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