Setting Expectations

The key for success when listing short sales is 'Setting Expectations"! This goes for everyone involved. At the start it begins with setting your client's expectations. Once you have an offer it continues with setting the expectations for the buyer agent and buyer. If you neglect to get their expectations in line at the start you are going to have problems for sure.

Setting the Seller's Expectations
After you have interviewed the sellers and if they qualify for a short sale set them at ease first. Remember they are not sleeping at night, they wake up in a panic, often they have stopped checking their mail and answering their phone. Some that we have interviewed were afraid they would return home one day and all of their belongings will be in the street. Here is where you step up as their Realtor and let them know you are here to help. Tell them the first thing you want them to do tonight is to have a good nights sleep. Assure them you know what you are doing and while there are no guarantees that they are in good hands.

Have them commit to opening all mail and communicating with you. Explain the foreclosure process for your state. For a list of foreclosure laws and procedures by state click this link. Once you know how late they are you can fit that into your states procedures and let them know where they are today and how that effects their short sale timeline.

If they no longer wish to speak with the bank that is their right. Have them sign a document stating that and that they wish the bank to direct all phone calls to you. Send this to the bank with your 3rd party authorization form.

Explain the time involved. Typically 3 months to close after ratifying a contract on a home with one loan. It could take up to 4 months for a home having 2 loans with different lenders.

As you gain more knowledge and experience you wil come up with some of your own details to cover in order to properly set their expectations. I would suggest putting everything in writing so it can be reviewed and signed off on by the sellers.

Setting the Buyer Agent and Buyer's Expectations
This is a big one. When you are speaking with a buyer agent they are listening closely to you and trying to assess your ability to get this sale to closing. Just like you they don't want to go through a 3-4 month ordeal to end up with no sale. Tell them how often you will update them and know that it is not acceptable to only update them every 3 or 4 weeks. I suggest a weekly update via email if acceptable to them. I know it seems silly to update them only to say you have no new updates but the buyer agent is sitting blind and these light touches via email or phone will keep them confident and they can do the same for their buyer. As you handle more listings you may wish to work a better system to manage your time if you do not have an assistant. Possibly a web site or page where you update the status for the agents to check on directly.

Ask the buyer agent in a respectful manner if they have written on any short sales? Find out what expectations they have set for their buyers. Our local contract has a short sale addendum allowing for all parties to agree how long the buyer will wait for the bank to send a written approval. I suggest all parties agree to at lease 3 months to be safe. If the buyer only wants 1 month I would suggest they are not motivated enough to stay with the sale and you might want to consider your options. For example, if they will only wait 1 month but you want to use this contract as a vehicle to start the process with the banks then go forward. I would also suggest in this case that all parties agree to keep the home ACTIVE for sale. Consult your broker with how to do this. In my area we would just add an addendum to the contract to cover this.

If you set every ones expectations from the start and manage them along the way it gives you more time to work on the negotiations and get to close quicker.