Is anyone noticing all the fragmented discussion about Short Sales these days?  There continues to be mass confusion about the whats, whens, whys, hows, and whos of Short Sale transactions.  I want to make something clear and my intention of this post is truly to help everyone who reads it.  As speakers at the 2007, 2008, and 2009 NAR Annual and Midyear Conventions and the upcoming first-ever NAR REALTOR University Webinar Summit, and as a 7-year veteran of being in the trenches building a Short Sale business as a team of licensed Realtors (not investors... totally different ballgame!), there continues to be a very large disconnect between lenders, servicers, note owners, real estate agents, escrow and title officers, and settlement attorneys on the topic of Short Sales.  Here's something interesting.  We verbally surveyed as many Realtors as possible at the recent NAR conventions and discovered that 95% of Realtors think that they control only 0-20% of the outcome of a Short Sale and think the lender, or servicers have majority control (80+%) as to what will happen in their Short Sale transactions.  This perception is every Realtor's first mistake in Short Sales.  Most real estate agents literally are waiting on the lender or servicer to guide or tell them what to do next and this is literally a blind man walking a blind dog, causing massive amounts of confusion and frustration among all parties involved.  First of all, Lenders/servicers and their loss mitigation and customer service reps do not have real estate licenses, therefore, they don't and never will truly know and understand the rules, regulations, and laws that have to be followed by the Listing or Buyer's Agents, especially in accordance to the individual state or area the Agent is located in.  We teach in over 20 states and the individual real estate board and commission rules change from state to state.  Very few states allow for an "offer" to stay an "offer" when submitted to the lender for a Short Sale request.  When a customer service or loss mitigation rep stands firm on wanting a contract before they'll do anything in the SS, they have no idea what this entails from a Listing or Buyer's Agent's perspective. Submitting multiple offers is one thing, and many brokers absolutely prohibit this practice.  Submitting multiple contracts with both the Buyer's and the Seller's signature in place (fully executed, but subject to lender approval), when the subsequent contracts (or offers) aren't even in a backup status can cause serious hemorrhaging to the process.  Let me clarify.  We have never had a lender not require both the Seller's and Buyer's signature on a contract when submitted.  In most states, having both signatures signifies an executed or reatified contract, subject to final lender approval.  If an Agent sends mutliple contracts, they, in most states, are in serious violation of their rules.  By stating that multiple offers are being submitted entails that the Realtor is treating their Short Sale transaction like a dart board, just throwing offers at the lenders like darts, hoping one sticks.  This is bad business and, in many ways, perceived to be highly unethical. One of the reasons why Realtors are required to be involved in these transactions, represented to the lender by a Listing Agreement included in the hardship package, is to procure the best contract that meets the lenders expected net thresholds and determine which contract (HUD attached) will be submitted to the lender. The problem with this scenario is that most Realtors are heavily relying on the lenders to tell them what they need to net, so this further supports why most Realtors think they only control 0-20% of these transactions. To the lenders, the most important thing to them is their bottom line net and if multiple offers (not even executed or ratified) are being submitted, this just confuses all parties in the transaction, especially the many Buyers who are anxiously waiting for a response, when their offer should have never been submitted to the lender in the first place.  Realtors have to submit all offers to their client, but too many Realtors unfortunately think that all offers have to be submitted to the lender or servicer, not just their Seller.

We also know that most Realtors don't know the preferred or required expected net thresholds for the lenders and servicers, based on the type of loan their client has.  Are you aware that working an FHA Short Sale requires you to know 3 unique percentages that the bank must net based on how long the property has been marketed for?  The numbers are only applicable for HUD/FHA Short Sales, AND only following the acceptance of the homeowner into HUD's formal pre-foreclosure sale program, as evidenced by HUD Form 90045.  Are you also aware that going active in MLS just after the listing appointment might be the source of your biggest frustration in your Short Sale?Most Realtors simply don't know how and when to apply the 88%, 86%, and 84% thresholds.  Unfortunately, they run the risk of losing their commission.  Unlike FHA thresholds, the VA and Conventional thresholds are different. 

The CDRS Certification Program teaches Realtors how to apply the unique net thresholds and determine what the MLS list price is, what the bottom line net has to be to all lenders involved, and what the lowest offer can be, as well as a million other unique tips, tricks, strategies, and techniques.  America's Home Rescue also just integrated a new valuation model discussing a 7-year trend on where most BPOs and appraisals come in at on a 0-10 scale, as compared to where Realtors typically value the property, based on both the active and sold comps.  Unfortunately, too many Realtors are submitting contracts (or offers) that will never be accepted to begin with, or that will cause a huge negotiation war with the lender. We’re doing what we can, in conjunction with the National Association of Realtors, as well as other government entities, to clean up what we can.  I swear, it’s like turn the Queen Mary with an oar!

Join us, as well as 5 other industry experts, in the upcoming first-of-its-kind NAR REALTOR University Webinar Summit on September 22!  Become a CDRS Member TODAY and see how much more there is to learn about this topic.  You WILL experience the paradigm shift, other CDRS Members are experiencing, guaranteed!

Short Sale Quiz of the Day:  When do you go active on MLS on your Short Sale listing, based on the type of loan the Seller has?

Michael Spickes

America's Home Rescue

Founder of the CDRS Certification Program

Realtors, take a look at this certification.  You will be absolutely amazed at how much you can learn through this program!  Next classes begin September 2nd, 3rd, and 4th.  Get $100 off for a limited time.

www.CDRSCertified.com

Not an NAR Designation