What makes a Short Sale Negotiator an Expert?

Short sales can be profitable, but many Realtors and investors avoid them.  There are many reasons why they do; however, most are based on rumors and a lack of understanding.  It’s very beneficial to hire a short sale negotiator to save your time.  While good organizational skills, persistence and tenacity are certainly necessary, there are also other key ingredients needed to break through the red tape to get a short sale done in record time.  Whether you are considering taking on short sale negotiation yourself or looking to hire a negotiator, the following is a list of things to consider when making that decision.

BEHIND THE SCENES

 Know the disposition of the property you are selling!

a.             Is there a foreclosure date approaching?  If so, what does it take to get it postponed?

b.             Who are the lenders and investors, and what are their policies?

c.             How many mortgages are on title and are the lenders the same or different?

e.             Is there private mortgage insurance on the loan?  This can make a difference.

f.              Are there liens or judgments on the property?  If so, how will they be resolved so you can close?

 Whether you are a listing agent or buyer’s agent, the answers to these questions are important.  Knowing what has to be accomplished to get the deal to the closing table lets you know what is ahead and allows you to communicate a reasonable timeline expectation to both the sellers and buyers.

 What type of loan does the seller have?  Conventional, FHA or VA?

a.             Conventional sellers may qualify for HAFA (Home Affordable Foreclosure Alternative).  You need to understand the program so you know if they qualify.

b.             FHA Sellers.  Understanding FHA guidelines will let you know if your seller qualifies for the Pre-foreclosure Sale Program or if variance approval will be necessary to get them qualified.

c.             What about VA loans?  How are they different?  Does a VA compromised short sale affect the Veteran’s eligibility or security clearance?

d.             What if your seller does not qualify for any of these programs and has to do a traditional short sale?

 Understanding the different programs and guidelines for the various loan types is critical to the success and timing of the short sale transaction.  Lenders are not always helpful in letting you know exactly what’s needed upfront and learning as you go is painful.

 STARTING GATE

 What is needed to start a short sale?

a.             Whether you are dealing with a traditional short sale, HAFA, FHA Pre-Foreclosure or a VA compromised sale, you need to be familiar with the required paperwork.

b.             Take the time to make sure the paperwork is complete and submit a fully executed short sale package.

 Short sales have two components.  The offer package and the seller’s financial package.  It is important to make sure everything is in order, complete, signed and dated.  The offer must be viable and prove there is a qualified buyer and the financial package must prove a financial hardship.

 FOLLOW THROUGH

 This is where organizational skills, persistence and have tenacity come in.

a.             Make sure you or the negotiator is calling in once or twice a week to follow up on the file to get updates.

b.             If things are not moving forward as they should, the file may need to be escalates to management’s attention.

c.             If additional documentation is needed, get it turned in and then follow up again.

d.             You have to stay on top of the lenders.  They do not stay on top of you and they will cancel the file if you don’t respond.

 Most short sales progress in three to four stages.  1.  Document collection, 2. Valuations, 3. Negotiations/Final Underwriting and 4.  Approval to Close.   It is critical to monitor the short sale file through every stage.  Customarily, each phase takes about 30 days, which makes the typical timeframe about to 90 – 120 days to receive an approval.  An experienced negotiator who understands all the components of a short sale and has experience with the different short sale programs, lenders and investors can easily cut this time down to 60 – 90 days to receive an approval.  This can make or break a deal.  Buyers get impatient.  If the process takes too long, they walk.  It is important to communicate the progress to all parties so expectations stay in check.  There is nothing more frustrating that being on the verge of an approval and the buyer walks!

 The short sale process with many lenders is changing.  The goal is to remove the red tape and shorten the time it takes to push a short sale contract through to approval.  Whether you are listing a short sale or you are on the buyer’s side, knowing the process, paying attention to detail, and being on top of the file at every stage is critical.

 Knowing what you are dealing with in terms of the loan, the lender, the program and having the experience and knowledge of the factors involved and following through on every phase is absolutely necessary for getting the approval and getting the deal to the closing table.

 Negotiating short sales is not for everyone, but for everyone dealing with a short sale, having an expert negotiator on their side makes all the difference in the world.