Minnesota Short Sale FAQs

I will usually get a number of questions from sellers, buyer and agents about Minnesota short sales. In this blog, I’ll pose a few of the questions along with the answers:

Why do short sales take so long

Here’s why they usually take so long ……

1. Lenders are overwhelmed with distress properties. I’ve spoken with some of the large lenders and some have policies in place where they will not add resources (think people, systems etc.) in places where they’re losing money. I know that may not make sense but that’s their choice.
2. If the listing realtor doesn’t submit a complete short package to the lender, the lender contacts the agent and lets them know what’s missing and then kicks it to the bottom of the pile. Inexperienced short sale agents many times don’t submit full packages.

For a more detailed explanation, see the Short Sale Timelines I’ve included on the MLS and talk to your agent.

Why is the seller’s lender asking me (the buyer) to sign extra forms?

Again, there are a couple of reasons. (1) The lenders just had their hands slapped (actually a left hook to the jaw) to the tune of $25 billion for following incorrect procedures. (2) The lenders want you to sign arm’s length forms to show that you and the buyer are not related, there are no side deals going on, etc.

Why do you collect earnest money when an offer is made on the property? I know other agents who collect the money when the bank approves the short sale.

The contract is between buyer and seller. Both the seller and I want to know that the offer is serious and you are willing to wait through the negotiations process. If earnest money is not collected, what prevents a buyer from putting an offer in on another property and cancelling this offer? Then the seller has to start over. So …..no earnest money, no deal.

Why are you charging a negotiation’s fee on some of your files? I don’t want to pay that!

I understand and don’t like to charge it but here are the reasons I do:

1. My job is to help people out of these situations and I can’t meet with them AND be negotiating with lenders. There are not enough hours in the day and I value my sanity. (I usually have 15-20 short sales going on at any one time.)
2. There is nothing in the listing contract that states that negotiating is one of the duties.

Some of my clients will use attorneys to negotiate the short sale but attorneys charge the sellers and usually they don’t have that extra money.

Look at it this way ….. you’re purchasing a home at prices last seen in the 90s at historically low interest rates. These people are losing their home and fortunately their loss is your gain. Also ask your realtor if they’ve ever worked with a “short sale specialist” who doesn’t know what they are doing. Did the deal get done and how long did it take? Finally, if you’re unwilling to pay, it might be best to look for a different property.