Short Sales and Real Estate!
I started Real Estate back in July of ’09. I practice all over the Phoenix metropolitan area. I missed the boom and by the time I started two thirds of all realtors left their profession; I actually started my career with a mop in one hand ready to help clean up after the party. Since I started I have had the luxury of only knowing the Foreclosure and Short Sale market. I have made so many calls to banks that AT&T called to see if my phone was stolen. I have put together enough short sale packets that I could give Encyclopedia Britannica a run for shelf space. The biggest opportunity I have found is The Short Sale Process. Love them or hate them short sales will be a huge part of real estate for years to come. Some realtors try to ignore them and others are trying to embrace them but at the end of the day this beast needs to be tamed. There are many different avenues to take when working on a short sale on both the buying side and listing side. For my next few blogs I will dive into different parts of the short sale process. Things to know, processes to learn, and even bank and Realtor edict.
Today I’m going to touch on being an educated Short Sale Buyer’s agent:
Educating yourself will not only save you time, help you make money, but will make you a hero realtor for your clients. Not all short sales were created equal and because of this fact you need to focus on what will close. Please, before you start, fully prepare your clients for the road ahead. Make sure they understand the process and the time it can take (sometimes a half a year) and the overall possibility of being rejected. Now lets begin.
Days on Market & Comparable Properties
If a house has been on the market 60+ days there can be some major timing issues. Most distressed home owners have stopped paying the mortgage completely. A foreclosure will start at 90 days of missed payments. There is no guarantee that a foreclosure will be postponed by the bank while a short sale offer is in review. So tread carefully.
Don’t fall for a teaser rate. If the price seems to good to be true…it is. Always check your comparable properties! If a house is worth $160k market value the bank will not ok an offer at $100k. Many buyer disappoints don’t come from the bank not approving a short sale but are upset about the price it’s approved for. Unfortunately there are good reasons that teaser rates exist. I will touch on these points when I discuss listing a short sale.
Control the searches & Make a lot of calls (Multiple Liens are the enemy)
This seems like Real Estate 101 but you must control the properties your client sees. The internet makes it easy to gather information. Everybody knows just enough to make your job harder. Have a conversation early on why the properties you bring to the table have the best chances of closing. Explain teaser rates, multiple liens (we’ll talk about this in a moment), proper comps, and your 100% commitment to finding the best properties (insert you best selling phrase)! Just make sure you have the reins other wise prepare to defend every property you show.
Now that you have the reins make sure you steer your clients properly. You need to find out the basics on every situation. Before you start calling other agents prepare the questions you need answered
How many offer are they working with?
Simply put: don’t waste your time as a back up.
How many LIENS are on the property?
It’s hard enough asking one bank to forgive debt but multiple banks will be manifold times harder.
What is the hardship?
You are not looking for heart throb story but simply that there is a real one. Divorce, loss of income, medical, etc… The client’s investment home lost to much value doesn’t count. If it’s not legit the bank might not want to play ball leaving your clients disappointed.
Are the HOA payments current?
Not all banks are willing to pay for past dues on HOA’s and that can become a substantial amount for your clients at closing. Also HOA companies can put a lien on a property. They are guaranteed to be paid in a foreclosure not a short sale. They can be a vicious hurdle to over come.
Who are the liens with?
Knowing the bank can open your eyes to a plethora of information. You can research their turn time and amount of successful closes. Knowing if all the liens are with the same bank can sometimes make life easier….not always. At least you have the opportunity to make a more educated pick for your client.
Have you collected and submitted all necessary paperwork for the short sale packet?
This will help gauge how far a long the listing agent is and also show their commitment.
Are they working with a Short Sale Negotiator?
This is a big one. A short sale negotiator can really make the process run smoothly but at a cost. If it is a third party they may take a slice from everyones pie. If the negotiator is another agent from their firm it will most likely be a split only on their side. If they aren’t using a negotiator find out how experienced the agent is.
Will you do a 50% split on what the bank approves?
If you don’t ask don’t expect to receive. Most agents that put 2.5% or less on their listings is because they were burned before. Most agents are willing to split 50%; just have it in writing at some point.
Asking these questions will help you find the best candidates that will close. At the end of the day a property that has no chance of closing was never an actual option.
Article contributed by Justin Botner
Mesa Real Estate