Close Your Short Sale Already!

As we all know, short sales are challenging. Just the initial contact can be difficult to make. There are a few key points to making the Short Sale more appealing to the negotiator on the inside. Here are a few points to keep in mind when working with a Short Sale.

First, have a complete package when submitting to a lender for approval. I don’t mean just an offer. I mean everything they are going to ask from you, preferably, current information. What they will usually ask for is a financial statement, breakdown of liabilities and monthly expenses, recent pay stubs to show they don’t make the income necessary to make the mortgage payment. Recent bank statements to show they don’t have reserves. A very detailed, Hardship letter, bring on the tears on this one; you want them to believe it, a credit report, to show real hardship. Your client has to be behind on more than just the home. Otherwise the lender is going to take it as the owner is just looking to skip on the house debt. Finally, the past two years of W2’s will also be needed. If they clearly show enough income to pay the home and have money in the bank, don’t bother, drop that short sale immediately. Chances are the bank is going to say no to the short sale and offer them a modification, if that. Remember, poor market timing is not hardship.

Second, when you do finally get a contact to negotiate with and you get a fax number. Keep that fax number as your main source of contact with the negotiator. If need be, fax them a cover sheet to follow up on your file. Many times you continue calling the customer service line and asking to speak to the negotiator. Realize that at times, you’re calling some call center in India or another country and they only see a name of the negotiator. They can’t, and usually won’t, be able to patch you through to the negotiator. Your best bet is to fax the negotiator till you get them to email you. Then you’ll have a direct line of contact to the person you want to communicate with. Also, follow up on any fax that you get within 3 to 4 days. You might get the run around about your fax. Push to get the direct fax to the negotiator if you don’t get it initially and remember to always be nice. You can get anything you want if you know how to ask.

Third, when negotiating, be ready to stand up for your commission. Short Sales are more labor intensive. If there was ever a time when you deserve the full six percent commissions, it’s on these files. Per recent guidelines, on Fannie Mae and Freddie Mac mortgages, your six percent commission is non-negotiable. Even when dealing with a non Fannie or Freddie loan, send them a copy of the letter. Chances are that the negotiator you’re dealing with doesn’t know if it’s Fannie or Freddie. We’ve had short sales where we were asked to reduce it and provided them a copy of the letter. Nothing else was mentioned regarding the commission and the full six percent was paid. You can find the letter online, search for it. Also on the Fannie and Freddie websites they have a page where you can find out if the loan is owned by either of them by just putting some property information and your client’s social security. Find out who owns the loan, before you work for less than you’re worth.

Before you turn down another Short Sale, pre-qualify it. Don’t just pass it by and assume it’s a headache. It may be a smaller one than you think and isn’t it a headache anyway to show 50 homes to a buyer. Drive around endlessly for months competing with another 30 buyers for the same REO listing. Wouldn’t you rather do it from the comfort of your office on the phone a few days per week? Do the math, for example, here in Orange County, it takes on the average about 3 to 4 months to put a buyer in escrow and close it. I guarantee you, that if you do the math on hours invested, you’ll realize you’ll spend less time on a well managed, pre-screened, short sale listing.

Charlie Memen is a licensed Real Estate Broker in Orange County California. He currently operates a Non-Franchise Real Estate company and mortgage company. He regularly holds seminars and classes for first time buyers, real estate and mortgage professionals.