Anyone Can Do a Short Sale

Yes, it’s true, anyone really CAN do a short sale.“secret”. That’s when it will become
But, the real question for any REALTOR consideringclear that you as the real estate agent and your loss
taking on this challenge is “Why would you wantmitigation specialist actually share a symbiotic
to?”relationship -- where you both can thrive, even as you
As a Realtor, surely by now you’ve becomesave banks money, get great deals for buyers, and of
aware of the awesome potential of pre-foreclosurecourse provide a new beginning to your homeowner
short sales in the current real estate market. Withclients!
newspaper articles, internet blogs, and even suchSo how do you get in touch with a Loss Mitigation
heavy-hitters as CNN and CBS touting the benefits ofService Company?
short sales, it’s nearly impossible to go a dayWell, the good news is that the list of companies
without hearing some new claim about how toperforming these functions for agents and
capitalize on this great opportunity. In fact, ifhomeowners continues to grow monthly, and just
you’re like most Real Estate Agents andabout every state will soon have companies standing
Brokers, you’re currently being hit daily withby to help you! Nonetheless, it’s not all a bed of
e-mails and flyers promoting 1 to 3 dayroses; prudence demands due diligence and therefore
“Seminars” which promise to teach youyou should exercise caution when seeking a company
how “anyone” can learn theto handle their short sales because there are a few
“secrets” of doing a short sale. Perhapsscams being run. In the October, 2007 issue of Florida
you’ve even taken the bait and, like countlessRealtor magazine, a number of “foreclosure
other agents looking for an edge, you’vescams” are detailed in the article “Whose
decided to shell out the hundreds and, in some cases,Behind the Smiling Face?” Among them:
thousands of dollars to learn the short sale business1) “…groups of investors calling themselves
from a self-proclaimed “guru”.a ‘Trust Company’…ask the
Again, I ask, “Why?”homeowner to quitclaim their home’s deed to
Have you ever really sat down and consideredthe trust, saying they will negotiate a short sale.”
“what is the return on my investment for all theUnfortunately, some of these groups never do. Instead,
time and effort it takes to do a short sale?” Or“the trust pays off the loan amount at less than
better yet, “am I really growing my business orthe full amount without negotiating with the lender or
am I just spinning my wheels?” And perhapsgetting the lender’s approval, so the lender goes
most importantly of all, “am I really the mostafter the seller for the difference even though they no
qualified person to help my homeowners who need alonger own the home.” (An ethical company is
short sale?”when that, IF they use a trust, it is only AFTER they
Let’s face it, the PROCESS of negotiating aobtain an Approval Letter from ALL lien-holders and
short sale is really quite simple on the surface, and if allthe trust is not activated until the actual closing occurs
goes well, “anyone” really can negotiate ain which the homeowner actually sells their property.
short payoff with a lender. In fact, after you handle aUtilization of a trust prior to closing is merely a way for
few transactions, you might even get very good atan investor to gain control of your homeowner clients
negotiating a deal with the banks. Yet, if you’veand only serves to place your homeowners at the
tried your hand at short sales, then you know that,mercy of the investor. It is the author’s opinion
after all the flowery promises of the guru’s fadethat land trusts are not necessary prior to obtaining an
away, that’s where the rubber meets the roadApproval Letter).
and that’s when you are left to fend for yourself2) Another scam involves the “sale of the home
– battling against a bureaucratic process that isto a straw buyer, who would borrow against the
different with every lender and which can become sohome’s value and pocket the money. The
frustrating that you just want to quit. If you’veoriginal owners were told their payments were brought
been through it, then you know that the short saleup to date, allowed to stay in the home, and were
process can take months. You might question whetherpromised that they’d be able to buy it back from
it’s by design or ineptitude when thethe investor.” Only to later learn that “the
banks’ default and loss mitigation departmentshome’s equity was gone and [they were thus
seem to be toying with you: keeping you and yournow] unable to afford to buy it.” (While a
homeowner stressed out and jumping through hoopspre-foreclosure short sale and owner-leaseback can
the entire time. Did your paperwork get lost? (aagh!)indeed be an effective way to avoid foreclosure and
Were your phone calls not returned? (how rude!) Didgive your homeowners the ability to save their home,
they find your paperwork (hooray!), only to be lose itunfortunately all too often such arrangements are
again (oh no!). Yes, the list goes on and on, and iffraught with fraud. If you or your homeowners are
you’ve tried your hand at short sales, thenapproached by such an offer, be sure get everything
it’s likely you have a few “warin writing (especially the terms of the lease and future
stories” of your own! Surely you’veresale!). Have a real estate attorney review it and thus
experienced the unpleasantness of when yourprotect yourself and your clients. This can work, but
homeowner becomes unhappy with the processyou must ensure that the investor group you are
– thus causing you, the agent, even more stress.working with is both fair and ethical. Do your research
Hopefully, you have NOT been a party to the worst offirst!).
cases – in which the agent may be sued by theSadly, these are just two of the “foreclosure
homeowner if the process fails despite your bestscams” being run today which are plaguing the
efforts! Do you even know how to protect yourselfindustry and giving short sales a bad name.
from this disaster?So, how can you choose the right company?
In the end, you are likely forced to face the questionHere are some tips that might help you when choosing
“Just what is my grand reward IF I’ma Loss Mitigation Firm to partner with:
successful in obtaining a bank approval letter for the1) Ensure that the sole service of the company is Loss
short sale?” Yes, this question is so vital for theMitigation.
real estate agent to understand, that I’ll state it2) See if they have a referral network of other
again a different way, “What’s in it forprofessionals they work with.
me?” You already know the answer, yet you3) Where does the company’s focus lie? Are
may not want to admit it. The fact of the matter isthey just in it for money for themselves (or) are they
that if you as the realtor are successful in negotiating afocused on helping those who really need their help?
short sale, if you spend the 50-100 extra hours of yourAn ethical company will have the desire to make YOU
time to do everything that is required to obtain a shortas the realtor a “Hero to your
payoff Approval Letter, and if you finally complete ahomeowners.” And most importantly of all, the
closing for a short sale, then your payoff is… aprimary mission of the company will be to save
Real Estate Commission! (Or in many cases ahomeowners from foreclosure and get a fresh start in
REDUCED commission!). Yes, if you’velife.
“done short sales”, then you well know that4) Ask the company if there are any other alternatives
for all those dozens of hours of additional time spent,besides a short sale. An ethical company will help you
your reward is…a pay cut! A pay cut? Yes,explore other foreclosure-stopping alternatives besides
it’s true, when you do short sales, it’s veryjust a short sale. (Since these other alternatives likely
likely that the bank will only approve you for a reduceddo NOT involve that company – and thus
commission (a pay cut). And that’s whenwon’t provide an income stream for them
you’ll finally learn the “REAL– if the company overlooks telling you about
SECRET” of short sales for Realtors (the onethese other options, you might want to steer clear).
the guru’s don’t tell you): more work for5) Does the company require your homeowner to
less pay! That’s what Realtors get from doingdeed their house to a trust? If so, why? When? And
short sales.who will be in control of the trust?
So I ask you, does that sound like an effective6) Will the company let you and your homeowner see
strategy towards growing your business?the HUD? Will they tell you exactly how much they
For some readers, the above scenario may seemstand to make or will they tell you “it
alarmingly familiar. For others, the process may sounddepends.” (An ethical company will disclose all
scary. Yet, all is not lost. You can indeed capitalize onfees in advance, will put everything in writing, and will let
the amazing opportunities that short sales have toboth you and your homeowners examine all short sale
offer. There is a better way – a solution to thedocuments at any time).
short sale rat race. Did you know that some agents7) How will the company keep you informed during the
have broken the code to pre-foreclosure saleslong process? Will they give you a way to track your
success? Would YOU like to know their secret?file’s progress as it progresses?
Would it benefit you to know how you can get8) Will the company fight for your homeowner to get
involved in the short sale process and get paid thea Waiver of Deficiency or Satisfaction of Mortgage? If
same amount that you would get paid if you did it onthe homeowner’s lenders don’t agree to
your owns? Would you like to know how this secretsuch a request, then your homeowner could end up still
can actually save you time and effort, and free you upowing the difference between the short sale proceeds
to do what you do best? It’s really not aand the balance of the mortgage(s). The result, your
“secret” at all. It’s just commonhomeowner really didn’t benefit from the short
sense!sale at all!. (An ethical company will make it the
So what is the real SOLUTION to effectivepurchase contract contingent upon all lien-holders
realtor-driven short sales? It’s simple:agreeing to provide a Waiver or Satisfaction. Yes, it
OUTSOURCE the short sale NEGOTIATIONS portionwill make the loss mitigations more difficult for them,
of your growing portfolio of pre-foreclosure listings.but to do anything less would be a disservice to the
Think about it for a minute and you’ll realize thathomeowner).
outsourcing negotiations truly represents a win-win-win9) What kind of guarantee of success will the
for you as the agent, for your homeowner clients, forcompany give you? The fact of the matter is that
the banks, and even for your final buyers. But how dothere is NO GUARANTEE. No company is 100%
you go about outsourcing? The answer is to utilize asuccessful at completing every short sale and if
company that specializes in building, submitting, andsomeone tells you they are ALWAYS successful,
negotiating short sales and take advantage of thethen you should really question them as to how that is
Relationship Leverage which they have built withpossible. The national industry average for short sale
lenders.acceptance is 30-75%. If the company you approach
These so called “Loss Mitigation” specialistsprovides a higher or lower figure than that, they may
are now representing a new concept innot be telling you the truth. (An ethical company will
pre-foreclosure sales. After all, the banks have Lossadmit that there are no guarantees. And a better one
Mitigation Negotiators working on their end; so whywill tell you WHY sometimes deals don’t work
shouldn’t you have such a specialist on yourout and what they are doing differently to continually
team as well? By working with one of theseimprove. The market constantly changes, your loss
negotiation specialists, you’ll be free to act as themitigation company must be able to adapt to the
real estate agent, while your Loss Mitigation Serviceever-changing lender requirements).
Company will handle ALL aspects of Short Sale10) Examine the company’s website. It’s
Processing. It’s important to know that thesehard for a tiger to hide his stripes. When you look at
“Short Sale” companies are not Realtheir website, it will become pretty evident where their
Estate companies, so there is no need to fear losingfocus lies. If they are really about helping others, the
the listing. In addition, the Loss Mitigation organization willsite will be more focused on providing information and
likely get paid their service fee from the lender’ssolutions versus just about making money.
sale proceeds, so you also won’t have to worry11) Ask your gut. When you talk to the
about losing your commission either. Yes, there arecompany’s representatives, how do they make
many benefits to outsourcing your negotiations to ayou feel? Trust your instincts. You’ll know when
professional, but besides saving yourself all the timeyou’re dealing with a scammer or when
and headaches of trying to manage the process onyou’re dealing with a potential valuable partner.
your own, one of the best things you’llThese are just a few of the questions you might ask,
experience is that you’ll be free again toif you interview a company to handle your Loss
concentrate on earning your commissions by doingMitigation negotiations. No matter who you work with,
what YOU do best: marketing, showing, and ultimatelyhopefully you now understand that while it’s true
SELLING your client’s home. And when thisthat “Anyone can do a short sale,”
occurs, when you can actually give your homeownerit’s the smart realtors who don’t “do
clients a fresh start and a way to escape theshort sales” on their own, but instead add a
pressures of mortgage default and potentialNegotiations Specialist to their team to “do”
foreclosure or bankruptcy, that’s whenit for them!
you’ll realize the true worth of this