Real Estate Agents

Is There Future In Short Sales For Agents?

Couple of days ago Road 2 Success, a Real Estate Investing School out of Houston held an education meeting in San Antonio. The guest speakers were a Real Estate Agent specializing in Short Sales, and a Title Company Representative who went in details about the process from the Title Company’s point of view.

First, let me just say that having an Agent talk about Short Sales to Real Estate Investors was not something I would recommend for Agents to do unless they have experience working with Investors!

Are Lenders really Flexible In This Market As Everyone Claims?

I have heard and read online from people who think the current market would drive banks to accept more short sales, and banks would take 50 cents on the dollar to off load their properties.

The reality is that banks are still as strict as before. If you cannot prove to them or make them an offer as good as what it would cost them to sell it as an REO, they are most likely to reject the offer.

Disclosure: I am not an expert in this area, and the following is just my opinion so if you disagree, don’t take it against me

 Some of the reasons I believe banks are not flexible stems from 3 main points:

First, Banks are still waiting on a government bailout package that would save them from the predicament they got themselves into. Some believe that if Fannie and Freddie fold, the government will take them over and dump money into the problem to correct it, which would restore confidence and rebound the market.

Second, Banks believe that holding a non-performing asset is better than cashing it out at a steep discount. If they take the assets back and wait till the market rebound, they could cut their losses and be in better position.

Third, Banks do not want to appear in trouble by dumping their assets at a huge discounts. Those who claim 50 cents on the dollar discounts are more likely referring to short sales mostly in market that took the big hit.

How can Real Estate Agents Benefit From Short Sales?

There are many books on the subject, I would really encourage you to get couple of them and read them. Check out Amazon under Books on short Sales.

 Working the Short Sale market has its benefits. It is much easier to find seller list. Just work the pre-foreclosure list. you can get the list from few resources such as:

• Title Companies would be happy to provide such list. I only know of Texas that is prohibited by law of providing lists, but check with your title company for availability.
• Local pre-foreclosure list sellers, there are companies that sell the list for about $50 per month.
• County Clerk office or website, free… but you need to see if it is worth the time to investigate. for me, it is not when you can just buy it.

There are other sources, you can look them up or read about them in the books you get from Amazon.

The problem with these leads is that they usually do not answer their phone, and some do not read their mail. Door knocking is probably a good idea here, otherwise rely on a good Direct Marketing Campaign. If you pick up couple of deals a month, it would be worth it.

The process is really simple…

1. Once you get a hold of a seller who is in trouble and not enough equity, talk to him about the short sale process and how it is best to short sale it than have a foreclosure on their record. Use your charm, and negotiation power
2. Get a listing agreement that lists the terms of the short sale, and is approved by your broker, for 80% of the market value in the current condition.
3. List the property on the MLS, and DO check the MLS rules on Short Sale listings.
4. When you get a contract on the property, make sure the contract has contingencies and disclosures about the Short Sale process and time line
5. Coordinate with the Title Company to come up with settlement statement and start negotiating with the bank to accept the short sale.

Some may question the 80% offer and weather the banks would accept it. In general, banks accept about 82% of the BPO (Broker Price Opinion) price, sometimes more. Investors usually offer much less to allow for the negotiation process to take its course since banks always tend to counter with higher offer.

If you are a Buyer agent, if a listing it for 80% and it is a short sale, you can always offer much less and start the negotiation process with the lender.

In Conclusion

 Short Sales are just an option, and while you can specialize in them, that does not mean you should ONLY specialize in them.

What you will find out while marketing to Short Sales is that many of the properties do have enough equity to sell without having to short sell them, so you can move them quicker.

Read my other articles on learn how to do a successful marketing campaigns, and you should be fine.

Resources

Amazon’s Books on short Sales. Get couple of them and read them. They have books for Agents and Investors. If budget allows, mix and match them to learn the tricks of both experts.

© 2008 Fadi Zeidan’s Articles.