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There is no
escaping the news about the loss of equity in
the current real estate market. A number
of home owners, roughly 5-7%, are behind on
their mortgage payment. This has prompted
home owners into trying short sale, and has
gotten more agents involved with handling short
sale listings.
There are a
number of factors involved with a short sale,
and our research team has found that while short
sales can be profitable, you must prepare the
right documents, negotiate, and have patients.
Also, we found
that doing a little preliminary work, before
taking on a short sale, can save you lots of
time and money.
This is part
one of our research into "getting the short
sale sold".
Part I -
Does your listing fit the short sale mode
1.
Private Mortgage Insurance (PMI)
- Lenders get paid from insurance
companies when a home carrying PMI goes into
foreclosure. This puts lenders in a
position to not really having to negotiate a
substantial discount. The purpose of PMI
is to reimburse the mortgage lender should the
borrower default on their loan and the
foreclosure sale price is less than the amount
owed to the lender. Therefore you must
consider two things:
a. Since insurance company reimburse
lenders, lenders are in no hurry to short sale
b. Consider working with the insurance company
when PMI is involved
2.
Liens - Does the property have
liens; i.e., home owner dues, tax liens,
medical, judgments, etc. Liens can hold up a
sale. Talk with a title company to see if
there could be some hidden problems.
3.
Mortgage Payments - Is the
seller making mortgage payments while waiting
for the short sale? Lenders may use this
to delay the short sale. Remember PMI (see
#1)? If the lender will be reimbursed by
the insurance company, getting the seller to
pay, keeps revenue flowing into the lender's
coffers and may impact approving a short sale.
While being behind in payment may get the lender
talking to you; agents should obtain the
services of a real estate attorney to discuss
this matter in detail.
4.
Short Sale
CMA - Lenders want realistic
market pricing that is current. Prepare a
comparative market analysis (CMA) that reflects
active, pending and sold listings. Also
include information about substantive market
changes and the reason that the seller cannot
sell their home at a price that can pay off the
lender.
5. Seller
Emotions - Is the seller
committed to going through the process.
Discuss the entire process, including time,
completing documents, providing information and
responding to requests. Depending on how
close the seller is to foreclosure, you should
determine if the seller has time for a short
sale.
The important thing to remember, before getting
started with short sales, is to qualify the
listing for the short sale. Do your home
work and put a system in place that will make
the process easier.
Have your documents prepared and be ready
with alternate pricing and commissions.
Document Management
is a big part of handling short sales; and
it's included with your Realty Broker
Office™. There is
no additional cost for this features.
With Realty Broker Office™ there
are no setup fees, no contract to sign and no
maintenance fees.
And this
isn't
the only extraordinary feature you get.
With Realty Broker Office™ you get the complete
solution to manage and grow your business.
Click
here to view
other features
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