Interested in adding a new niche to your business? Become the short sale expert in your area! Short sales are becoming a very significant practice in all parts of the country right now and the procedure to successfully sell a short sale is very different from the sales in which you have been accustomed. Short sales are not for the newly-licensed or fly-by-night agents, they are for the patient, seasoned salesperson who plans on helping homeowners in distress for a long period of time.
For owners that can no longer afford to pay their mortgage, there is an alternative to bankruptcy or foreclosure proceedings - it is called the short sale. The short sale occurs when the net proceeds from the sale of a home are not enough to cover the sellers' mortgage obligations and closing costs such as property taxes, transfer taxes and commission. These homeowners are Upside Down in Lender's terms. Unlike foreclosure, a short sale can keep the homeowners credit intact.
Decreasing home prices, large home-equity lines of credit, 100% financing, and spiking interest rates on adjustable mortgages are creating an expandable niche for real estate professionals. Some short sellers may be on the road to foreclosure. Divorce, job loss, or job transfer can all be reasons for the need to sell right away. If you can get the homeowner out of a bad situation before foreclosure or bankruptcy hits, you have a client for life.
Before you begin to try and help the homeowner in need, advise them in writing to consult a real estate attorney for legal advice and an accountant about the tax liabilities involved with a short sale. Do not try and be their agent, accountant, and attorney. The homeowner needs to understand everything upfront, before the short sale process begins.
What is the process? First, the homeowner must prove that they really cannot afford to pay their mortgage - and that the reason is new such as job loss or divorce. They need to understand that assets such as stocks, bonds, or high paying jobs hurt them in the short sale and the lender will not allow them to walk away without signing a note promising to repay what they owe. Next, a Comparative Market Analysis (CMA) or appraisal will determine the market value of the home. You must also ask the seller what their outstanding debt is and calculate the cost associated with the sale- from transfer taxes to your commission. This will give you an estimate of the net proceeds that will be realized. Check with the title company and the lender to get exact figures on closing costs and loan balances. Next, the facts must be presented to the mortgage lender. Lenders do not always accept the short sale but if your plan will bring them in more money than they would get during auction, most likely, they will agree to it.
How should you get started? Short sales currently are not a part of the basic real estate training, however, there are a number of educational seminars about the short sale that can help you get up to speed. The 2007 REALTORS Conference & Expo in Las Vegas, November 13-16 will have many seminars to help you grow your business.
Lenders will pay a reasonable commission to the agent for an incentive to get into short selling. Talk to agents who currently have experience in the short sale process and get the pros and cons from them. Has their business increased since they started short selling? Do the benefits and rewards of helping someone in need out way the increase in work for the sale? My advice to you is to be as educated as possible. Start slow, be patient, get the experience and then create your niche as the Upside Down expert in your area!
To provide helpful service with empathy and compassion
To provide comprehensive high-value home warranty coverage.