New Policies for Taking Short Sale Listings

By
Real Estate Agent with RE/MAX Advantage Nampa, ID

A Monday morning review lead to New Policies for Taking Short Sale Listings.

Idaho Short SalesThus far, in 2010, I have successfully closed 20 short sale transactions and failed on 11, which ended up going to foreclosure. (These are in addition to my traditional listings/closings.) These 11 that failed to close, really get to me! In times past, I have had an excellent closing ratio for listings. This does not feel good.

So, after reviewing the successes and the failures of my short sale business this morning during my meeting with my team, I came to the conclusion that there are some listings that I should not take.

We discussed each one, and they each have their own unique story, however, there are some basic polices that I think may help me moving forward:

 

             1. Seller has to ABSOLUTELY, have their head in the game!   This means for them to grasp the complete understanding of the process and the potential risks along the way.  I need to have a good understanding of their financial position, beyond the house itself. Are they a candidate for a bankruptcy down the road?

They have to be cooperative in showing, staging, keeping a lockbox and a sign on the property and really, just to have their head in the game! If sellers are too emotional and even depressed about their financial situation, often times they will not persevere through the process.

             2. Evaluate second lien holders.  Following my experience, I know some 2nd lien holders are almost useless in trying to work with, but simply take a look at the junior lien holders and decide a game plan.Idaho Real Estate

             3. Don't take a listing when the foreclosure sale date is less than 2 months out.  Every time I've tried this, it just seems to bite me in the end and we run out of time to process and the bank does not postpone the sale. I cause myself more stress.

             4. Don't follow the bank's pricing.  If the bank gets a BPO or an appraisal and it's significantly different than your evaluation, follow your gut & your expertise, not the bank's price. If it's not selling at "their" price, then obviously the price is wrong.  Work it out through time & petition the valuation if necessary.

             5.  If a borrower is more than 12 months behind, let it go!  Chances are, if the bank hasn't foreclosed by that time, they will either be selling the note/servicing to someone who shortly will.  
                   Check out my earlier post:  Fannie Mae - No Mercy After 12 Months Delinquent!

Now, I understand the bigger picture, or at least for me, is to help these people Avoid Foreclosure and to deliver the option of Idaho Short Sales, but if it only brings about frustration and added stress for everyone, why waste the time for the headache?

This is just a start, I think, to some guidelines I need to have in place to tighten up my closing ratios.

I'm looking for other ideas that you may be using that may help clients and agents across the country with their short sale frustrations!

Please share your thoughts on any of these & feel free to add to the list.  THANK YOU!

 

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Re-Blogged 3 times:

Re-Blogged By Re-Blogged At
  1. Praful Thakkar 10/26/2010 01:20 AM
  2. Don & Valerie Keeton 10/29/2010 09:07 AM
  3. Svetlana Stolyarova 10/30/2010 01:21 PM
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Rainmaker
227,511
Bob Hertzog
Summit Home Consultants - Phoenix, AZ
Designated Broker

Pre-qualifying your seller is critical.  Recently, we started having our sellers agree to pay $300 upon contract acceptance to a third-party processor that organizes/follows up on our short sales.  We will not send their package to the lender until the fee is paid, and we have all required documents.  So far, so good.

October 30, 2010 11:18 AM #33
Ambassador
683,384
Charita Cadenhead
Keller Williams Realty - Birmingham, AL
Serving Jefferson and Shelby Counties (Alabama)

Don for me, I think your #1 stance says it all. Angry, resistant and don't give a damn attitudes are not formulas for a successful short sale.

October 30, 2010 12:09 PM #34
Rainmaker
341,953
Don Wixom
RE/MAX Advantage Nampa, ID - Nampa, ID
"Looking out for your next move..."tm

Ann, yes, I believe Met Life has been the absolute WORST one I have worked with! Ocwen is right behind them. I would have to say Wells Fargo has been my favorite & they seem to be "sharper" people on the other end of the phone.

Broker Bryant, thank you! It would be nice to close them all, but you're right, that's not realistic.

Fernando, thanks for stopping by, you're right about pre-qualifying them!

Michael, thanks for the encouragement!

Brian, that IS the biggest issue, I think. Thanks for reading!

Brian B, thank you! Yes, each one has their own story and they are a case by case situation.

Elizabeth, thanks for the lengthy comment!  :)  I would love to know your thoughts on this, even if they are contrary... I won't be offended. I need to learn more.  I understand they are each on a case-by-case situation.

Bob, the $300 fee sounds pretty harsh, but certainly understandable. How has the reception of that been?

Charita, right on!

October 30, 2010 12:17 PM #35
Rainmaker
80,170
Kimberly Thurm
Koenig & Strey Real Living, Naperville, IL - Naperville, IL
Broker Consultant / Relocation Specialist ABR, CRS, GRI, SFR

Don,  I agree - Seller's have to most definitely be in the game.  You just can not play the game with out them, at least not for very long.  Also it does not work to be dragging them along with you.  It will simply be wasted effort on everyones part.  You just can not save some seller's from themselves.  Great points, thanks!

October 30, 2010 12:38 PM #36
Rainmaker
237,424
Roger Johnson
CENTURY 21 American Homes - Hickory, NC
Realtor - Hickory NC Real Estate

Don, your #1 hit home with me.  I'm now on my second short sale where the seller has vanished!  Now, I have a listing that can't be sold, nor can I legally take it off the market, since the seller isn't around to sign off on the paperwork.

October 30, 2010 01:59 PM #37
Rainmaker
1,511,347
John Novak
Keller Williams Realty The Marketplace - Las Vegas, NV
Henderson, Las Vegas and Summerlin Real Estate

Good ideas here, Don. Agents need to remember that getting the transaction closed is the ultimate goal. That definitely means thoroughly prequalifying distressed sellers.

October 30, 2010 02:23 PM #38
Rainmaker
174,212
Ken Patterson
TPR Properties - Rocklin, CA
Roseville Real Estate, TOP Rocklin Realtor

Nice Post Don!  It isn't getting any easier...  Seller cooperation and "head in the game" mentality can make the ultimate diference for certain.   Good selling!

October 30, 2010 02:43 PM #39
Ambassador
1,231,992
Erica Ramus
Erica Ramus - Ramus Realty Group - Pottsville, PA - Pottsville, PA
MRE, Schuylkill County PA Real Estate

Sometimes the seller starts out cooperative, but as time goes on they either lose hope or get angry and it seems to all fall apart.

October 30, 2010 02:56 PM #40
Rainmaker
509,195
Patricia Aulson
BERKSHIRE HATHAWAY HOME SERVICES Verani Realty NH Real Estate - Exeter, NH
Realtor - Portsmouth NH Homes-Hampton NH Homes

Thanks for the post. All good ideas and comments made here today.

Patricia/Seacoast NH & ME

October 30, 2010 05:28 PM #41
Anonymous
Anonymous
Anonymous

I also run from owners who only focus on how long they can stay in the home, Don. Warning bells that they will reject every offer, so none will ever get to the bank for consideration!

October 30, 2010 05:58 PM #42
Rainer
59,663
Maria Borci
Homes 4 You LLC - Doral, FL
P.A. - ABR, TRC, REO - Doral Kendall FL Real Estate

You're very experienced and yes I love to work with people like you. There are some of our co-workers that they don't realize neither review court dockets to check court sales date and make your time worthless. I check every possible record before making offers. Good Luck,

 

 

October 30, 2010 08:09 PM #43
Rainmaker
1,209,671
Elizabeth Weintraub Sacramento Real Estate Agent, Top 1% of Lyon Agents
Lyon Real Estate - Sacramento, CA
Put 40 years of experience to work for you

Hey Don: OK, it's #3 and #5 that I would not throw out because I've had them close under those circumstances. Obviously, if it's a Wells Fargo portfolio loan or a Fannie Mae deal with 2 months to go before the sale date, I might not take it for the reasons you state. But anybody else, heck yeah. Because the likelihood is I'll get an offer between now and then and the bank will postpone.

As with deals that are 12 months in arrears, I've closed some where the seller hadn't made any payments for 2 years!!! I know, it's insane. But after 12 months, the bank has pretty much figured out that it either takes the short sale or it takes the property because there are no other workable solutions available.

October 30, 2010 08:09 PM #44
Anonymous
Anonymous
Will Wheaton

Don,

Thanks so much for this post. Truer words have never been spoken if the seller is not on board you are the captain of the Titanic.....I just closed on a short sale I have been working on since 11/2008. The only reason I hung on was the seller she was amazing. Every time we lost a buyer she happily cooperated with me to get it back into the system. Without her willingness to cooperate. I NEVER could have seen this though to closing....

 

 

 

 

Will Wheaton

 

October 31, 2010 01:25 PM #45
Rainmaker
383,174
Russell & Tracy Lee Parker
RE/MAX Dallas Suburbs - Wylie, TX
Experienced Broker & Property Managers Since 2006

Thank you for all the great suggestions to save time and frustration. I agree with #32 on the 1 year listing. Nothing worse than getting everything together to learn all is being held up because your listing EXPIRED!!!!

October 31, 2010 09:32 PM #46
Rainmaker
341,953
Don Wixom
RE/MAX Advantage Nampa, ID - Nampa, ID
"Looking out for your next move..."tm

Erica, yes, they often start out cooperative & then get depressed or angry. There's not much you can do about this except stay in close contact & ask them how they are holding up...be their friend!

Irene, yes, if they are just buying time on your marketing dollar and ability to postpone the sale date, that can be a terrible situation!

Maria, great job on your diligence! Not a lot of agents that do that!

Elizabeth, I would agree. I have also had some luck in both of those areas. It just is a slimmer portion of luck & you have to look at each individual situation & also know who the investor, MI company, etc. are.

It sounds like #1 "head in the game" is the main policy everyone likes to stick with the most!

Thanks for reading!

November 02, 2010 10:28 PM #47
Rainer
16,465
Carol Letcher
Desert Properties Realty - Chandler, AZ
Owner/Broker

All good info here...there are some listings I will not absolutely take anymore due to junior lienholders and their ridiculous demands.   Sellers need to be onboard, otherwise we are wasting everyone's time.  Love what I do but we also have to be realistic about expectations.  Great Post Don!

November 02, 2010 11:09 PM #48
Rainmaker
811,858
Lyn Sims
RE/MAX Suburban - Schaumburg IL Real Estate - Northwest Suburbs of Chicago - Schaumburg, IL
Schaumburg Homes

I have to agree with the 2nd lien holders, I have turned down a few that have had odd 2nd liens from the Small Business Admin & Back Child Support Liens.  Good luck getting those guys to negotiate.  As BB says, you can't help everyone, just someone every once in awhile.

I saw this featured in the RE/MAX newsletter, congrats.

November 10, 2010 07:59 PM #49
Rainmaker
341,953
Don Wixom
RE/MAX Advantage Nampa, ID - Nampa, ID
"Looking out for your next move..."tm

Carol, right on!  Thank you!

Lyn, Thank you for reading & for the congrats! This has been fun!

November 12, 2010 12:11 AM #50
Rainmaker
315,240
Dave Halpern
Keller Williams Realty Louisville East (502) 664-7827 - Louisville, KY
Louisville Short Sale Expert

Don,

Very astute list of screening criteria.

One of the perplexing developments is that some short sales that were slam dunks one or two years ago don't work today. Therefore screening criteria need to be revisited periodically.

MI practices, 2nd mortgage practices, doomed loan mod offers from the banks, government programs, all rattle the short sale process and mostly in a negative way for the end consumer who ends up losing the house to foreclosure and for the Realtor who wasted so much time without being able to help.

 

January 10, 2011 12:50 AM #51
Rainmaker
341,953
Don Wixom
RE/MAX Advantage Nampa, ID - Nampa, ID
"Looking out for your next move..."tm

Dave, so true! I am looking at a short sale listing today. I may pass on this tenant-occupied, dirty, out-of-state owner short sale...

January 10, 2011 10:23 PM #52
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Rainmaker
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Don Wixom

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