Short sales are thrilling, fulfilling and profitable transactions. In a short sale, the homeowner sells a property for less than what is owed on it. The remainder of the debt is forgiven. This happens because the property is over-mortgaged, the homeowner is insolvent and it’s the lender’s best option.
Negotiating short sales definitely requires expertise. The homeowner and the lender are locked up into an unpleasant situation. The homeowner is unable to pay the mortgage. The lender is not getting paid. The job of the short seller is to positively unravel this awkward situation and be rewarded for it.
The longer it passes, the worse it gets. With time, the debt increases and the property falls in disrepair. As this trend continues, matters only deteriorate further. Sooner or later, the homeowner will lose the property. Very often, the homeowner still owes on the property after the foreclosure. By the time this happens, the creditor will have a great financial loss. The creditor will have a lesser loss the property if sold at the foreclosure sale. If not, the lender will end up owning the property. If this happens, losses will keep growing until the property is sold. It is the expertise of a short seller that provides an amiable solution to this situation.
Short sellers are real estate agents, investors or both. Either way, the set of skills needed for negotiating short sales is basically the same. The difference is in how each make a living. Agents earn commissions. Investors earn by re-sale profit or rental property income.
Here are the top ten tips for succeeding in short sales:
Be knowledgeable. Nothing beats good training. In real estate, the more you learn, the more you earn. In this business, education pays off. Knowing the short sale business allows to quickly assess foreclosure situations and determine whether or not to be involved.
Understand the foreclosure process. The principles of foreclosure are timeless and basically universal. However, foreclosure law varies state to state. Each state has its own foreclosure version. Every short seller must master this.
Know the legal boundaries. There is only so much a short seller can do. Crossing legal boundaries can easily result in judicial problems. This is why the short seller must be very knowledgable about all the local, state and federal regulations of this business. In real estate, the law is most often broken by not being aware, rather than by willful intention. However, the law is not forgiving of ignorance.
Work only with motivated clients. Pre-disposed clients are open to be helped. It is only fair for the client to ask questions and request references. The short seller’s confidence, knowledge and sincerity should be enough to overcome this. However, it is waste of time to have to convince people.
Be helpful, not judgmental. Clients needing a short sale are providing a financial opportunity in exchange for your help. The short seller needs to be grateful to have this chance. Not only that, the moment the short seller passes from being helpful to being judgmental, the business relationship will become strained. Judgmental thoughts negatively affect interactions with clients. Like this, inevitably, attitudes will create problems. Too many problems and the transaction will not close. Incomplete transactions are a waste of time, energy and emotion.
Make sure the client understands the benefits of a short sale. A short sale is always better than a foreclosure. However, this is not always evident to the client. The main benefit of a short sale is reduced credit rating damage. Damaged credit through foreclosure will result in the homeowner having to pay high interest rates for years and years. Not only that, if a short sale is not negotiated, in many instances, the homeowner will remain owing on the home despite no longer owning it. Home equity loans or cash-out second mortgages not fully paid by the foreclosure, remain the homeowner’s responsibility. |
