Everyday, I receive phone calls and emails from REALTORS® inquiring about the delays in the contracts they’ve presented on properties in foreclosure or an REO. REALTORS® are grounded in the belief that “Time is of the Essence.” This philosophy simply means that REALTORS® and their clients will perform within a time limit specified by a contract or within a reasonable time if there isn’t a specific date for the performance outlined in the contract. I wish that this concept was followed by a world now inundated by loss mitigation specialists and asset managers. I do ask REALTORS® to use empathy and not judgment when dealing with lender employees because they are overwhelmed by the abundance of new foreclosure filings and the fact that some employees are already handling up to 1,200 files.
Real estate is a fast-paced world full of contracts, negotiations, and going to the closing table. Finally, REALTORS® can take a long lunch and a walk in the park because you might have to wait months just to get an executed contract.
To paint a realistic picture, I have a short sale listing that was submitted to the lender via fax and overnight mail on March 7. Three weeks had passed before the lender acknowledged receipt of the short sale package. The lender ordered two Broker’s Price Opinions and informed my client on April 22 that they wouldn’t pay for a survey, termite, zoning certification, water certification, or any outstanding water bills. My client, the attorney, and I have had weekly communications with the lender. On May 1, we received a counter-offer to the contract and the lender wanted a response on or before May 5 and they wanted the purchaser to close by May 31.
Representing the buyer doesn’t make for an easier transaction. I love working with buyers, and I use the skills acquired through the ABR designation courses to attract buyers looking to purchase short sale and REO properties. Distressed properties often have deferred maintenance or have been vandalized. To ensure that clients can close according to the terms of the contract, it’s important to have them preapproved by a purchase-rehab lender.
Taking extra steps won’t guarantee you a smooth deal. One of my clients has been pre-approved and has saved her money to purchase a home where she wants to create sweat equity. We have submitted six contracts over the past two months. On March 22, we submitted a contract for a property in Englewood. I faxed the listing agent twice, emailed her four times, and called a half of dozen times. Six days after submitting the offer, we finally received word that there were other offers (cash) and that the listing agent was waiting on a response from the lender. Much to my dismay on April 21, I received a phone call from the listing agent who stated that the other deal didn’t work out and that she would send me the lender addendums. My client was livid because when we did receive the addendums on April 22, they stated that she needed to sign everything and submit with a cashiers check in 24 hours. She decided not to submit a new offer with the addendums because she felt like she was second choice and she and the lender were on an uneven playing field.
C.O.S.N.O.P (Concentrate on Solutions Not on Problems), now is the time to revisit an old skill set (initial buyer and seller consultation) in order to have a successful transaction. First and foremost, set a realistic time frame for the buyer and the seller before entering into an executed contract. Commissions are negotiable and should be discussed with all parties. Listing agents need to discuss commission with all buyer agents prior to the exception of a contract because commission will be determined by the lender and not the homeowner with whom the REALTOR® has the listing agreement. Buyer agents should draft sales contracts that allow their buyers to cancel the contract if they haven’t received a response by a certain date or they have the right to rescind the offer. Remember, listing agents are waiting just like you. Short sales and REO aren’t for everyone but, patience will be the best skill set to develop if you plan on doing business in this new niche.
Marki Lemons, CRB, CRS, ABR, ABRM, CRMS, MBA, is a member of the C.A.R. Board of Directors and an instructor at the REALTORS® Real Estate School. She is a Certified Residential Broker with Rubloff.
