Short Sales for Sellers
The list of short sales is long and growing longer. That means a lot of potential listings. Sure, they might not be as tempting as traditional listings, but as the saying goes, when in Rome, do as the Romans do. When in a tough market, do (and list) what you can.
Not only is the market growing, but also (and contrary to what some say) you can make decent money. In a short sale situation, the bank pays the commission and many are willing to pay close to 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.
Tiffany B. Lachnidt, a certified distressed property expert I know who works in Colorado Springs, Colo., says short sales have proven both lucrative and rewarding for her. She admits they’re challenging and a lot of work but adds, “They’ve taken my business to a level I couldn't have achieved without moving into this market.”
So if you're thinking about entering the short sale market to help sellers, now is as good a time as any to jump in. Here are some tips that might help you get started.
1. Get educated. Lachnidt says that is what has helped her most. “I can't tell you how much there is to know about working on short sales,” she says. “Get a basic knowledge first and that will help make any certification class that much more beneficial.”
2. Focus your marketing. Next get the word out that you’re available to help in short sale situations. “Then tell everyone you know, including other Realtors, that you’re available to help,” Lachnidt says. And keep any general advertising simple. The general public doesn't know a short sale from an egg, so focus on promoting that you can help those in financial trouble and give alternatives to foreclosure instead of trying to explain the details of short sales in an ad. I’ve also heard Foreclosures.com and ForeclosuresDaily.com sell lists and that www.treas.gov/auctions/irs/index.html has properties around the country facing foreclosure. And consider FSBOs -- they may not know the bank pays the commission.
3. Be patient and persistent. As Lachnidt says above, there’s a lot of work and that work often translates into time. For example, a short sale can’t even start until a lender agrees to one. And before that happens, sellers must show proof they can't make their mortgage payments. So financial packages will include W-2 forms, bank statements, tax returns, among other items. And if the seller lost his money betting on horses, don't count on sympathy (or permission for a short sale) from any lender. As you can see, there are plenty of conditions, and some say in your first short sale you’ll probably lose money, but as you go along you’ll get better (and hopefully faster) at handling them.
4. Understand pricing. Banks call the shots when it comes to price, but they often seek your opinion. Usually comps of recent traditional and REO prices will put you in the ballpark, but be prepared to follow the bank's lead, they know what percentage under market value they'll take. Lachnidt says in her market banks are pretty firm on wanting market value for short sales unless they’re in poor condition.
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 email me at Bob@CorcoranCoaching.com and I'll be happy to send it to you.
Let me hear from you. What are you learning about short sales? Have you ventured into that market? If so, how’s it going? Have you uncovered any new ways to tackle short sales? 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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