Short Sales -- The Pros and Cons
Ever since the since the real estate market turned soft, I have had many of my clients ask me about entering the short sales market. No doubt, it's tempting. Short sales have grown faster than a puppy in a dog food factory. And they continue to swell.
I know many Realtors who have included this market in their portfolio of real estate services, and a good chunk of them have added some good money to their bottom line by doing so.
But like most things in life, there are pros and cons. If you're thinking about stepping into the short sale world, please take a minute to consider the pros and cons.
1. As I mentioned, the market is there and growing. Some estimate the number of short sales waiting to hit the market in the next 12 months is well into the millions. So if you're not making money in the traditional market (or you’re looking to boost what you’re making), the business is there for the taking.
2. You can make decent money, contrary to what some say. Yes, a few banks look to Realtor commissions as a quick place to save some money, but many lenders are willing to pay close to – if not complete – full commissions. And make no mistake, banks want as much for the house as they can get, and they often seek a price close to comparables in the area.
3. Education (and even certification) is available for distressed properties. NAR has the “short sale and foreclosure resource” certification (SFR) that’s designed specifically for real estate professionals at all experience levels .
It covers how to direct distressed sellers to finance, tax, and legal professionals, qualify sellers for short sales, develop a short-sale package, negotiate with lenders, tap into buyer demand and even safeguard your commission and more. Two more options include the Certified Distressed Property Experts (CDPE) www.cdpe.com and Five Start Institute. www.FiveStarInstitute.com.
1. It can be (and often is) a slow process that takes more patience than many Realtors have. Sometimes it takes a couple of months just to get approval for a short sale. And short sales require financial packages that include many documents (W-2 forms from employers, bank statements, tax returns, to name a few) and if just one document isn't prepared properly, it can kill the whole deal instantly.
2. Even though you're truly helping people who need your services – primarily you’re saving them from foreclosure and they're often extraordinarily grateful for the help – you can be seen as a business person who is capitalizing on others' misfortune. If you can accept that, I say fine.
3. There's plenty to learn (hence the training that’s often needed that I mentioned above). Short sales can be extraordinarily complex and sometimes they border on just plain difficult. Short sales, for example, require a high level of knowledge about the inner workings of these deals.
If you are considering short sales, I have a free “seller interview” form that shares questions you can ask a seller who’s considering a short sale: simply e-mail me at Bob@CorcoranCoaching.com and I’ll be happy to send it to you.
Let me hear from you. What are your thoughts – good and bad – about short sales? Are you moving into short sales? How’s it going? Have you developed a new approach to this thriving market? Or, have you opted not to add this area to your services? If not, why? Please share any comments or questions you have about this article. Send me an e-mail at Bob@CorcoranCoaching.com.
Bob Corcoran is a nationally recognized speaker and author who is founder and president of Corcoran Consulting Inc. (CorcoranCoaching.com, 800-957-8353), an international consulting and coaching company that specializes in performance coaching and the implementation of sound business systems into the residential or commercial broker or agent’s existing practice.
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