Doug Patterson ABR®, SFR REALTOR®: The “Accelerator” Offer and the Physics of Short Sales

Sally had a short sale deal--a serious buyer.   Hooray for Sally!  Imaginary confetti for everyone!

Things were moving forward with the bank, but the bank took longer than expected to approve the short sale.  (That happens these days.)  Two months into the process, Sally's serious buyer walked. 

Sally had worked hard.  We had worked hard. 

We all heaved a collective sigh, pretend-vacuumed up the imaginary confetti, and Sally put the house back on the market.

Then, of course, one week after Sally's buyer walked, the bank finally kicked in, and we got the approval letter.  (Insert Expletive Here)  

Here's where the physics of short sales comes in:

Allow me to dip into my high school science for a simple illustration.  I've managed to block out nearly all of it, but I do remember Newton's Law of Inertia that states, A body in motion stays in motion.

Think of a prop plane.  It takes a great deal of hands-on effort to get that front propeller spinning.  However, once it kicks in, that propeller becomes a force to be reckoned with, a major part of what makes that plane take off.

Another part of Newton's law states, A body at rest stays at rest unless acted on by an outside force.  In other words, the bank and your file will just sit there like a lump until acted upon by an outside force.  That force is usually the first buyer.

When you get that first buyer and they start the process, the bank and your file are put into motion.

There are triggers that happen when you finally send that first offer to the bank.  That offer becomes the first downward swipe of the propeller blade that starts that "inert body," the bank, to move, and once that body is in motion, it's not nearly so hard to keep it in motion.  That first buyer did you a big favor.  

So, when you get a second offer, sometimes that file already has a loss mitigator assigned to it.  It's already moving toward the runway, getting ready to lift off.  So, you can just toss that new offer onboard. 

Does it always work just perfectly?  No.  But all that forward movement wasn't wasted.  The next buyer-and there will be one--is going to find the short sale process so much faster for them because that first offer, the "accelerator offer" placed your foot directly on the gas of that short sale. 

Yes, buyers fall out a lot - especially that first buyer.  They walk away because, in their opinion, they've been waiting too long.  This is usually a sign of poor positioning by one or both of the agents in the transaction.  If it takes two months for an approval and the buyer was positioned that it would take two to three months, it is unlikely the buyer would walk away in this time frame.  These poorly positioned buyers are the ones who lose out on the deal.

In the short sale world an agent should expect that the first offer will not likely be the buyer who closes on the sale of the property.  That mental concession alone will help you navigate the disappointment of a buyer walking away.

So, does Sally still have a short sale deal? 

Yes, she does.  Her short sale is still moving forward with everything in place for that moment when the right buyer steps into the deal - a deal which already has bank momentum and is ready for lift off!

Let me give you one final word of advice.  If it takes you too long after the first buyer walks away, some lenders will require you to start the process over.  Here lies the benefit in stacking offers throughout the negotiation process.  If buyer one gets impatient and walks away, you should have buyer two and three waiting in the wings.

Matt Side
Alliance Short Sales
Spokane, Washington
www.AllianceShortSales.com

Follow Me on Twitter:  http://twitter.com/MattSide

Based in Spokane, Washington Alliance Short Sales offers short sale services in multiple states around the U.S.  With a current network of agents located in Washington, California, Idaho, Nevada, Arizona, Florida, Tennessee, and Virginia, Alliance negotiates short sale real estate transactions with lenders on behalf of agents without charging a fee to the agent or the seller.  With their fees paid at closing out of the net proceeds to the lender, Alliance creates a beneficial outcome for all parties involved.  For additional information about how you can work with Alliance Short Sales, please visit our website at www.AllianceShortSales.com.