

Translation: assuming all of the foregoing is true (see, "Experienced Short Sale Agent"), the odds of a deal in this case are a little higher, and the "masochism quotient" for would-be Buyers will be a little less . . . .

"Experienced Short Sale Agent"

Short Sale Agents Try to Reassure

With short sales* proliferating the last year or so in the Twin Cities, short sale nightmares have, too.

The most common complaints: endless delays, no communication from the bank(s), Sellers who don't tell Buyers about accepted offers even as they solicit more (since they're all subject to bank approval, there's no risk of selling the home multiple times).

To counter the fear that any deal will be a time-wasting quagmire -- and otherwise reassure would-be Buyers and their agents -- more and more listing agents (representing the Sellers) are now promising that they're "experienced short sale agents" on MLS.

Which begs the question: are they?

It's certainly not hard to find out.

You simply go to the MLS database, find the agent's ID, then run a search on "closed sales" with the agent's number.

So, what did I find when I checked out the "experienced short sale agent" listing a home my clients viewed last weekend?

The agent had closed a career-total of three properties, all condo's, none of which were short sales.

*A short sale is a home where the owner owes more on their mortgage than the home is currently worth. To sell, the bank(s) holding the mortgage must agree to reduce the principal that is owed.