Never assume anything when you are working on a Real Estate Short Sale!

Foreclosing banks lose everything!
By Bob Lachance

If I were to ask you what you thought was one of the biggest causes of short sales failing, what would you guess?  No buyers?  A high BPO or appraisal?  While those challenges can certainly kill a short sale, they usually aren’t the leading causes.  Perhaps the biggest mistake we make occurs when we make assumptions.  It is when we assume that the lender has completed certain tasks when they haven’t.  It is assuming that the buyer knows that it will take anywhere from 2 to 4 months (or longer) to get a response on their offer.

Here are a couple rules to follow on every short sale deal you have:

NO ASSUMPTIONS

Do not assume that a lender has everything that is needed, or that they even see your short sale package, or that they have even set up the file for a short sale, etc…. YOU MUST CALL every couple of days and check on the status.  When you call, ALWAYS verify:

• They do have your package in its entirety
• That it is being reviewed for a short sale and has been assigned to a negotiator/processor
• Whether or not there is a foreclosure sale date scheduled
• That they have your direct phone number and email address as the point of contact

Make sure you also keep your clients (buyers and sellers) updated, in real time, so they don’t hound you every single minute of the day. We use a short sale and loan modification management tool called ManageMyShortSale.com to automatically do that for us.

PROPER EXPECTATIONS: THE SCHOOL OF HARD KNOCKS

It is very important to keep everyone on board from the beginning.  The way to do this is to be sure everyone knows what to expect!  Unfortunately some of these expectations may not be pleasant to the ears of those receiving them, but you must be completely honest and upfront.  If you don’t spill the beans from the beginning, everyone will blame you for failed negotiations.  With full disclosure you will have better cooperation!

Here is a short list of topics to be discussed with Sellers, Buyers, and Real Estate Agents from the start of the short sale process:

1. The real estate agents commission is “contingent to lien holder approval.”
2. The lender may “not allow any seller contributions to closing costs,” although some will.
3. Money “may be needed to satisfy junior liens or assessments” outside of what the primary lien holder may allow (deal specific scenarios).
4. The review process varies by lender and could be very fast.  However, some lenders and loan types can take a very long time (3 to 6 months).
5. The closing date is subject to change. Make sure you have an addendum that will state such.

This is a standard checklist that everyone buying, selling or working on a short sale property should keep on hand.

And this is why it is absolutely critical to explain these facts the minute you start working on a short sale.  Make sure to explain to the listing agent and the seller right away.  If there is an offer on the property already, then make sure you set expectations with the buyer’s agent and buyer immediately as well.  If not, then make sure that each and every buyer that submits an offer is notified of what to expect.

If you don’t adequately inform everyone involved in the short sale as to what they can expect, then you should expect that you will lose buyers left and right, will lose the trust of the agents and attorneys, and experience a seller that stops cooperating with you.  So make sure you paint the picture clearly for everyone, so you can avoid those outcomes and close more deals! For more real estate industry articles and videos visit www.RealEstateBusinessMentors.com or visit www.AskBobLachance.com for any real estate questions.