So my buyers are expected to put earnest money down on your short sale listing and if they back out within 90 days, your sellers get to keep the EMD.
So what about the sellers?
Las Vegas Short Sale Sellers and their agents are expecting buyers to have a little more “skin in the game” in the last year.
This means the sellers may ask a buyer to make their earnest money non-refundable in a certain time frame – usually 60-90 days.
I get it – I really do – it has to be frustrating for a short sale listing agent or seller to continually deal with buyers that walk away from this frustrating type of sale contingency – the Las Vegas Short Sale!
NOW there are no guarantees that the agent will be successful in getting an approval from the lienholder(s) with price, terms and conditions that the sellers will agree upon during that time frame.
I would LOVE to give you 2 examples of instances where my buyer’s earnest money on a short sale escrow or counter was non-refundable in the last year:
This wasn’t really an “escrow” but an offer we put in on a property. These buyers just escaped a 90 day short sale escrow, with absolutely zero movement. They put an offer on another short sale and we get a counter that if they buyers leave the escrow before 90 days after contract date, their earnest money deposit would NOT be refunded. I checked the agent’s stats and saw that he has only closed ONE short sale. I advised my clients to not walk but run away from this home. Home went into foreclosure less than 30 days after we put that offer on the house that was new to the market.
What would my buyers received by making the committment to that contract from the house going into foreclosure? Diddly squat.
Buyer accepts short sale counter offer that their earnest money deposit is non-refundable for 90 days. Buyer patiently waits for 120. Buyer wants the tax credit and with no apparent movement on the short sale and tax credit deadling looming, decides to move on to new construction. Agent whines to me about having short sale approval that very morning that they cancel. What happened to the house after the next contract? It went into foreclosure.
What did my buyers get for making the committment to that contract? Jack Squat.
Time is of the essence for buyers (as well as sellers that may be facing a foreclosure deadline.) If there is no apparent movement in a transaction, the buyer should have the right to move on if they do find something else after a reasonable time frame. It does seem that the best short sale list agents will have SOME sort of movement (not necessarily full approval) within the transaction that should keep the buyer “on the hook” IF they want the property bad enough.
I believe that buyers would be more inclined to make their earnest money deposit refundable IF sellers had skin in the game also. This means that sellers should match the earnest money deposit and if there is no approval in that 90 day time frame or they do not agree to the price, terms or conditions of the lienholder(s) approval of their short sale – the buyer’s would get that money. This would definitely alleviate some of the issues of not getting approvals in a timely manner and the seller controlling the entire transaction. Making sellers put “skin in the game” would get the docs the lienholders need in a more timely manner, assistance to the short sale negotiations and maybe less “gaming of the system” with those that are just doing it because they are trying to live in that home rent free for several more months by selling short.
Oh and the ones that don’t require this extra hoop jumping – those were my successful closes.
At least this is how it would work in my perfect world
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