It is possible in some cases for someone to conduct a short sale without the involvement of real estate agents. However, it is much better for someone considering a short sale to list their property with a licensed agent.
Below are the reasons why sellers of a short sale property should work with an agent:
1. Many banks will only consider a short sale if the property is listed by a licensed agent. The banks know that an agent will be able to market the property on a wide scale. The banks also realize that agents will disclose known defects about the property. Agents will disclose to buyers that the transaction is a potential short sale. Furthermore, many agents will provide guidance to the seller on which offer to accept.
2. Banks like to work with licensed agents because of the reduced potential for mortgage fraud.
3. Licensed agents know about the basic concepts of real estate. Licensees are less likely to commit fraud, as doing so could cause them to lose their license and their livelihood. Many agents are REALTORS®, who are bound by a common Code of Ethics. All agents operate under the guidance of a broker, whose role is to ensure that transactions are conducted effectively, ethically, and legally.
4. Banks prefer to review and approve standardized real estate contracts, which agents typically use. A standardized contract is often worded with protections for buyer and seller. A standardized contract is less likely to contain hidden clauses that may create unfair advantages for the buyer or another party. Non-standard contracts created by auctioneers, attorneys, private buyers, or the sellers themselves may contain provisions (or a lack of provisions) that swing the contract totally in favor of one party.
5. Mortgage lenders may wish to talk with a listing agent about the short sale, with the expectation that the agent would be more credible than the seller. A seller might be too emotional or inexperienced to deal with the bank’s negotiator.
6. Agents will qualify a buyer’s ability to purchase the property. If an owner trying to sell their house themselves enters into a contract with a buyer who is not qualified, then the entire transaction is a waste of time and money.
Many owners of a short sale who have tried to sell their property themselves have found that the bank demands extensive proof that the property has been marketed effectively. Providing such proof may be difficult. Since most mortgage lenders now mandate that the property must be listed with an agent as a condition of considering a short sale, it is not worth the time and money for a seller to attempt to sell the property themselves.
People who try to sell their short sale property on their own may also embroil themselves in legal liability if they fail to properly disclose the short sale nature of the transaction. A seller who unwittingly signs a contract without a short sale disclosure and/or short sale clause may be compelled to sell the house even though a short sale approval is not obtained.
There are some fraudulent buyers and flippers who seek to take advantage of a naïve or unwitting short sale seller. A person trying to commit fraud may be attempting to engineer a transaction whereby the bank is deceived. Some people may attempt to lure the seller into signing over the deed or signing an option to purchase, which clouds the title and forces any end-buyer to pay the deed or option-holder money.
Some people may tell the bank that their low offer is the very best price that the market will bear, only to deliberately conceal the existence of a substantially higher offer in the hopes of collecting the difference. If there were a real estate agent involved in the transaction, he or she may spot the fraudulent activity and alert the seller and perhaps others. the condition of the property. If the house is in a desirable neighborhood and it is in good condition, then the property will likely sell close to fair market value.
