Coaching For Real Estate Agents- Short Sales
In today’s market you are most likely finding sellers who owe more money on their mortgages and home equity loans than what they could get for their house.
It would give you as a Real Estate Agent in your marketplace an edge over agents who do not know how to assist in a short sale. This could be a great niche for you!
Do you know what a short sale is?
When the net proceeds from a sale of a property are less than the mortgage, taxes, real estate commissions and other closing costs and the seller can not or will not come up with the difference you have a short sale.
Just like when people buy cars for zero down and need to trade that car in they find themselves upside down, meaning they owe more on the loan for their car than what the trade in value is.
This same thing happens in the housing market. You may have a seller who is going into foreclosure, a seller who is transferred due to work or someone is getting divorced. These are all reasons that the short sale may be forced to happen.
You can check with a title company even before you take the listing and ask them to do a preliminary HUD closing settlement statement so you can have the numbers correct. The title company can also run a check for you about how much they owe.
Sometimes when you ask the seller he or she will give you the amount for their first mortgage but not for their equity lines. I always ask them for all the loans that may be tied to the house.
Have the sellers write a letter to all his/her lenders giving them permission to talk to you. They will not talk to you unless they have express permission from the seller.
Once you get an offer on the property contact the lender’s loss mitigation department. Do not talk to the people at customer service. They are not trained in this area and they will not approve any offer unless they are collecting all the past due payments, etc.
Gather up the seller’s W-2 forms, a letter of explanation if the seller is unemployed, bank statements, two years of tax returns, and other financial documents relating to income, asset and debt obligations.
You should have the seller write up a hardship letter explaining why he/ she is in this situation and why it is impossible for the seller to pay off the loan in full. Most lenders will require true hardship. If the lender sees the seller has stocks and other assets it is likely the short sale will not be approved.
One thing to be especially aware of is what did the seller say when he got the loan initially. For instance, if the seller obtained a stated income loan stating his assets, it may be a trigger for mortgage fraud if he no longer has those assets, unless he can prove the loss somehow. Just be aware of this.
Most lenders use a formula of what losses they are willing to incur. It is suggested that this figure may vary from 8 % to almost 20% .
It is important for the buyers to understand that the lenders will not give away properties.
It takes two weeks to sixty days to get an approval from the lender to do a short sale.
It is very important for the buyer to understand this process and that this may take time.
Please make sure that if you are the Seller’s Real Estate Agent that you put a clause in the contract stating that the seller does not have to close on the property with this buyer if the lender does not approve the short sale. Otherwise, the seller would still be liable to close and come up with money for the difference.
Doing short sales can be very time consuming. However, it may be a good niche for you since not many Real Estate Agents have the patience to do them nor the knowledge.
E-mail me at Katerinag@bellsouth.net for coaching and consulting information for Real Estate Agents. I am a Realtor and a Business, Career, Health and Personal Coach, Real Estate Business Consultant, trainer and speaker. Yours In Real Estate, Katerina
