Short sales are a viable option for homeowners who want to sell their property before it reaches foreclosure. They would typically decide to sell for less than the home’s mortgage. Since the home seller cannot fully repay their mortgage loan, they’ll have to reach an agreement with their lender before the process can be considered a short sale.
The short sale process can be tricky and complicated since it heavily involves the lender, buyers, and you – the seller. That’s why it’s important to know what you can avoid to prevent costly mistakes.
Check out these 6 common short sale mistakes and how to avoid them:
Pricing your home incorrectly
Pricing a short sale home is challenging because you have to price it correctly to attract buyers and receive multiple offers. Other parties that your home price needs to appeal to are the buyer’s agent, the buyer’s lender, and the short sale bank.
When pricing your short sale home, avoid setting a price that’s below market value or so high that you scare away home buyers. Since you’re trying to appeal to buyers, you need to arrive at a competitive yet reasonable price. Check out comparable sales, including REO (real estate-owned) properties and other short sale homes, or ask your real estate agent for advice.
Marketing the home poorly
Your home can only qualify as a short sale if you receive offers to purchase. Without any offers, your lender will not approve of the short sale qualification of your home, even if it meets the criteria. Don’t make the mistake of letting your home’s price speak for itself. To get multiple offers, start by aggressively marketing your home.
Marketing your short sale is just like marketing any other property for sale: you need to reach as many buyers as possible. To ensure short sale success, you can request your listing agent to post your home in the local Multiple Listing Service (MLS), Zillow, Realtor.com, and other relevant real estate sites. Maximize the use of social media platforms such as Facebook, Instagram, and Twitter, as well.
An important part of marketing your home includes having photographs in your listing. Listed properties without photos on real estate websites tend to move down in rank so make sure to have photos to accompany your listing. Make sure to choose those that perfectly capture the look and feel of your home – in high resolution, no less.
Leaving the house in poor condition
Preparing your home in anticipation of its sale is also an important step in the short sale process. Just like selling a regular home, you need to make sure that it is clean and in good condition. Otherwise, potential buyers may get turned off and change their minds.
Some of the easiest but most effective ways to keep your home in good condition are to:
Clear the dishes from the sinks
Sweep the floors
Store items that are not being used
Conduct regular maintenance checks
Make the necessary repairs when needed
Submitting incomplete documents
Along with your personal financial information and hardship letter, you need to provide documentation like your tax returns, bank statements, and purchase contracts. Without these documents, your bank or lender won’t be able to process your request immediately. Not having these could also cause you to not qualify for the short sale at all.
Since the bank takes around 90 to 120 days to approve of the short sale, try to submit the complete financial package ahead of time. This can speed up the process and allow you to sell the home at the soonest.
Having too many restrictions
Knowing that the entire process of making a successful short sale could be lengthy, you should realize that time is of the essence to avoid foreclosure. Thus, you will want to make yourself available to as many potential buyers and their agents as possible. Putting too many restrictions like obligating potential buyers to set an appointment before home viewing could turn them off. As a seller, you should always be ready to entertain buyers and be open to any questions they have.
Working with an inexperienced listing agent
Selling a short sale home is a complicated and challenging process. That’s why it’s best to work with an agent who specializes in this type of sale. An experienced short sale agent has the negotiation skills needed to deal with a bank or lender.
Before working with a listing agent, ask about the number of short sales they have closed and the length of time their listings stayed in the market. Any short sale listing that has been in the market for more than 90 days is a red flag to look out for.
Having an experienced listing agent by your side makes the short sale process smoother and easier. Let 606 Brokers, Chicago’s number one real estate team, guide you every step of the way. Get in touch with us today by calling 773.870.5101.