Bill Joyce (otherwise known as Sacramento Bill) sent me a link to his full short sale speech after having spotted this reference to it here about a week ago. Here it is:

The seller isn’t the seller. The banks and investors are the parties in charge.

A short sale is a negotiation between borrower and lender (or lenders) and the buyer plays a minor and expendable role. A short sale is about mitigating the loss of a non performing asset (the loan). The sale of the home is one piece of the puzzle. Customer satisfaction and keeping the buyer happy are not priorities in loss mitigation. In fact, I’m not even sure they are considerations.

The buyer & buyer’s agent are isolated from the true authority (Banks/investors) to negotiate, or problem solve. As a result, the buyer is essentially along for the ride and success is based on the seller’s circumstances, skills of the seller’s agent and the willingness of the banks and investors. All out of the buyers control.

The failure rate is high… the odds are, after many months, a home will not be sold as a short sale. While the success rate has been upgraded from horrible to bad, the odds are still against a buyer having a successful short sale purchase.

There is not a great process in place with banks. Call centers are overwhelmed with high call volumes. There are typically multiple banks and investors each with their own and often changing objectives. Combined with an apparent low motivation to complete any particular short sale, you can expect documents to be lost, files get closed without notice and what will feel like an unlimited variety of absurd hurdles. Muddling through best describes the typical short sale.

The seller is in a bad place financially and emotionally. The seller would probably jump at the chance to get the price the buyer is getting and stay in their home. Don’t expect the seller to behave like a typical seller profiting from the sale of their home. Don’t expect gratitude from the seller.

It isn’t all doom and gloom for the potential (if unlikely) short sale buyer, however, as there are a number of things that they can do to better prepare themselves for what’s ahead.

The second and third items seem like particularly good ideas based on our experience.

Avoid Contingent Short Sales labeled “Active Short Cont.” in the MLS as they already have offers submitted to the bank…your chances for success with these ranges from highly unlike to remote

Interview seller’s agent on a property you are interested in

Be prepared for a bumpy ride

Keep your options and schedule flexible

Don’t fall in love with a short sale

Be careful what you wish for…you might just get it.

Don’t expect much effort or expense from the seller to make the buyer’s move easier or better (like repairs, or leaving the house particularly clean)

As noted here previously (see link above), if the listing agent doesn’t know what they are doing or they are prone to blow smoke up peoples’ you-know-what, that’s a good thing to know early on because he/she is a key part of the process and your chances of success are greatly diminished without some minimum level of competence and honesty on their part.