I've been spending a lot of time this week thinking about short sales. My market, Poinciana FL, is going to have a bunch of them this next year so I figure it's time to brush up on my short sale skills to see what I can do to help some folks out.
The first thing I have decided is that I'm going to be very picky with who I work with. My last post touched on that a little. The percentage of getting short sales closed is very, very low. I hear 25% to 30%, if you're lucky.
My goal is to up that number substantially. If I can't close better than 1 in 4, well.....I have better things to do with my time. My target is to close 3 in 4.
So, with that in mind, I will be doing a series of posts sharing my thought process as I try to figure this out. Your suggestions are welcomed.
Here is a rough outline of my thoughts thus far:
The Seller has to have a legitimate hardship.
The Seller has to be motivated to work with me and the Lender in providing all the documentation we'll need to get the job done.
The Seller will need to provide me with full financial information prior to me placing the property on the market i.e. 2 years tax returns, bank statements etc.
I will need a signed "authorization to release info" letter and a hardship letter at time of listing.
The Seller will need to sign a disclosure stating that I have suggested they seek legal advice and that they understand the negative ramifications of being granted a short sale.
And finally, I want to make sure the Seller did NOT purchase the property in a fraudulent manner.
Folks, this last one is very, very important and the one I want to expand upon today. Over the last few years there were many homes purchased using stated income, low doc loans. There were also many homes purchased as "second homes" that were in fact not second homes but properties bought to flip.
Sellers need to understand that even though they didn't have to prove their income when purchasing the home they WILL have to prove it in order to apply for a short sale. If they lied on their initial loan application this can be opening up a big ole' can of worms.
What is the Lender going to say when the Seller provides a tax return for when they bought the property and it doesn't match up with what they "stated" on their application? Have you thought about that? Have you been counseling your potential Sellers about this? If not, you need to start. These folks do NOT qualify for a short sale and could very well be opening themselves up to a fraud investigation by applying for one. They don't need a REALTOR® they need an Attorney.
My point is, a short sale is not for everyone. As REALTORS® we need to do our due diligence prior to taking on a short sale listing. If we can be smart in our approach, to working with short sales, we can surely do better than a 25%-30% closing percentage. I know I plan to.
OK, so that's it for today. Did I give you any food thought? Do you have any suggestions for me? Let's think this through together. I want to do this right so please help if you can.
First post in the series:
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