Top 7 Steps to Increase Your Short Sale Approvals

November 1, 2011 By

There are some things you can do on every short sale to increase the chance of it getting approved.  Check out my personal Top-7 steps to increase your short sale approvals.

NUMBER 7 – Pricing

Set your price at market value, not below.  But quickly adjust pricing as needed every 2 weeks until you get an offer.  You will find market value quickly and be able to detail to the bank the amount of showing or interest at any price point until you finally generated an offer.  Of course consideration on pricing is needed when auction sale dates are pending.

Number 6 – Clean and Organized Short Sale Package

The organization and completeness speak volumes to the negotiator on the other side.  Supplying incomplete and disorganized packages screams to inexperience and open you up to more aggressive negotiations from the bank side.  Make certain to complete and submit all bank specific documents with the original package.  Review it prior making certain all pages needing signatures are signed.  Don’t allow your urgency to ignore the basic requirement to review all the documents for completeness.

NUMBER 5 – Photographs

During negotiations we are always fighting value or the banks version of market value.  Be prepared from the start with photos of damages and needed repairs.  If there is mold photograph it for the bank negotiator.  Use Flickr.com or other to provide a URL link to the photo album to the bank’s negotiator if needed.

NUMBER 4 – Remove the lockbox

If your local jurisdiction allows for it remove the lock-box immediately after you have an offer.  You do not want the bank’s BPO (Broker Price Opinion) agent accessing the home without your notice.  Remember to correct the remarks in the listing to reflect the lack of lock-box access.

NUMBER 3 – Buyer’s Purchase Appraisal

The most solid retort to a bad BPO or bank counter offer is the buyer’s purchase money appraisal.  The negotiator will tell you they won’t use it.  But they will if you push forward and stand your ground.  I have used this more than I can count.  And for those out there thinking “the buyer won’t do it or what if it expires due to the length of the short sale and a new one is needed” I say calm down.  All kidding aside if you are worth your salt as a Realtor you can easily explain the value.  If needed ask the seller to either pay for it or promise via a contract addendum to pay the fee if the short sale does not close.  I personally would not reimburse the fee if the buyer backs out prior to a response from the seller’s bank.

NUMBER 2 – Arrive at the BPO

There are arguments that this is not ethical and I do not agree at all.  I am not suggesting you arrive with the purpose of misdirection or misinformation to the BPO agent.  It is your job to protect your home owner from incompetence of BPO agents from outside the market area of the home or just lack the ability to properly assess the local market.  Arrive with data of your time on market, price changes and data on activity or lack of it.  If you have comparables or other data supporting your price package it all up.  The agent may or may not take it but you should be prepared to supply it.

and NUMBER 1  - Negotiation Support

If you have no experience negotiating short sales do not learn on an unsuspecting home owner.  Hire an experience and trusted negotiation company to help you.  Ask around your office or family and friends.  Interview your options and confirm they are legitimate and can provide proof of their past successes.

Filed Under: Appraisal, BPO, Listing Short Sales, Negotiating

Pre-Negotiate Your Short Sales

October 18, 2011 By

Okay listen up Real Estate agents and Short Sale Negotiators out there.  I find it hard to believe that many of you are NOT running a title search at the start of your short sale.  If needed to be paid up front the home owner should provide that as it typically is very affordable.  I don’t know how many times a home owner has told me the only liens on the home were the two mortgages they have but to find out during the title search that there is an IRS lien or other judgments.

To be successful negotiating short sales you must start with all the facts so you can pre-negotiate and set your case up for success.  In the case of additional liens or judgments found during the title search go ahead and include them on your initial submission to the bank(s).  You would be correct to assume they will counter back or deny them but on some occasions with strong purchase offers they will actually pay them.  Start negotiating with these additional liens quickly so when the final approval comes you are prepared with alternatives if the bank denies them.  While many banks now run their own search to support your claim we find it very useful to provide a copy of the title report to the bank when this happens, highlighting the additional liens or judgments.

We know from our experience that IRS liens are actually easy to deal with and in the state of Virginia our title agent can work with the home owner early on to remove this lien.  If the home is upside down and has no equity removing it is not too hard.  Additionally HOA and Condo Association dues that have not been paid can really add up quickly but can often be negotiated to a lower payoff.  We recently negotiated an $11,000+ past due condo fee down to $3500 and were able to get the buyer to pay for it.  In this instance we had the title report back and knew of the Condo judgment before the contract arrive.  So when the offer came in we approached it and were able to show the value to the buyer in having them prepared to pay it if the short selling bank denied it.  When we came back with needing them to pay $3500 and not needing them to support the full $11,000 they were happy to step up and pay it.

All of this is made so much easier if you take the time and work from the start mapping out a path for success.  If all of this waits to the end I can almost promise you often that deal will fail.  Most often with the buyer leaving the offer and the seller frantically looking for a new offer and a second chance to avoid the auction block.

Filed Under: Liens, Negotiating Tagged With: , ,

Is the 1st Lien Really a Short Sale Situation?

October 10, 2011 By

This one can really cause you problems for no other reason then you did not do the numbers first.  Do NOT send a short sale package to the 1st lien holder if they are not going to be shorted a payoff during the sale.  And yes this happens even in my market where values dropped by 50%.  Make certain you know the estimated payoff for each loan.  Then run your CMA and put together a well thought out net sheet to see the numbers.  What I mean be well thought out is go ahead in your net sheet and assume worse case scenarios like 3% seller concessions, projecting out 6 months or real estate taxes, association fees, etc.

Now when you have completed the above look to see if there is enough to pay off the first.  If there is do NOT send them a short sale package.  In this scenario you are only shorting the 2nd and only the 2nd needs a short sale offer.  Sending a short sale package to the 1st causes problems and confusion on all ends. [Read more...]

Filed Under: Listing Short Sales, Negotiating, Second Liens, Submitting Your Offer Tagged With:

Stress Free Short Sale Negotiations

February 10, 2010 By

Something needs to be done before ‘Short Sale Negotiators’ start to edge out postal employees as the most likely to start  shooting into a large crowd at a local Walmart. Stress levels are high, the bank negotiators seem more focused on finding a way to push the file to the side and delay it than staying productive and getting results. I get that they are busy, hundreds of files each, okay so stop the whining and get the job done already.

Here are my tips to help reduce your stress when negotiating short sales with the banks and for your clients. These tips apply whether you are a 3rd party negotiating for the Realtor or homeowner or if you, as the Realtor are the negotiator.

First I will share with you my two absolute favorite things you need to be aware of.
The first it Pareto’s Principle. Simply stated 80% of your results come from 20% of your actions. But you can flip that around. For our use let’s just say the 80% of your stress and aggravation is coming from the same 20% whether it be recurring events or people you might interact with. So find what they are and remove them (I’ll explain how at the end). [Read more...]

Filed Under: Negotiating Tagged With: ,

Top Five Reasons Short Sales Fail & How to Solve Them

December 21, 2009 By

There are some very specific reasons that short sales fail. Take a look at my Top-Five. I could easily expand this to 10, 15 maybe even 20 but that would be a bit overkill as they all often stem from the same origins.

[Read more...]

Filed Under: Negotiating Tagged With: ,
Next Page »