We've all been there. We helped our borrower through the mortgage process, the appraisal came in and the value is right. The seller is ready, willing and motivated. The only problem … “it's a short sale.” Those four words can make any seasoned originator cry. So then why am I suggesting that you focus on adding more short sale real estate agents to your referral network? I have three good reasons and they all lead to increasing your business.
►Short sales are on the rise like never before.
As heavily reported in the press, the banks have the foreclosure engine in gear and are ready to roll. After a temporary delay questioning the legality of many foreclosures, banks were forced to re-examine their foreclosures processes. The good news is this made the short sale process move along faster than ever before. The number of real estate agents who now realize they can charge a higher commission on a short sale is growing. You should plan now to capitalize on this, capture those agents and have them as key components of your network.
Many are predicting that in 2012, 50 percent of all homes will be underwater. Short sale agents are preparing for this and will be an ongoing source for mortgage originations for months, if not years, to come.
►You will become an indispensable resource to real estate agents.
One of the most important components to a successful short sale is a comprehensive, properly-prepared and well-executed short sale proposal. Unfortunately for most agents, paperwork is not their strong point. To compensate for this, agents refer this part of the transaction to attorneys or negotiators, reducing their overall gross commission earned (GCE).
A properly-prepared and executed short sale proposal includes more than just the buyer's qualifications. It also requires a detailed income and expense worksheet from the seller to demonstrate how they cannot afford their mortgage, a financial analysis showing that a short sale is in the bank's best interest over foreclosure, a HUD-1, BPO and numerous other documents.
Do you think you can help write these documents? Why not, many of the documents associated with a short sale proposal are just like the ones you complete for a regular mortgage. In fact, there is software out there you can share with the agent to make writing this proposal even easier. When you empower a real estate agent to negotiate their own short sales, you increase their gross commission earned, and of course, you position yourself as the point person for the mortgages their buyers will need.
►Every short sale listing can lead to seven transactions!
It sounds crazy, but it makes perfect sense. Phil Tesoriero is a short sale expert based on Long Island, N.Y. He reports that because his short sale listings are priced to market, they appear as a bargain in comparison to the higher priced listings placed by sellers with unrealistic expectations.
"Due to the fact that my listings are usually priced less than competing listings", said Tesoriero, "I get quite a few calls from buyers. Whether or not they buy that listing, my team is qualifying these buyers with my mortgage person, and we're showing them other properties in the neighborhood. That one listing can yield me seven transactions. Working short sales pays dividends."
Phil's mortgage originator greatly benefits from those dividends, as he's qualifying buyers for not just short sales, but all other kinds of transactions.
With trends as they are, short sales aren't going anywhere. In fact, they're getting more mainstream every day. Don't wait until they are a part of someone else's business. Make it part of your business today! If you start taking steps to work with short sale agents now, you'll have a giant head start on your competition.
Erik Wind is co-founder of ShortSaleSpeedway. He may be reached by phone at (516) 882-6930 or e-mail at
[email protected].
