Darn, not another Short Sale! 

As you sit listening to the too familiar recording on the other end of the line....you hear one more time... Thanks for calling.  Federal law requires that we inform you that we are a debt collector.  Please enter the loan number you are calling about.  You press the number in one more time.  "How many times have I entered these numbers?" you ask yourself.  50 – 75 times and how much closer are you to getting this deal done. 

A page comes through the office intercom.  Oh no it’s for you.  Mrs. Smith is on line one and you know it’s your panic stricken sellers desperately looking for a nugget of hope on the progress of the sale of their home. You look at the blinking line on hold and your stomach starts to tighten and you feel a little sick.  Do you hang up after your 10 minute hold or take the call.  You know they are calling to remind you the auction is only three weeks away, and they want to make sure you are doing everything you can to get this sale closed so they don’t end up with a big fat F on their credit rating.

You decide to stay on hold.  You don’t want to start the wait time over again. As your ‘On-Hold’ session with the lender’s Loss Mitigation Department continues, you start thinking through all the steps you’ve taken to help these folks get their home sold. You start wondering where you might have gone wrong. Even though you’ve done everything the lender has asked of you you’re left wondering if you missed something. Why has this become such a painful experience? There has to be a better way to get the lender to approve this deal. There just has to be!!

Every day there are thousands of hard working, dedicated real estate agents, just like you, that are feeling the same frustrations with their Short Sales. At the same time though, there’s probably an equal number of agents that have taken the time to jump in and learn how to master the process. Like any other niche market, Short Sales have their very own idiosyncrasies, but they can be profitable and rewarding once you understand the basics.

By following these three simple steps you’ll not only close more of your Short Sales but you’ll also find the process a lot more rewarding both professionally and financially.

STEP ONE:  PROVE to the Lender that your Sellers are DESERVING of a Short Payoff.
Convincing a lender that your sellers, their borrowers, are deserving of a Short Payoff is similar to proving credit worthiness in reverse. First you’ll have to establish what catastrophic event took place in your seller’s lives that created their current financial hardship. This is commonly referred to as a ‘Hardship Letter’.  The letter itself should chronicle the chain of events that led them to this point in their lives where they’re no longer able to meet their financial obligations.

You’ll also need to prove to the lender that your sellers have no other resources that they could tap into to pay their mortgage. Be sure to get copies of your seller’s previous tax returns, bank statements, recent pay stubs, a prepared financial statement, and any other collection letters, default notices or past due bills. Keep in mind that unless you prove your sellers are unable to pay their payments the lender will assume they’re able, but unwilling. If you believe your sellers are able and unwilling then you might want to rethink whether or not they’re deserving of your help.

STEP TWO: PROVE to the Lender that the Property is only WORTH what it sold for. 
There’s a reason it’s called a Short Sale and not a Short Maybe.  Lenders don’t deal in the world of make believe. They like facts, figures and proof. They like to know what is, not what might be. So don’t fall victim to one of the most common Loss Mitigation traps out there by asking the Lender what they’ll consider taking as a Short Sale. They might very well give you a number but what good will it do if the market doesn’t agree?

The best approach is this; prove what the house is really worth by simply getting it sold before you start dealing with the lender. Any property can be sold quickly if you know how to price it right. If it’s not sold it’s not priced right. Price it right and it’ll sell.

Then, once you’ve sold it you’ll need to justify the sale price with current, similarly distressed sales in the area. If it helps you’ll want to include a detailed repair list and an agent narrative explaining your local market conditions. There are a dozen ways to prove to a lender that the house won’t fetch a nickel more but understand this; if you don’t deliver the PROOF that it’s only worth what you’ve sold it for you won’t have a deal. No PROOF, no deal.

STEP THREE: PROVE to the Lender that you are COMPETENT in dealing with Short Sales.
Lenders don’t enjoy foreclosing on a defaulted borrower’s property; it’s messy, expensive, and time consuming.  Because of the many legal and practical complexities, lenders will often create entirely separate Loss Mitigation departments to oversee this side of their operation. These Loss Mitigation departments are supposed to do everything possible to minimize the overall losses to the lender.

With the growing avalanche of defaulted mortgages over the past few years, along with the consolidation of so many failed banks, these Loss Mitigation departments are having a hard time keeping up with the growing demand. This has forced most lenders into a massive hiring and training initiative just to keep up. These loss mitigation reps tend to be modestly paid, modestly trained, overwhelmed and over worked and yet these are the same individuals that determine the financial fate of your seller.

The average loss mitigation rep has got two to three hundred other case files staring them in the face and every week they have to decide which ones to give attention to and which to ignore, or send to the back of the line. They are the gatekeeper to the files and they alone decide which ones move up the line and which get ignored. If you, the agent, come across as competent, appreciative, easy to work with, kind (I can’t stress this one enough) and considerate, you increase the odds that you’ll win. On the other hand if you come across as incompetent, your Short Sale will be sent to the back of the line. It’s just that simple.

The best way to prove you are competent is by NOT acting incompetent. Don’t make the mistake of calling the lender and asking if they DO short sales. Do this and you’ll definitely be added to their ever growing list of agents to avoid. Don’t say or ask questions that’ll tip them off that you don’t know what you’re doing or your deal will likely go to the end of the line. And don’t make the most common mistake of sending the requested documents one at a time; it drives them crazy. Take the time necessary and put an ENTIRE Short Sale Packet together. Include anything and everything you can to make the loss mitigation rep’s job a little easier. If not you risk going to the back of the line.

Keep in mind that the lender’s Loss Mitigation representative is looking for any excuse to kick your deal to the back of the line, so don’t give them a reason to do that. Be the professional you’ve always been and focus your energy on helping your sellers the best way possible by getting this deal closed. As long as you’re able to prove your sellers are deserving, the house has sold for the most anyone could ever expect to sell it for, and you’re a competent agent looking out for your seller’s best interest, there’s no reason you won’t be able to get your next Short Sale Listing closed.

Scot Kenkel delivers high impact training programs for agents interested in growing their businesses without going broke.