Short sale trends
What we are beginning to witness is buyer's putting multiple offers on short sale listings and buying the first one that responds. This is becoming an issue for all parties as that is not the way to do business, nor is something any buyers agent should agree to as it undermines our ethics and process.
What listing agents have recently started doing to counter this issue to make the buyers Earnest Money Deposit hard for the first 60-90 days. What this means is if the buyer backs out prior to the 60 or 90th day, the buyer forfeits their deposit. What the buyers have done to counter this is to place lower EMD (Earnest money deposits) in their offer. This hurts both sides as the EMD shows how serious the buyer is to purchase the property.
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It hurts the seller because a traditional buyer may not agree to have their money tied up as hard money for 90 days. What if that person no longer wants the house or has something happen where they do not want to buy any houses? They should not be penalized due to unfaithful buyers that run around putting 3-4 offers in and waiting for the first response. This is the one bad apple rule that will eventually ruin the bunch.
Personally, I agree with the hard money model as I get frustrated as a listing agent when a buyer walks (30% of short sales) and I have to restart the whole process again. Some banks do not continue from that point and require the full file to be resubmitted. But let's just say it does continue from that point, the 2nd buyer gets the benefit of not having to wait months and months since the process is already close to the middle or end. Regardless, the EMD issue is going the wrong way. I believe that it is the buyer agents job to make sure the buyer does not place multiple offers. If explained properly, the buyer would not want to risk their EMD or place a low EMD due to fear of losing their deposit. My buyers are all serious so this issue does not exist for me. I do not represent a buyer unless they are serious, so a EMD that is higher and hard does not matter as we are willing to wait regardless. I just hope this issue doesn't pour into the normal deals which can affect the whole process one day.
The moral of my story is to choose a house you like, put a reasonable EMD to show the seller/banks how serious you are, and wait like everyone else does until you get a response. The process for short sales is still 3-6 months so there is no surprise of the length of time it takes. Good things come to those who wait. Happy house hunting.
Posted in Real Estate Post Date 05/14/2016