Short Sales are a hybrid transaction and it can be hard to remember that there are some things you need to do differently because it is not a “regular” transaction. I’ve collected 5 of what I think are the major pitfalls that can jeopardize the sale, or even put the homeowner at risk for liability.
- Make the home reasonably available to show. Agents need to preview, and Buyers need to see the inside in order to make a decision to buy. Blocking access wastes the Seller’s time. There is a window of opportunity to sell before it reverts back to a foreclosure, and all of that time is needed.
- Fill out the Seller disclosures. This one is actually the fault of the agent. I have heard of listing agents telling their Short Sale Sellers that they do not have to supply disclosures. This is categorically wrong. Not only is it in the state statutes that the Buyers have a right to disclosures, it creates a huge liability for the Seller to be brought to court later over something that could have easily been disclosed up front in the transaction.
- Do NOT sell personal items directly to the Buyers. Say a Buyer really likes your dining table & chairs and offers to buy them so they stay with the house. If you accept money for them outside escrow it is considered fraud because you are withholding money connected with the sale from the lender.
- Insist on quality representation by the listing agent. What do I mean by that? Simply, that your house should look just as nice as any other listing on the MLS. It should have a sufficient number of pictures and be promoted just as much as a regular sale. Your listing agent is being paid a commission out of the proceeds of the sale for their work. So, there is no reason to short change a short sale. (Sorry, could not resist that.)
- Get advice upfront. Before you jump in, talk to your tax person and find a good attorney in case you need legal advice. Then, interview agents who are experienced at Short sales and/or have earned a designation in Short Sales. Usually, if someone went to the trouble and expense of getting a designation, they are taking the sale of your home seriously. If you do not have someone to turn to for tax or legal advice, check out the Resources Page.
What is point 5 ½ ? Breathe…..you will get through this. There are thousands of others in the state of California in all price ranges doing short sales. By making a decision to move on the best way you can, you’re closing a difficult chapter and getting on with your life. Keep your focus on that.