While there are many specialties you might pursue as a realtor, one that has become very common over the last several years is short sales. Among areas of specialties, short sales can be one of the most frustrating. Here are some tips to help you succeed and train you as a Real estate specialist in working with short sales.
• Get Educated: Nothing can prepare you better for working short sales than education. One of the best is NAR’s Short Sales and Foreclosure Resource (SFR) Certification course. You will come away from the course with a wealth of tips you can apply in working with short sales from both the listing aspects to working with buyers who want to purchase them.
• Stay Informed: Once you earn your Short Sales and Foreclosure Resource (SFR) Certification, you will receive a monthly newsletter filled with helpful tips and industry updates. You will also be invited to participate in periodic webinars to learn about the changes in the world of short sales. It is also critical that you follow social media groups and news feeds from other industry sources to stay informed of this part of our industry.
• Be Honest in Your Counseling Sessions: When you sit down with sellers, they need to know you are a hard worker, but not a miracle worker. You need to build a rapport of trust quickly with them. It is critical they understand that if they withhold information from you, it may be impossible for you to help them. Ask them right out of the gate if they have received a notice of foreclosure or pending “sheriff sale.” They may have called you too late in the process.
• Begin Using a New Term: In this segment of the industry, it is important the consumer understands that they are now part of the housing market that is “lender-mediated.” This would include foreclosures as well as short sales. The seller is not sitting in a position of final veto power now that the bank is involved.
• Expand Your CMA: You will need to do an expanded CMA. The seller will need to know how their property compares to other “lender-mediated” properties, as well as traditional sales. The buyer pool for a short sale will vary greatly.
• Condition: Your seller will be angry and embarrassed that they have found themselves in this situation. Often they might choose to let the house go because they know they are losing their home anyway. Encourage them to maintain the property as best as possible. The higher the dollar they can draw in the market, the easier it will be for the bank to say “yes” later.
• Get Authorization: At listing time, be certain to get authorization from your seller that will allow you to speak to the bank on their behalf. This process will require you to get current financial information from the bank in order to best represent your client. You will need to speak with the bank via phone, email and other ways during the process, and that authorization will be needed.
• Get Good at Keeping a Journal: Whether it be electronic or in paper form, keep a journal which includes copies of all forms and papers throughout the process, as well as logs of emails and phone calls.
• Be Prepared for Anything: You will have surprises around every corner. Whether from the bank, the HOA, the seller or even some other source, surprises will be part of every short sale transaction you do. Remember these are simply bumps in the road that you will have to manage.
• Have Patience: This is not a specialty for those without thick skin. You will be tested with each and every short sale. Everything will take longer than you thought. While you might grow angry, remember to kill them all with kindness because you will be certain to have more success.
Short Sales & Foreclosures Courses
Short Sales and Foreclosure Resource (SFR)
This course looks at how real estate professionals can counsel buyer-clients in the purchase of foreclosure properties.
Fundamentals of Real Estate Auctions
This course provides real estate professionals (as well as buyers and sellers) an overview of the key factors regarding real estate auctions.
Short Sales and Foreclosure Resource (SFR)
This course helps students evaluate all available options for distressed homeowners and identify the components of an effective short-sale package. This course looks at how real estate professionals can counsel buyer-clients in the purchase of foreclosure properties. And as a practical resource, this course shows students how consumers can foreclosure in the future.
Sales training programs help salespeople learn and/or improve their selling technique, skills, and processes. Here are the evaluation criteria to use when picking a sales training program:
• Location: Is training delivered virtually, or will the trainer come to you?
• Length: How will you fit training into your and/or your sales team’s schedule?
• Focus: Does the theme address a challenge you or your reps are facing?
• Price: Can you anticipate the return of the training will be at least 5X its price?
• Intended audience: Are you in the relevant industry, market, or role?
How to Choose a Short Sale Agent
A short sale is too complicated of a transaction to trust to a novice. Don’t make the mistake of choosing an agent simply because he has a flashy website or has taken a couple of short sale classes. Since short sales popped back on the scene in 2005, many agents have decided to pursue the short sale business. Real estate training companies have also capitalized on short sales by offering a ton of training programs for agents and making up their own certifications. However, an agent can’t learn how to be a short sale agent in three hours. So don’t fall victim to choosing a short sale agent solely on credentials because those credentials might be worthless.
How Much Experience Should a Short Sale Agent Have?
Experience is a funny thing. An agent can have 10 years in the business, but it breaks down to one year times 10 if they haven’t closed very many transactions. Maybe a 10-year agent has closed only one or two transactions a year. You could choose a short sale agent who has only five years of experience but perhaps has closed 100 short sales, and you’d be better off. Before you choose a short sale agent, ask about the agent’s track record. Here are some sample questions:
• How many years have you been selling short sales? At a minimum, you’d like an agent who has at least three years of experience or more. Experience is a teacher that no classroom instruction or online short sale seminar can replace. It teaches an agent the pitfalls and how to anticipate and avoid potential problems. It’s even better for you if the agent has experience in real estate apart from short sales.
• How many short sales have you closed? Imagine the knowledge of a short sale agent who has closed one-hundred, five-hundred or more short sales. Those agents most likely already have the short sale packages from every bank on hand and know how each bank operates. These agents also have systems in place that may streamline the short sale process but are also able to give your transaction individual attention.
• Do you see any red flags for my short sale? A short sale agent who has been around the block knows the types of things to warn a seller about. While the agent can’t give legal or tax advice because an agent’s license doesn’t allow such disclosures, an agent should be familiar enough with the possible legal and tax consequences to point out possible problems and tell you where to get the answers.
• What has been my bank’s track record with you? Past performance is no guarantee that you’ll receive the same response from a bank, but it’s an indicator. For example, a Wachovia short sale is every agent’s dream transaction. In fact, if every short sale was a Wachovia short sale, we short sale agents would be drinking champagne all day long.
• Who will negotiate my short sale? Hands down, lawyers are best at negotiation. But typically you will pay a lawyer a separate fee. If you want your short sale agent to handle the negotiation, find out if your agent is outsourcing the negotiation to a third-party vendor. Many third-party vendors are mill houses staffed by so-called loss mitigators who handle hundreds of files and, in fact, might not even be licensed to do so.
• How long will my short sale take to close? This is often the $64,000 question. Some banks are easy to predict and some aren’t. Aurora might be closing short sales in six weeks in the first part of the year but fall to 120 days by year-end. But an agent who is busy closing short sales with Aurora would have a pretty good time estimate.
How Long Does it Usually Take a Short Sale to Go Through?
Financial circumstances can conspire to put just about any homeowner in a box when it comes to paying on a mortgage. It’s bad enough when you owe more on your home than its worth, but having to sell that home for less than what’s owed adds insult to injury. Selling a home for less than is owed on it is called a “short sale.” And aggravatingly, home short sales can take some time to go through.
Short Sale Phases
There are a few different phases when it comes to conducting a short sale on your home. For one, you’ll have to put together a good case for why your lender should approve your short sale request. For another, finding a short sale buyer savvy enough to structure a deal your lender will accept can take some work. Lastly, your lender might unfortunately take several weeks to a couple months to consider your short sale buyer’s purchase offer.
Offer Consideration Periods
Mortgage lenders won’t stay in business for long if they lose money on all their mortgage loans. While mortgage lenders consider short sale buyer offers they’re mulling over the financial upsides and downsides presented by those offers. Generally, mortgage lenders only accept a short sale buyer offer when the offer makes more financial sense than a foreclosure would. Because mortgage lenders want to minimize their losses on home loans they frequently scrutinize short sale buyer offers closely, which takes time.
Short Sale Approvals
Once a mortgage lender finally gets around to approving a short sale buyer’s purchase offer, the closing period is usually very brief. For example, it isn’t uncommon for a mortgage lender to accept a short sale and demand closing within a couple weeks. In some cases, a mortgage lender approving a short sale has wanted to close within a day of offer acceptance. Once your mortgage lender approves your short sale buyer’s purchase offer be ready to close your sale shortly thereafter.
Short Sale Issues
Short sales are sometimes delicate, and lender-accepted purchase offers can be killed by failures to close on time. Keep in mind that your lender might be working on foreclosing your loan even while your short sale is taking place. Mortgage lenders have several different departments involved in their mortgages, including foreclosure departments, collection departments and loss mitigation departments. Sometimes, mortgage lender foreclosure departments try to push mortgage foreclosures while their loss mitigation departments are pushing for short sales.
Managing Short Sales
It’s important that homeowners conducting their already lender-approved short sales stay in communication with those lenders. Short sales aren’t for the novice home seller, and experienced real estate agents are frequently helpful when it comes to conducting them. Also, buyers wanting to submit a short sale offer need to work to put together a comprehensive offer package to convince the mortgage lender to accept it. Managing short sales takes skill, time and patience on the part of sellers and buyers.