A “short sale” is when you sell a property for an amount less than what the seller owes the lender, which in majority of the cases is the bank.
It’s a very common thing for sellers to prefer a short sale of a house rather than getting it foreclosed because foreclosure would just kill their credit score, which will make it very tough for them to get a loan for any property anytime soon. However, every short-sale needs to be approved by the lender, which is mostly bank and even experienced real estate licence holders often find it hard to close such transactions.
Agents with successful experiences are preferred when trying to close a short sale in real estate. But all of them had to start somewhere, right? So how do you go about negotiating a short sale and be successful at it? The first thing you need to understand is what makes a short sale work.
A short sale can be successful if all of the following factors are present:
- A willing lender
- Seller with a hardship
- Willing buyer
- A home with no hope
Keeping in mind the above-mentioned factors, I have put together a blog that will help increase your chances of success at short sales.
1. Work Out the Hardship Letter
When your clients are ready to send in their paperwork for a short sale, make sure to go through it with them. It’s not right for you to offer them legal advice because that’s the job of a lawyer, but the least you can do is point out the shortcomings or problems with the contract.
Some of your clients will be anxious about admitting to making a short sale. Make it clear to them, it’s either a short sale or it’s not. When you’re going through the paperwork, you must look for any weaknesses or any signs that might put the bank negotiator at an advantage. Believe me, I have seen people put up not being able to afford ballet lessons for their daughters as an excuse.
I mean, that’s just not right. It won’t work. Bank has no obligations to approve your short sale request or forgive the balance. So whenever your clients are about to send in their short sale package, take a look at all the paperwork, advise them and help make the necessary tweaks.
2. Focus on being Successful
Whenever you’re working on a short sale, never, ever, let the thought of failure cross your mind. Do not lose sight of your goals. If there’s anything that’s going to get in the way, you take care of it first. Make sure you’re ready to ask the hard questions that will get the job done for you.
The success of a short sale in large depends on you, the real estate agent. Are you doing all that you can to be helpful to your clients and get them this deal? The majority of the time your clients would be going through hardship. They would be very vulnerable emotionally and would need your support. In such a scenario, you need to have an optimistic approach, help your clients keep a positive mindset, and stay focused on the goal.
3. Don’t Lose Your Sense Of Humour
Short sales can be frustrating and annoying at the same time. Not many people can handle all of the aggravations involved. Some people just don’t have it in them. However, as an agent, you come across all kinds of individuals, with their own different personalities.
Similarly, when dealing with bank employees during a short sale, it’s very easy to get ticked off. Whenever that’s the case, make sure to think of something funny. Something that will help you keep the calm. It’s always a good idea to keep your sense of humor with you in such cases.
4. Put your Heart Into the Negotiation
During the short sale process, there will come a time when the bank negotiators will give you only two options: Accept the deal or see your application be thrown out. As an agent, you must understand that it’s not set in stone.
There can always be tradeoffs. You need to work with the bank negotiator to put the deal together. But it’s your ability and understanding to know when to hold your ground and when to dial down a little.
5. Be Prepared To Close
After a short sale is approved, you can pat yourself on the back but you’re only halfway there. A real estate short sale is not complete without the whole deal going through. Whenever a short sale gets the approval, there’s a limited window for buyers to complete the transaction.
During this window, they might have to get a loan approved, get all the inspections done – all of the factors that can cut it too close and even make the deal fall out. So as an agent you need to be ready and take care of all such documentation before a short sale gets approved.
If the buyer needs to get a loan approved, ask them to get it pre-approved. I know, it’s a risk, but it’s a calculated one that can help in getting the deal done in time. Once they’re pre-approved, they’d anxiously by ready to jump at the opportunity to make the purchase.