Should You Be Doing Short Sales?

Well, it’s been a while since my last post and it’s not because business is down. Au contrere my friends, if you are in real estate and you are NOT doing short sales you are certainly missing out. I have more short sales than I can shake a stick at! Seriously though, to be successful in short sales, it is IMPERATIVE that you know what you are doing (and I mean really know what you are doing, none of this “I’ll learn as I go along” malarkey.)

1. Have a support staff
2. Have expert legal representation, both for you and your sellers
3. Have an “Adapt, improvise, and overcome” attitude

Let me explain why these points are so important for you to be successful:

Know what you are doing

I can’t stress this enough. Short sales are serious business. People’s financial and housing futures are at stake! You owe responsibility to both the seller and the buyer to make this happen. Take a minute to really, really ask yourself; Am I qualified to do this? If there is any doubt whatsoever, then the answer is you are not.Short sales are NOT a real estate issue! They are a banking issue!

Secondly, the issue is liability. More and more states are writing laws governing short sales. Are you familiar with them? Here in Illinois, there are very strict laws, and I have only once ran into a broker that was abiding by them. Now there are Federal rules such as the M.A.R.S. disclosures.  Are you compliant?  If something happens, and someone complains, and it is revealed that you were not legally compliant, you could lose your license or your freedom. Think about that.

Mark my words, the consumer lawsuits against agents will come. If you represent yourself as an “expert” in short sales with minimal or no actual experience or training (these so called certifications are worthless), you open yourself up to liability, because if you don’t get the deal closed, and a seller loses the home through foreclosure, it’s only a matter of time before they start to litigate against the agents who “gave them bad advice or service.” Also, check with your E&O insurance.  Brokers and agents will not like what they hear about coverage regarding short sales.

Have Support Staff

If you are confident in your abilities, you will need to hire a support staff. Knowing how to put together a short sale package is just the beginning. Taking the complete application, gathering documents, opening the file, submitting it to the lender(s), following up, coordinating with attorneys, etc, etc, ETC!!! Unless you have help, or are only working on one or two files at a time, to do this properly, this will simply take all of your time.

Have Expert Legal Representation

This so important, and I see little evidence that the average agent even thinks about this. A good, experienced attorney can make sure that you are legally compliant with any state and Federal laws pertaining to short sales. They are out there, and they can cause you serious problems if you are not compliant. Ignorance of the law is not a defense in court. I require all of my short sale sellers to have an attorney, and if they do not, I will assign them one from my list of experienced attorneys who work well with me and know what is needed for a successful short sale.

This is key for several reasons. One, I ask the attorney for accurate tax, assessment, title, and closing numbers so I can generate a preliminary HUD to send with the short sale submission. This is required by the lender and it is the most important part of the short sale package. Screw up the numbers, and you will join the ranks of agents crying that they closed a deal and never got paid. Second, any correspondence, approval, deficiency request, etc. that you receive from the lender is a legal document. You must have the attorney review and present this information to the seller. If you do it yourself, you run the risk of being accused of practicing law without a license. Many lender approvals contain language and terms that could be harmful to the seller, so let the attorney handle it.

Short sales is problem-solving, wrapped in troubleshooting, smothered in details, and deep fried in creative structuring. You must be ready, willing, and able to counteract every hurdle, lender roadblock, and seller shenanigans that may come your way. It is essential that you keep a positive attitude and not let these “setbacks” set you back. Find a way to overcome the issues. I really do find that there are very, very few deals that I can’t get approved, because I don’t believe in no-win scenarios. I always insist that there must be a way to get this done! And there usually is.

Options

You may be wondering where to turn for help with short sales, and there is certainly no shortage in webinars, books, and courses to buy or attend. Your local REALTOR boards are also jumping into the mix with training, and frankly, most of it is so basic as to give you just enough information to make yourself dangerous. Dangerous to your seller and to yourself. Other courses are mostly there to teach you how to market for short sale leads, and have very little usable practical information. I have seen several courses that advocate techniques that are downright illegal in many states. Anyone can take a three hour course and learn the basics of how to put together a short sale package, but the process is so much more than that. There are so many nuances, guidelines, programs, and tricks to learn, and they all change on a weekly, sometimes hourly basis. So, where do you turn? Start interviewing attorneys and third party negotiators with simple, but direct questions such as:

1. What is your turn time? Any answer that is less than 120 days average and they aren’t being honest.
2. What is your approval ratio? Mine is close to 90%+ theirs should be too.
3. How many have you closed in the last 90 days?
4. Are you legally compliant in (your state)?
5. Do you tie up the property with a fake offer on the property and then try to re market? (Stay away from these, very few are reputable and they open you to liability.)

If you need assistance with a short sale, or just need to ask a question, please contact me and I will do my best to help you. I am currently helping agents with short sales in multiple states, and I will always take the time to help a seller, buyer, agent, or attorney when I can. You can contact me at joe@ssnegotiators.com.

One Responseto “Should You Be Doing Short Sales?”

1. chris says:

   December 20, 2011 at 5:57 pm

   Very well said Joe. All valid, true, and vital points in this post.

   Reply