Short Sale Process: Script for the Homeowner
How to handle the short sale process of dealing with distressed sellers and setting up short sales in three (3) steps:
1. Pop the Question
2. Gather Information
3. Set Up a Face-to-Face Meeting
Step #1: Pop the Question
Your first questions in the short sale process are what determine what route you'll take with helping the homeowner solve the problem. The first questions should be:
"What would you like to see happen?"
"What if that plan doesn't work?"
"What are you willing to sacrifice to keep your home?"
"On a scale of 1-10 how bad do you want to keep your home?"
The short sale process begins here if they are interested in selling. In most cases, homeowners who want to sell have either made up their minds that the property is no longer wanted and they simply wish to sell, or they have tried some of the more popular means if solving their problem by either attempting to refinance or selling through a real estate agent. If, on the other hand, they want to keep the house, this is a good place to discuss whatever workout options they may have and help them explore those. Share with the homeowner that they have basically eight (8) options to handle the foreclosure. They are:
· Renegotiate the loan
· Reinstate or redeem the loan
· Give a deed in lieu of foreclosure to the lender
· Seek a legal delay
· File for bankruptcy
· Sell the property
• Do nothing
Other "workout programs" (designed to help the homeowner keep the property) are available but cost the homeowner money that they may not have. For example they can renegotiate their loan but that costs money to get the loan current. If they want to hire an attorney and seek a legal delay, that also costs money. If they have the time they can sell the property, but their debt swells with late charges and penalties.
At this point in the short sale process you can be assured you've demonstrated you know more about the foreclosure process than they can ever hope to know. You've positioned yourself as a trusted adviser, and potentially a solution to the problem. Now it's time to offer a creative solution. Advantages to the short sale for the homeowner:
•· Their credit is only damaged for 2 years instead of 7 years with a foreclosure.
•· They are able to stay in their home "rent free" for an extended amount of time, waiting for the short sale process to take place. This could take anywhere from 45 days to more than 12 months. The homeowner is able to stash cash to get back on their feet once all of this is over.
•· The stress of the situation is relieved. With an experienced team backing them up, they no longer have to live everyday worrying about what they will be doing about their home.
Step #2: Information Gathering
After you determine that the homeowner wishes to dispose of the property, it's time to get the necessary information to begin the short sale process. It begins with the simple question: "Will you be willing to sell the property for what you owe?" If the answer is yes, you keep going. If the answer is no, ask these questions in this order:
· How much above what you owe will you sell for? (Don't be worried about unrealistic numbers. Just accept their number and move on. You won't be able to tell if it's in the ballpark until you've gathered more information).
· What will the house appraise for?
· What repairs does the house need?
· How many payments are you behind?
· What's your interest rate?
· How much are your monthly payments?
· Who's your lender?
· How old is it?
· How long have you lived there?
· Have you made any repairs or updates to the house since you moved into it? (If they've lived there a long time then the answer to repairs is going to be yes, even if they stated no).
· Square footage?
· Does it have a garage?
· Does it have a basement?
· Size of the lot?
· Is the house currently vacant? If not, how soon will you be moving?
· Is the insurance up to date or do you have force placed insurance? (Force placed insurance is placed on the property when the homeowner fails to keep it insured. The lender will then put insurance on it and that insurance is typically two to three times higher than if we got it ourselves).
· Is it listed? Can the listing be canceled? How long have you had the listing?
· When is your foreclosure date?
· Why did you call me? What are your needs? What are you looking to do?
Once you get all of this information, then you set an appointment date and time to go see them. Your purpose on that visit will be to convince them of the good sense of giving you their headache and just leaving the mess behind for you to clean up. In other words you'll get them to complete some paperwork including deeding the house to you, giving you written permission to talk to the lender and commencing the short sale procedure.
Step #3: Have a face-to-face meeting
As you know, nothing in real estate is done on a handshake. If this short sale process is going to happen you'll need to get some paperwork signed. That's the purpose of a face-to-face meeting.
It should be self-evident that putting together all this paper work and getting the proper signatures will require the cooperation of the homeowner. So this first meeting is vital in assessing and establishing that cooperative relationship. Having a plan in mind for this meeting is important.
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