Real Estate: 10 Strategies for Short Sales (1/2)

Tips for real estate agents:
How to Sell a House When Seller Cannot Pay Off the Bank

Part 1/2

1. TRY TO SAVE THE HOME.
Determine if the sellers have a job with an income that provides a reasonable chance to support the house with a loan modification. Some might say I’m crazy for helping people get them. Yes, I’m crazy like a fox. If I help the homeowners now to save the house, save their credit, keep their kids in the same school, who do you think is their Realtor for life? You won’t make money in the short run, but in the long run you’ll end up with lots of referrals because you put their interests ahead of yours.

2. QUALIFY SELLERS FOR SHORT SALE.
There are specific hardships that must exist for a Short Sale to be an option. Verify that the seller (a) faces financial hardship (b) has no financial reserves, excluding retirement, and (c) is losing ground financially each month and heading toward foreclosure.

3. PREPARE A LETTER OF AUTHORIZATION.
Make sure you have permission to represent the sellers. In the pre-listing appointment phone calls, get the information about their lenders and the loan numbers, so that you can arrive at your first meeting with a letter of authorization for them to sign. Have the borrower/seller in the letter direct the lender to give you the name and contact information for the investor and any mortgage guarantors, too. You want to have the power to negotiate with everyone involved.

4. PUT THE SELLERS TO WORK RIGHT AWAY.
Give them a list of what you need in the Short Sale package and have them collect the items for review during the first listing meeting. Every bank asks for different items, but typically they want the hardship letter, a financial form showing assets and liabilities, two months of bank statements, the last two pay stubs as well as copies of the mortgage statements. If the sellers are self-employed, you may need two years of tax returns. Once everyone signs the listing agreement, you lose the power to walk away if the client isn’t cooperative, so make the Short Sale package information a condition of the listing agreement.

5. DO A TITLE SEARCH UP FRONT.
You need to know what all the problems are as early in the process as possible. In title company states, get a title report, normally provided as a service. In attorney states, have a firm you work with do it, and specify in your offers that this will be the closing attorney. Make sure the attorneys and escrow officers are trained in Short Sales.

Go to Part 2/2