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Short Sales: How to get them through...

By
Real Estate Agent with #FelixtheCoach

So you have a past client call you up asking you for advice...

they can't handle their mortgage any longer and they've depleted their savings trying to keep up with all the bills.  You ask them a series of questions and determine that a short sale would be a good solution.  Now what?

Most real estate agents know the basics or have gone to a Short Sale class held by their association to learn the basics.  We are taught to contact the lender or lenders, get authorization from our clients to talk on their behalf, and list the home for the payoff amount.  BUT...too many of our fellow agents stop right there and just sit back and wait for a contract to come in. 

So what if no one write a contract and the thing goes into foreclosure?  Do you believe you did all you could to help that client out?  I would say not.  Short sales aren't easy and you need a system of somekind.  I have gotten 3 through myself and non of them were easy, but now with a system in place, they're surely not hard. 

I am writing this blog to do two things:

1st to share some tricks of the trade I've learned along the way.

2nd to tell those who don't have short sale experience to stay out of them or to truly seek competent help.

 

Here are the basics to my system:

I show my potential clients that I've gotten these short sales through by providing them my HUD-1's.  This will show an irregular 2nd trust or 1st trust payoff amount that will immediately tell you some debt has been forgiven and the lender was shorted.  I also show potential clients letters and provide them numbers of sellers I've helped through this process.

After they sign a listing with me:

1. I gather necessary documents to provide their lender (hardship letter, income, expenses, tax returns).

2. I get an authorization form signed by the owners on the mortgage so I can speak on their behalf.

3. I tell them the basics, give them articles, and the go over the game plan.

4. I will price the home as I would any home and I pull comps to support my price.

Next, you submit all this to the lender (some want a  contract to accompany this information)

Following up with the lender is where most agents fail.  These loss mitigation managers have HUNDREDS of these files on their desk.  And as blunt as this is, you are simply a file to them.  So you need to be persistant without being a pest.  And you need to stand out in their minds or they will forget about you and your file.  BE NICE!  Most of these telephone operators make less than $10/hr. 

When I have my fellow agents call me on my short sale listings, I tell them everything and leave nothing out.  AT THAT POINT I AM NOT NEGOTIATING WITH THEM, I AM ONLY NEGOTIATING WITH THE BANK.  I disclose as much as my clients allow me to and I explain to them why I believe it to be their best interest.  I often remind agents that my client is not the bank, rather it is the seller.  Then I tell them the seller's goal is just to have a successful short sale completed without coming out of pocket regardless of price and terms from a buyer's agent.  BUT I think too often, buyer's agents are so used to negotiating that they can't help it.  Usually it kills the deals.  The same goes with listing agents who don't tell buyer's agent exactly what's going on.

There are definitely more tricks to the trade, but I will end there.

If you have questions, I am open to answering them.  Please don't think this means contacting me will ALL your short sale questions. If you are in need of help, I am open to helping my fellow agents anywhere in the US for a referral fee. If you are a Virginia agent, I am open to co-brokering any deal 50/50.  I have gotten 3 out of 5 deals and I believe those stats should go up from here.  If you don't know what you're doing, you could put your client into foreclosure.

Often people ask me where I've learned what I know...

I read a lot of real estate articles and with short sales in particular, I sought out agents, investors, and attorneys who have already had success here. 

 

Everyone has their opinions.  Here is mine.  Hope this helps! 

Denise Allen
Resh Realty Group - Chesapeake, VA
Realtor@ Chesapeake, Hampton Roads
I haven't had a short sale yet but one of my sellers is now telling be he can't come up with the $15,000 he was going to need to go to closing.  His wife left him and he is out of state so he is now paying rent and a mortgage on his dime.  I told him to contact the mortgage company but it sounds more like that is what I might want to do.
Jan 23, 2008 08:14 AM
Felix Hung #FelixtheCoach
#FelixtheCoach - Costa Mesa, CA
Helping Agents Through Coaching

Yes, let me know if I can help.  I would be open to teaching you the whole process for a small referral fee.  I hope we can spread the wealth and get more of these through.  I see too many up here go into foreclosure because agents have too much pride to ask for the right help. 

Jan 23, 2008 08:16 AM
Michael Dumas
Future Home Realty - New Port Richey, FL

Short Sales are not easy to deal with- whether from the buyer's side or the seller's side. My partner and I have been involved on both sides with over 10 deals since Jan.1 Here is what we have found.. and at the end, I will share with you THE single MOST important element of a successful short sale.

First, if you are new to short sales- there is a BIG difference between dealing with a bank or mortgage company in a short sale and dealing with them when they are REO (foreclosed homes that are bank owned). You are dealing with two completely different departments and groups of people. And yes, when you are a short sale, you are dealing with departments that are VERY over-loaded. Banks have never experienced the volume of short sales as they are now.

Second. If you are dealing with a buyer or investor looking for a great deal... I suggest you go after REO properties rather than short sale properties. Short sale offers can take weeks, even months to get accepted. With an REO, you can get a reply within 48 hours if the listing agent has done his homework. That is THE BIGGEST PROBLEM with dealing with a short sale as a buyer- most listing agents do no do their homework up front. It is very, very frustrating.

Third, if you take a short sale listing, do your homework up front. Get a hardship letter. Get the buyer to do a financial worksheet, give bank statements, pay stubs, and Tax returns. Do a very, very thorough market analysis. And SHOW closed properties that have short saled or foreclosed. AND ASK THE BANK TO APPROVE IT UP FRONT. Not a sale, just that they are willing to accept a short sale. And prepare them how you will present offers, to whom they go to, what is needed, and how long to expect to wait for a reply.

NOW THE BIG HINT- hook up with a title company that deals with short sales- let them do the leg work for you. You will be surprised how easy they can make the process for everyone. Make sure to get the seller to sign an authorization for the title contact as well. If both the realtor and title contact are preparing the file and communicating to the mortgage holder, you will be surprised how much more professional you appear and how much faster your sale will go through...

 GOOD LUCK!

Feb 22, 2008 11:37 AM