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Wednesday, November 2, 2011

5 Steps To The 90 Day Short Sale:

5 Steps To The 90 Day Short Sale:

If you could do short sales in 90 days or less, would you? Travel back with me in time to those days we longingly refer to as, “The Good Ole Days”. A traditional transaction looked something like this: Days 30-60 marketing a listed property to achieve a contract for sale and the next 30-45 processing the transaction to a successful closing. This entire process was likely to encompass a total of 90-120 days. Then the Dow fell, the economy imploded, values plummeted, and the majority of the population couldn’t sell because they were under water on their mortgage. Hence, the “Short Sale” was born. Initially, it was chaos. No one knew who, how, or what to do to get one of these transactions to close. But more importantly, the delay in lender approvals came from the fact that lenders had more financial incentives, (i.e. could earn much more money from Freddie, Fannie, and HUD) to process and manage a foreclosure. There were initially no incentives for the lenders/servicers to do short sales. In fact, it cost them money and resources to approve them versus foreclosing. The outcome meant that almost half of all of our transactions were foreclosure inventory.

Flash forward to present day. Now Fannie & Freddie have established guidelines that took effect September 1st requiring all of their servicers to address a request for a short sale within three days and process a short sale within just thirty days of an offer being submitted. If a modification is not an option, these servicers must offer a short sale as an option and have good reason to do so because now the financial reward for processing a short sale outweighs the benefit of foreclosure. In addition, the homeowners are being offered cash incentives anywhere from $1000-3000 to do a short sale instead of abandoning the property. For this reason our inventory has flipped. Of more than half of non-traditional sales, short sales make up 40% and foreclosures are down to 13%. This means if you are not doing short sales, you are cutting out about half of your potential business.

Here’s how to work the whole process in 90 days or less:

1.) List the property competitively at 5% below actual market value. If priced appropriately and marketed for “Demand Effect”, the house will sell in the very first week. When you do this you are truly working for your customer, the homeowner. Our job is to limit the pain caused by the circumstance. The best way for us to accomplish that is to sell the home quickly and stop the damage to their credit or, if they are making payments, eliminate the monetary loss with by limiting the number of payments they need to make going forward; don’t worry about the house not appraising from the short sale lender’s perspective, buyer demand will net a high enough price to get an approval.

2.) Use a company to process the sale for you. There are several attorney firms that will negotiate the deal on the seller’s behalf that will not cost the seller any money. They get paid via the lender at the close of the sale. This frees you up to do what feeds your family, which is to get more listings to sell.

3.) Submit the sale package. Most servicers are held to Fannie/Freddie guidelines that mandate a thirty day turn- around time. So far you have gathered the paperwork, taken the listing, marketed the listing, and have a contract to sell it within the first 10 days.

4.) Let the company/attorney firm you have hired to negotiate to manage the process, which is essentially at this point a mere appraisal. With the 30 day mandate, there should no longer be a need to update bank statements or pay stubs. Receipt of the appraisal and review will initiate an approval or counter offer. (We should be around day 20-45 at this point)

5.) Get buyers mortgage and close – yes it sounds simple, but it really is that simple. We are now left with 30-45 days, to get mortgage approval for the buyer and close still meeting or even exceeding our 90 day short sale goal.

Sounds like the “Good Ole Days” are back again!

If you have any questions about “Demand Effect” marketing or want to learn of companies who will process the short sale for you at no charge to you or your customer, please call or email me.

If you don't remotely know how or where to begin with building or re-building your business, come work with us. We already have systems in place that do it all for you!

The best in their field, even professional athletes take advantage of coaching. If you would like the benefit of working with a full time coach, absolutely free to you, please call me directly or email to set up an interview.

Suzanne O'Brien
(313) 516-6644

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