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The Basics of Short Sales: A Discussion
Since we work together 24/7, we thought it would be fun to create a duo blog. This way we can present a topic from two perspectives, with a masculine and feminine point of view. We get lots of emails and calls from people asking questions about short sales, so we thought our first blog should give an overview of what we think is important.
There is a lot of talk about success rates for short sales, whether they are they worth doing and how should they be structured. Although we can not cover it all in one blog, a few chapters of “The Basics of Short Sales” (essentially a “For Dummies” edition) may offer some insight towards a successful outcome!
Bill: So are we saying only “dummies” should do short sales? Or are we saying even a dummy can do a short sale?
Jackie: I think we’re saying you don’t have to be a rocket scientist to do a short sale. Short sales contain lots of parts and pieces. No two are ever the same, so it’s impossible to lay out a 1,2,3 primer on how to do them. There are however several components that must be in place for every successful short sale.
Bill: I think one reason we’re successful is that we’ve assembled a really good team, with each member playing an important role. We’ve got the Investor, Negotiator, Realtor, Title Company or Attorney and finally the Transactional Lender or private money all doing their part to achieve a successful Short Sale.
Jackie: Don’t forget the birddog who refers the short sale client to us so we can get the process started. We have lots of Realtors that bring us their listings, but we also have birddogs that are actively looking for distressed homeowners and properties to plug into our system.
Bill: Another key part of the process is communication, keeping everyone updated on the progress of the short sale. You can give weekly updates, or you might have an online management system that will actually allow the client and Realtor to log on and check the progress.
Jackie: I agree. You need to build rapport and trust with the client and with the Realtor. If you have done that, then when you need something quickly, they will be quick to respond.
Bill: A good example of that is last Friday, the morning after Thanksgiving, our negotiator emailed that the lender for one of our files wanted a new listing extension, and a letter regarding Social Security benefits ASAP. Because of Jackie’s rapport with the Realtor and client, she was able to get the Realtor in Missouri to quickly draw up a new extension, sign it, and email to Jackie. Jackie then called the client visiting his daughter in California (always be sure to have cell numbers), and at 9AM in the morning, he drove to a nearby office supply store (on Black Friday!), had the documents faxed there, signed the extension, copied the letter Jackie prepared for him and then faxed it back. Two hours after it was requested, it was supplied to the lender. That may make the difference in getting an approval letter next week.
Jackie: Probably the most important advice that I give new investors is: Do your homework! Understand the process! You can’t explain it to a homeowner, title company or end buyer’s lender if you don’t understand it yourself. Know how to look at comps, what questions to ask the homeowner and Realtor, how to read a HUD, how to determine if the short sale will be profitable, and what’s legal and not.
Bill: And finally, we can’t forget disclosure. You will stay out of trouble as long as you disclose, disclose, disclose!
Jackie: I think we’ve given a quick thumbnail sketch of what is involved in successful short sales. In future weeks, we’ll go more deeply into the individual components.
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