How to Choose a Short Sale Agent
Your Closing May Depend on the Short Sale Agent You Choose
Word to the wise: Choose your short sale agent carefully. A short sale is too complicated of a transaction to trust to a novice. Don't make the mistake of choosing an agent simply because he has a flashy website or has taken a couple of short sale classes.
Since short sales popped back on the scene in 2005, many agents have decided to pursue the short sale business. Real estate training companies have also capitalized on short sales by offering a ton of training programs for agents and making up their own certifications. However, an agent can't learn how to be a short sale agent in three hours. So don't fall victim to choosing a short sale agent solely on credentials because those credentials might be worthless.
Should Your Real Estate Agent Help You to Choose a Short Sale Agent?
Sometimes I get referrals from other agents in Sacramento because those agents don't want to handle a short sale. They know that I sell a lot of short sales and close them, so they feel comfortable referring their sellers to me. I don't offer to pay those agents a referral fee because I work too hard for what I earn. Often, lenders cut my commission, too.
Short sales can be 4 to 5 times the amount of work of a regular transaction. Most of the time, the referring agents are happy I've agreed to sell their client's short sale. These referring agents don't demand a referral fee because they put their client's needs first. Others will shop until they find some yo-yo who is willing to pay them, even though this yo-yo might have never closed a short sale; hence the referring agent may never get paid. You might want to ask your agent if there's a referral fee involved and think twice about choosing a short sale agent who pays for referrals.
How Much Experience Should a Short Sale Agent Have?
Experience is a funny thing. An agent can have 10 years in the business, but it breaks down to one year times 10 if they haven't closed very many transactions. Maybe a 10-year agent has closed only one or two transactions a year. You could choose a short sale agent who has only five years of experience but perhaps has closed 100 short sales, and you'd be better off.
Before you choose a short sale agent, ask about the agent's track record. Here are some sample questions:
- How many years have you been selling short sales? At a minimum, you'd like an agent who has at least three years of experience or more. Experience is a teacher that no classroom instruction or online short sale seminar can replace. It teaches an agent the pitfalls and how to anticipate and avoid potential problems. It's even better for you if the agent has experience in real estate apart from short sales.
- How many short sales have you closed? Imagine the knowledge of a short sale agent who has closed one-hundred, five-hundred or more short sales. Those agents most likely already have the short sale packages from every bank on hand and know how each bank operates. These agents also have systems in place that may streamline the short sale process but are also able to give your transaction individual attention.
- Do you see any red flags for my short sale? A short sale agent who has been around the block knows the types of things to warn a seller about. While the agent can't give legal or tax advice because an agent's license doesn't allow such disclosures, an agent should be familiar enough with the possible legal and tax consequences to point out possible problems and tell you where to get the answers.
- What has been my bank's track record with you? Past performance is no guarantee that you'll receive the same response from a bank, but it's an indicator. For example, a Wachovia short sale is every agent's dream transaction. In fact, if every short sale was a Wachovia short sale, we short sale agents would be drinking champagne all day long.
- Who will negotiate my short sale? Hands down, lawyers are best at negotiation. But typically you will pay a lawyer a separate fee. If you want your short sale agent to handle the negotiation, find out if your agent is outsourcing the negotiation to a third-party vendor. Many third-party vendors are mill houses staffed by so-called loss mitigators who handle hundreds of files and, in fact, might not even be licensed to do so.
- How long will my short sale take to close? This is often the $64,000 question. Some banks are easy to predict and some aren't. Aurora might be closing short sales in six weeks in the first part of the year but fall to 120 days by year-end. But an agent who is busy closing short sales with Aurora would have a pretty good time estimate.
At the time of writing, Elizabeth Weintraub, BRE # 00697006, is a Broker-Associate at Lyon Real Estate in Sacramento, California.