"The year of the Short Sale"
With one out of five borrowers underwater on their home and an estimated 1.5 million foreclosures scheduled for 2011, the opportunity for short sales will be better than ever. Banks usually see a 20-30% better execution price on a short sale versus an REO sale. With the foreclosure volume and current and pending REO inventories, servicers will be pressed to do more short sales in 2011.
I have done a lot of research into how Banks will be handling short sales this year. It is no secret that when short sales first hit the market there was not a lot of knowledge from REALTORS, homeowners or Banks on how to effectively handle a short sale. Learning has been through trial and error. Each bank has different guidelines and these are changing constantly. In this environment it is critical to know what type of deal to take, and how to properly put a short sale package together.
The good news is lenders are making an effort to minimize the time it takes to close the transaction but in return they will be tightening up their guidelines and will expect all of us to abide those rules if we want to be successful.
Here are some rules to consider this year:
Some of the major Banks including Bank of America, Wells Fargo, Chase and Wachovia will be implementing the following:
· There will be no postponements of Trustee Sales and NO extensions of closings on Short Sale approvals past the approval date. They all want to clean out their inventory as quickly as possible.
· Banks have put systems in place to speed up the short sale approvals. Wachovia has cut their paperwork to 13 pages and will send a representative with the agent to meet the seller and will provide an approval within 14 days. They are also paying a 6% commission. (I have a transaction with Wachovia right now and it has been moving faster than most.)
· Do not call them the “lender” – they were the lender when they made the loan but once the homeowner went into default, they became “Debt Settlement Companies” on the loan. This adds a new perspective to the homeowner that feels that they can stay in the property forever without paying.
· They are not paying attorney fees to attorneys that the borrower has hired to fight the foreclosure. If it shows up on the HUD it will be removed.
· They are not paying third party negotiator fees.
· These companies are willing to work with REALTORS who truly have their client and the bank’s best interest in mind.
· They are paying extra attention to offers that are two low.
With these guidelines in place it is important to make sure that we have the following before submitting a short sale:
A) A qualified seller
B) A listing history
C) A qualified and committed buyer
D) A complete short sale package with all applicable documents
E) A solid proposal (HUD)
I believe that short sales are going to be massive this year and with the Banks finally tightening up and creating better systems and incentives, short sales are going to close much faster.
REALTORS, what is in your business plan this year? What are you doing to create a system that will allow you to build your short sale business? How often are you out there prospecting and how do you know if you are taking the listings that are going to be successful and not a waste of your time?
Call us today and let us show you a system that works to help you expand your business and effectively and efficiently close short sale transactions.
(Quote) If you want to get somewhere you have to know where you want to go and how to get there. Then never, never, never give up."
Norman Vincent Peale
LOTUS REALTY GROUP
PROFESSIONAL SHORT SALE NEGOTIATORS
At Lotus Realty Group, helping people ethically succeed is at the forefront of who we are...
Call today to find out how Lotus Realty Group can assist you in closing your short sale transactions or go to WWW.LotusRealtyGroup.com
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