I’m excited to talk with you about the lesson today to determine a good and bad short sale candidate.
I am going to do my best to send you a new step every day or every other day.
Some of the lessons are longer than others. The important thing to remember is getting the understanding on how the process will work and then taking massive action to implement them inside your business.
Alright… let’s get to the first lesson
Lesson 1: What is the difference between a good or bad short sale candidate?
Did you know that not all short sale candidates are created equal? They are not. In fact, you can waste a lot of time on dead beat sellers that care less whether or not you can help them. You want to stay as far away from those people as possible. If they don’t recognize you throwing the life saver for them to grab on and work with the solutions you provide, move on. There are too many others out there that are SCREAMING for your help. They are in need of your specialized knowledge to help quickly liquidate their property. They either do not have time or knowledge on how to successfully get a bank/lender to accept a short sale on their property. Most of the time they are approaching or in foreclosure so the clock is ticking and they need to work quickly before the property is sold at the sheriff auction. This is where your knowledge is applied.
Did you know that not all short sale candidates are created equal? They are not. In fact, you can waste a lot of time on dead beat sellers that care less whether or not you can help them. You want to stay as far away from those people as possible. If they don’t recognize you throwing the life saver for them to grab on and work with the solutions you provide, move on. There are too many others out there that are SCREAMING for your help. They are in need of your specialized knowledge to help quickly liquidate their property. They either do not have time or knowledge on how to successfully get a bank/lender to accept a short sale on their property. Most of the time they are approaching or in foreclosure so the clock is ticking and they need to work quickly before the property is sold at the sheriff auction. This is where your knowledge is applied.
When distressed homeowners work with you they get peace of mind that someone is taking the ball and running with it to help them sell their house and avoid a completed foreclosure. This can have big benefits for the homeowner. A completed foreclosure compared to a short sale appearing as a “paid as agreed” on the homeowner’s credit can save them 2-3 years from reestablishing good credit. That’s a LONG time. Not to mention that you are buying them more time to find a place to move because you will be postponing the sheriff sale while the short sale is being reviewed for approval.
Does it make better sense now?
Why doesn’t the homeowner just list the property with a Realtor? There are many reasons but the two that stick out the most are..
1. Many Realtors are not experienced in successfully completing a short sale
2. Realtors want to get paid a commission and short sales home have ZERO equity. That means Realtor has to get the LENDER to pay their commissions. They don’t like risking that, so they usually shy away from homeowners without suffice equity to pay their commissions.
Which Deals Should You Pursue?
It is important that you do not waste your time with unwilling or unmotivated homeowners/sellers. They must be ready to leave the house for you to assist them with a short sale strategy. You cannot help all homeowner’s in or approaching foreclosure. You can only help those that will be in complete compliance to your requests. You did not cause the homeowner to be in a hardship. If the short sale does not get accepted the homeowner is in no worse of a situation than before they met you.
The homeowner must have a legitimate hardship. The lender will not agree to a short sale if they believe the homeowner is just avoiding making the payments because they don’t like the house anymore, upset at a spouse, want to move quickly or some other cop-out type excuse. Don’t waste time trying to assist homeowners that are not good short sale candidates. You are robbing the other people that are in desperate need of your help. Willing homeowners with legitimate hardships NEED a solution. Be a WISE servant and not a GULLIBLE fool.
The following is a bullet point list for what my team considers ACCEPTABLE AND NOT ACCEPTABLE short sale candidates.
ACCEPTABLE “GOOD” CANDIDATES
• A continuing hardship that is preventing any more payments being made to the lender
• The homeowner completely willing to work with you with no friction
• Already behind on mortgage payments
• Lis Pendens or Notice of Default (NOD) has been filed lender has started the foreclosure process
• No equity and property is overleveraged having owed more on it than it is worth
• Property needs repairs
• More than one mortgage is owed
• One or multiple judgments or Liens owed
• Property is listed for sheriff sale with MORE than 10 days left to auction sale date
UNACCEPTABLE “BAD” CANDIDATES
• NOT in compliance to requests for documents, showing their property, signing a listing agreement etc.
• Does not have a legitimate hardship (using some excuse to NOT pay the lender when they have the money available)
• The property has a lot of equity and the lender would be better off foreclosing to get paid in full
• The sheriff sale is LESS than 10 days away
• Homeowner requests to STAY in the property
So there you have it. If you have a homeowner who makes plenty of money to pay bills, is a pain to work with, will not respond to your requests for paperwork or wishes to stay in their house … move on. This is what our team considers an UNACCEPTABLE short sale candidate. The better candidates are homeowners that have legitimate hardships, having missed three or more payments, in pre-foreclosure, the property needs some repairs and they are looking at a sheriff sale more than 10 days away from the auction date.
The following are some questions you would ask to determine if you have short sale candidate. This is assuming you have the full contact information for your client/prospect.
1. What is the address of the property including city, state and zip?
2. Do you have a foreclosure date pending? If yes, when?
3. Can you make anymore payments to save the house?
4. Do you want to SELL or KEEP the house?
5. What do you owe on the house? Mo. Payments and balance?
6. Do you have any other mortgages? If yes, who are they with and what do you owe?
7. Do you have any other liens? If yes, who are they with and what do you owe?
8. Does the house need any repairs? If yes, briefly explain
9. Are you behind in payments? If yes, how many?
10. Are you the owner? Is anyone else on the deed or the mortgage?
11. Is the house vacant? If not is it rented or owner occupied … when could you move?
12. What type of loan do you have? FHA, VA, CONVENTIONAL?
13. Has anyone else tried to contact the lender on your behalf?
14. Ever filed a BK? If yes, when? Was it discharged or dismissed?
15. What is your goal by working with us?
16. Additional Info?
2. Do you have a foreclosure date pending? If yes, when?
3. Can you make anymore payments to save the house?
4. Do you want to SELL or KEEP the house?
5. What do you owe on the house? Mo. Payments and balance?
6. Do you have any other mortgages? If yes, who are they with and what do you owe?
7. Do you have any other liens? If yes, who are they with and what do you owe?
8. Does the house need any repairs? If yes, briefly explain
9. Are you behind in payments? If yes, how many?
10. Are you the owner? Is anyone else on the deed or the mortgage?
11. Is the house vacant? If not is it rented or owner occupied … when could you move?
12. What type of loan do you have? FHA, VA, CONVENTIONAL?
13. Has anyone else tried to contact the lender on your behalf?
14. Ever filed a BK? If yes, when? Was it discharged or dismissed?
15. What is your goal by working with us?
16. Additional Info?
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