Why Short Sales Don't Work - Part Seven

Most banks will not give you an idea what they will take unless they see a contract...we just make sure we have everything prepared and ready to submit...we have a team of attorneys who handles everything now for me so I don't have to even call the bank. They have been doing them for 40 years so I can concentrate on other things...we just closed one in 47 days about 2 months ago...I'm doing one right now but unless we get a contract we can't submit anything...it's not worth it...the package just gets lost in the pile...we saved 2 weeks of mailing by having it ready to go on a minutes notice....I'm just waiting for the offer.

I just put in an offer one eon at the list price, and it was rejected because of there net. My buyers got frustrated and found another home.

Good advice Kathy.  The one thing that really floors me is how long it takes lenders to respond to offers. 

You would think that lenders would be jumping through hoops to get these properties off of their books.     I would have thought that there would be a significantly greater sense of urgency to get these deals done as fast as possible.

I have an offer in with Wellsfargo.  They contacted us because the Buyer signed the contract with her middle initial but the name on the contract did not have an initial.  Then the seller signed the contract with her maiden name and they wanted her divorce decree.

We submitted the offer in the beginning of January still no ratified contract. 

The process is grueling and just down right ridiculous in some cases.  I've started to pass over them when I see them now.  90 day listings are one thing, but Buyer deals going into 90 days?  Forget it!

Endea: Smart girl. Stay clear of them, but if you do have to because the buyer wants the property, make them sign a Buyer's Broker Agreement, so when they get frustrated and want to go looking for another home, they have to still use you.

Short sales are very demanding, time consuming and like many niches, takes a very unique personality. In the short sale specialty, you have to be tough and have a willingness to go beyond the average "call of duty" to fight for your client. Simply put, you just can't take "NO" for an answer so easily--even if it means going all the way up the chain of command and present your case to the President of the company along with concrete, persuasive data to support your point of view. (Yes, I've done this many times :)) I personally love them, as my team and I have been very successful with them, representing a significant percentage in the Charlotte area. It's an excellent way to help contribute to the foreclosure fallout and help those in need. It's also a very lucrative business if you are organized, have systems in place & are able to achieve great results. For example, I personally closed 4 short sale transactions within in the past 27 days. Some agents venture without full knowledge of the process.

Of course, my team has a very effective system with checks and balances that we've learned over the years are a necessity to getting short sales approved. Our average file size consist of 100+ pages. We know where to locate each document and how to process each fax, email, and request we receive.

You are absolutely correct regarding the slow process. The number of days of a short sale average 45-90 days for the bank to approve the submitted offer. However, there are banks that will do them much sooner, especially if they also have less time constraints and less "red tape." But, I find if you educate the Buyer Agents prior to the submission of an offer explaining the process and keeping the agent informed once the offer is submitted (at least once a week), the process can run smoothly. Usually the buyer is willing to wait--especially if the deal is sweet and they are aware of the process! We rather under-promise to overachieve. Here is Charlotte, the average DOM is 120 days, even with the long wait of approval for short sales, we try to price listings accordingly to obtain an offer immediately. As a result, many times we close the property before the 120 day mark!  

As you progress with short sales, you will learn the ratio range banks will allow for their short sale approvals. Equally important, you will begin to make a name for yourself and gain a vote of confidence by banks you frequent---no doubt making it easier for your sellers to get approved! 

Hi Kathy -- Jaclyn presented some great information, and you've presented some useful guidance.  Aren't we fortunate you began this with your post.  I believe the national conversion/success rate with short sales is about 30%, with teams like Jaclyn's (and others I don't have the permission to name) are in the 80% range. It's still the market of the future, I believe, and we're positioned to handle short sales and REOs -- albeit very different transactions, both are essential in today's market.  God bless you!

Terry, Thanks for the kind remarks. It is without a doubt, hard-work---but so is the real estate industry in general. I happen to get into the short sale industry by chance. I was asked and admittedly did not know a thing about short sales. Period. I remember being told, "You were once a teacher right? Then Learn!" So, I took that advice and did what I do best when I want to learn more about a particular subject/area: I educated myself. I ended up taking an out-of state course on short sales---long before short sales were as popular today as a result of the foreclosure fallout. I then applied all I learned into the market and got very lucky with the results. I really pray a lot, hoping that the deal goes through for my clients.   

My goodness, it is really rewarding. At the end of the day, I feel as if I have made a positive contribution to someone in need. Those that we have helped are so kind, grateful and thoughtful. They will never forget us. They close the transaction with dignity and the hope that they will one day be homeowners again. Our job is to never forget them and to inspire them to develop a plan to re-experience homeownership.

My biggest lesson learned is the many circumstances that people encounter, which contributes to a financial hardship. People don't choose to lose their home, or fall behind for the most part. Things happen. A divorce, job loss, illness or death in the family can really wreck havoc on a family. We are really seeing it today because of the economy.  People are making major decisions at the gas pump. Budgets are shortening and folks are having a hard time making it. Elderly on a fixed income are not able to pay for gas. It's sad because it will only get worse. Especially with the price of gas and food surging and home values and wages diving to the lowest depths within our generations.

Terry: National conversion rate of 30%, thats just fine and dandy for part time realtors. But for those of us who have full time real estate careers, and value time and money, I would rather put my time and effort into something with more weight to close than that. It is a business, not a lottery system. I for one will not handle short sales in Florida, when there are more inventory on the market than trying to waste your time, and your clients on banks who are dragging their feet with bureaucracy and incompetence. Just my thoughts on the matter. God Bless

God bless you, Jaclyn -- you've really got the heart for this.  I bet you'd be good at cash for keys as well -- ever done it?

Hi Nicholas -- I know we're using Kathy's post for this communication, but I'm with you.  Thirty percent is very low, so I believe you have to be extremely selective and give down-to-earth counsel to prospective sellers (and buyers) of short sales.  For a time we said, enough is enough with short sales, but I really believe the market forces are driving us to a friendlier short sale market, and we're going to be in it along with our REO niche.  Just my thoughts on the matter.  God bless you!   And Kathy, thanks for the platform time :-)

Nicholas:

Great point. However, if you become really proficient in it, you do really well and the losses significantly decrease. We only lost (1) short sale last year. It wasn't because there was no buyer, it was because the mortgage company really, really thought they could get $10,000 more. Even the assigned REO agent thought they were crazy. By the way---last I checked, the home was still on the market---almost a year later. But you know, that's what makes this profession so exciting. There are so many different specialties and avenues one could take to further enhance his/her practice. You know, according to the media---being a real estate practitioner seems very risky. Equally so, when reading the drop-out rate amongst first year agents, one can become extremely discourage about entering this profession. It goes back to the old 80/20 rule. Eighty percent of all the work is done by only twenty percent of the real estate professionals.

Jaclyn: Absolutely, correct. You need to find your niche, but I still feel banks need to come up with faster turn around times, and make our job much easier. Until that time, I will stick with traditional real estate transactions.  You bring up good points in this post, and the comments are very interesting. We are always learning in this business and I thank you for your post and this platform in which to interact with you and others. God Bless

Terry: We always seem to strike up conversations wherever we go. REO is a different animal, banks go by the BPO and are anxious to more inventory. Short Sales are not the banks inventory, so they act like they are doing the borrower a favor. Maybe things are changing because more and more short sales are coming on the market. We shall see. Blessings and sell, sell, sell.

Trey,  Almost a year later you're brilliant!  There is a way out we just need to work with less distressed properties that are financed through CW/BOA-maybe they'll figure it out when more and more Buyers walk and these properties foreclose and come back on the market at fair market value ready for a qualified Buyer and quick close........