How to Win With Short Sales

Short sales are everywhere, and they are not going away. I am always surprised to hear agents say they won’t list or show short sales to their clients, because not only do I think that is a disservice in our industry, but also because I think closing a short sale is one of the most rewarding experiences, and no one – not buyer, seller or agent – is left without a sense of gratitude.

Short sales are scary to many folks because there are no consistent guidelines on how to sell or buy them. Lenders have different policies and deadlines, different systems. But despite the craziness, short sales are not unlike any other challenge that is worthwhile – you just have to know the basics, have an open mind and creative thought process,  and keep one step ahead of the lender and their negotiators.  Here are some basics on how to win with short sales.

1.  Get educated. You need to understand how a short sale works and what is expected of you – no matter whether you are a buyer, seller or agent. Sellers must first educate themselves on all possible options, and understand the ramifications of short sales compared to other options. Don’t ever go into a short sale without learning about the process. Buyers also need to understand the process and be committed to a possible long road to closing.

Similarly, agents who list or sell short sales need to learn how they work, understand timelines and different lender requirements.  For example, Wells Fargo is now denying auction postponements on short sales unless an offer is submitted at least 30 days prior to the auction date. If you are a listing agent and take a short sale with a Wells lien without knowing that, you could be wasting your time, as well as that of the seller and buyer.

2.  Know the law, regulations, and stay on top of changes. It is imperative to understand the laws – both federal and state – and how they apply to distressed properties. You need to understand legal, tax and credit implications. States often have different regulations and programs designed to assist short sellers too, so you definitely need to be well informed. Most importantly, stay on top of things, because they are constantly changing. Distressed property law and regulations are an alphabet soup – HAFA, HARP, HAMP…you need to keep learning.

3.  It takes a village. Short sale acceptance often requires teamwork. Attorneys, tax professionals, negotiators, title and escrow people, debt counselors, and an agent who not only understands the short sale process, but who can be the conductor by keeping the team on track and focused.

4.  Be persistent and bold. The banks will tell you what they want, but you need to be able to negotiate. You must be persistent and not be afraid to push back. It helps to work with a skilled independent negotiator. Short sales are not for the lazy or timid. But don’t let them scare you.

You CAN win with short sales – you just have to know what you are getting into, set expectations correctly, stay educated, and be on top of the situation from the beginning to closing. In the process you will find that helping a seller avoid foreclosure and a buyer to get a great property for a great price, is extremely rewarding.

Do you have questions about short sales? I am the host for monthly short sale seminars sponsored by Shortsaleopedia. The next seminar is Wednesday, February 15, 2012, from 6:00-8:00 at the Encinitas Community Center. You will learn everything you need to know about short sales from a panel of experts – legal, financial, title and escrow officers, short sale negotiators… bring your questions! To sign up click here.