* This blog post is Part 2 of : Maximizing the Value of Specialization...Understanding Foreclosures & Short Sales. Refer to links below for other blog posts in this series about Effectively Marketing Your Real Estate Skills to Provide Value and Optimize Your Income.
There are many challenges associated with determining the viability of taking a listing which is in trouble with the bank. It is important to assess the implications carefully before proceeding. There are times when it is not possible to be of assistance. However, many situations can be greatly aided by the skills of a properly trained, licensed real estate agent. Here are some suggestions to follow when evaluating a potential listing.
1. Ask to see the Last Payment Slip!
This is incredibly important! Remember the huge number of consumers who have their home SOLD at a sheriff's sale without talking to anybody? (We referred to this phenomenon in Part 1) Well, if you're in their house...they won't be telling you that they haven't paid their mortgage in 4-5 months. I would recommend that along with the survey, appraisal and tax documents...you ask for their most recent mortgage payment statement from the bank.
2. Make Sure You Know How Many Banks are at the Teller Window!.
These days, it is not uncommon to have 2, 3 or even 4 mortgages one property! Assume at least 2 with the financing craze of the last few years. Order a pre-listing package be expedited immediately. Although this will not let you know the current balance on any of the mortgages, at least you can more accurately asses if this home can sell in a normal fashion or determine if you want to expend the energy required to pursue a short sale.
3. Ask to See ALL correspondence received from the bank.
Often, homeowners become overwhelmed. I've been in situations in which important documents were never opened. Sometimes, home owners are confused. They don't fully understand the implications of various documents. Examining copies of recent correspondence gives a more accurate picture of how far the process has transpired and where the home stands with reference to a sheriff sale, foreclosure notice or redemption period.
4. Provide a Complete List of Documents Needed.
Being organized is very important. A tremendous amount of chaos has already ensued to reach this point. As a professional, it is our job NOT to add to this. There are certain documents which will be required for all short sale negotiations. They include items such as a hardship letter, recent bank statements and pay-stubs, authorization letters and an application. Don't wait for banks to ask for them. Inform clients about what they will need in advance.
5. Use SOLD comparables for the CMA
Use ONLY SOLD comparables for the CMA. This is not the time to "test" the market. It is important to make sure that the pricing of a property WILL expedite a sale and not extend an unfortunate situation. Sold comparables are the RESULT of a SUCCESSFUL real estate marketing effort. I always emphasize that when a short sale needs to take place, NOTHING happens until an offer is received. If all the Sold properties are significantly below what is owed on the property, it makes no sense to try to list the property to cover what is owed. The NEXT STEP IS TO...
6. Contact the Bank Prior to Listing.
This last tips has been acquired at the School of Hard Knocks. Contact the bank prior to listing or at least at the beginning of the listing. Believe it or not, some banks seems to like taking houses back! Some banks refuse to acknowledge they made lousy loans even if the evidence is hitting them between the eyes and below the belt at the same time. Although no negotiations will proceed in earnest UNTIL an offer is tendered, it is wise to have your client contact the bank at the BEGINNING of the listing to inform them of what may be required to sell their home. Guage the response at this time...it's unlikely to get better as the process proceeds.
7. Make the Right Connections!
One last piece of advise...Ask to speak to a Loss Mitigation Specialists. Usually, these individuals have a better understanding of the process. Ask the bank to perform an appraisal early to determine the value of the property. This will be the crux of their decision. With this knowledge, the likelihood of making an intelligent decision increases exponentially.
Taking a few precautions and understanding how to advise clients can provide a real estate agent with a highly specialized segment of marketing skills that are appreciated and provide Value to real estate consumers. It can also be an opportunity to assist clients with recouping their hard earned equity and allowing them to move on after a devastating loss. The Value of Helping others in this way is...Priceless!
Other Posts in this series:
#1 Thriving Successfully In Real Estate Through the Holidays...and Beyond!
#2 Marketing To Create Multiple Streams of Income Through the Holidays & Beyond!
#3 Creating Multiple Streams of Income by Dominating Your Local Niche!
#4 Maximizing the Value of Specialization...Understanding Foreclosures & Short Sales (Part 1)
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