As real estate agents, there are certain transactions that you’re going to have to deal with from time to time that aren’t as common in the real estate world. Short sales are one of those types of transactions. This week at our Agent First Summit, our guest Nicole Espinosa showed us how to master short sales.
Our Agent First Summits happen every Tuesday morning! It’s a perk for all our real estate group members and any of their guests who want to join us. To get an invitation, RSVP here: Save Your Seat!
In this Summit, we learn all we need to know about navigating short sales to help our clients get the most out of their sales even when in financial trouble.
What Is A Short Sale?
A short sale basically comes down to a seller being forced to sell a home for less than they owe on the mortgage. If a homeowner runs into financial hardship and can no longer make payments on their home, they will need to either foreclose or sell it in a short sale.
In a short sale, the lender (usually a bank) allows the homeowner to sell the home for less than they owe on the mortgage provided that the lender receives the profits. A short sale is beneficial for a seller because it affects their credit and buying potential less than a foreclosure does.
Nicole Espinosa has a nationwide organization that helps sellers with short sales. She is truly the Short Sale Queen and has tons of tips for agents looking to work short sales.
During COVID, the government allowed many homeowners to go into forbearance (stop paying on their mortgage) for a short time. Unfortunately, a forbearance is just a pause. Most homeowners still owe just as much on their homes and may not have the money to pay for it.
As COVID and forbearances end, many homeowners are likely going to be forced into foreclosure or other options like short sales.
Where To Find Short Sales
Once an owner gets months behind on their mortgage payments, they’ll get a notice. You can go online with RedEx or another platform to find homes that are in pre-foreclosure. There you can get contact information to reach out to these distressed homeowners.
Keep in mind that the bank will pay you the commission on a short sale. Bankers are willing to take a loss in a short sale because it saves them more money overall than an actual foreclosure. So, this is a viable real estate niche for real estate agents.
When you find a short sale option, don’t hesitate to do all you can to help the buyer get the most out of their home. Short sales are great for getting loyal clients and referrals since you don’t take money from clients but still provide lots of value.
Questions To Ask Clients
There are a few main questions you should ask as soon as you meet a potential client. These will help you narrow down what you need to do to get them the most help possible.
- Are you in foreclosure? (If so, you’ll have to get in touch with the foreclosure attorney.)
- How many loans do you have–what are your debts?
- Who is on the mortgage? (Consider divorced spouses still on the mortgage, for example.)
Once you get answers to those questions, you can get started on the rest of the process.
How To Complete A Short Sale Transaction
Working with short sales can be challenging, but it is an opportunity to set yourself apart from your competition by offering to help sellers who can’t find help elsewhere. Most sellers in danger of foreclosure have no idea what to do to get the help they need.
Keep in mind that most short sale sellers don’t want to sell their homes at all. Don’t start out by announcing you’re a realtor. Instead, provide support and education to potential clients so they’ll contact you when they’re ready.
A lot of people don’t care about market value and things that you as an agent would care about. Instead of starting with those selling points, listen to the clients to hear their pain points and understand their motivations. Some desire to sell their house, but some also want to keep their house or just need more time before they have to get out.
When you reach out to people, take off your salesperson hat and come from a place of wanting to help. Sellers in pre-foreclosure are getting advice from attorneys, other real estate agents, and lenders that won’t solve the whole problem.
Lenders, for example, will often modify the loan, which ultimately is intended to get them more money. They’ll raise the cost of the home and extend the length of the loan–which will end up costing way more for the homeowners and keep them stuck in a hole of never being able to pay enough.
Attorneys will tell them to file for bankruptcy, which will end up causing more problems. REALTORS® will come at them promising to sell their home, even if that’s not what they want.
Your job as a good REALTOR® is to be the one to navigate the confusion. Educate them about all of their options, explain what the banks and attorneys won’t tell them, and offer as much help as you can.
Once you’ve started working on a short sale, keep focused on providing as much value to the homeowner as possible.
Mastering Short Sales
There is a lot more to the short sale negotiation process. If you still have questions, you should check out Nicole’s website. There, you’ll find YouTube videos, a book on mastering short sales, and courses you can take to learn more about navigating short sales.
Just make sure you keep in mind the importance of focusing on helping your client and providing them with value. When you make that your starting place, mastering short sales could easily become a main source of clients and revenue for your business.
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