Short sale gurus say a lot of wild things sometimes, but some of their methods they use to get their short sales approved are really nuts. I hear about secret spreadsheets, magic phrases to speed up the approvals, and inside contacts who guarantee to put your files on the fast track. Most of it is just ridiculous.
Hundreds of successful short sale deals later, we’re pretty confident that success has nothing to do with secret tricks and sudden approval. It has a lot more to do with targeting your efforts to overcome the challenges of short sale negotiation.
The real secret is to get to know your opponent. You have to learn how loss mitigators look at a short sale and what they need to get out of the deal if they approve one. If the property goes into foreclosure, the lender always loses money. Debt collection involves paying attorney fees and losing interest income from the unpaid mortgage. Maintaining REO properties involves appraisal fees, realtor fees, and property maintenance fees. Having another foreclosed property on their hands is not in their best interest.
So, without offering any wacky secrets, these are my real-life, straightforward tips for successfully negotiating a short sale.
1) After you submit a complete short sale package, confirm that it was assigned to one of the loss mitigators and find out who that is. Do this right away, because it’s not unusual to find that lenders misplace those packages upon receipt. They are overwhelmed with foreclosure paperwork, so a call or two from you may help your package avoid getting lost in the shuffle.
2) Be persistent. Lenders are swamped with foreclosures. They have trouble keeping up with all the short sale cases they are working. The only way to push things forward is to make sure you are pleasantly persistent. Don’t call every day. Call every other day or every third day. When you call, don’t leave a message every single time and make your first impression as a pest. Just hang up and call back.
3) Ask your loss mitigator who actually owns the homeowner’s mortgage loan. Whether you’re dealing with Fannie Mae, Freddie Mac, FHA, or VA loans, they all have a predetermined percentage of the property value that they will accept in a short sale. Knowing this ahead of time will make your job a lot easier.
4) Give your loss mitigator a quick overview of your offer and politely ask them to immediately order a new interior BPO.
5) Manage the BPO effectively.
6) Make sure you know what’s on title by pulling a title report after the BPO has been done. You don’t want to get to closing and find liens you didn’t know about.
7) Ask the bank about the number for the BPO. This is self-explanatory. Just ask. Sometimes they won’t tell you, but sometimes they will. And then you know you’ll pay about 90 percent of that number.
If the bank will not tell you the BPO, you have to get them to make a counteroffer. (Most of the time, their counteroffer equals the BPO figure anyway.)
9) Submit your own counteroffers with additional proof to validate your offer (days on market from the MLS listing, repair estimates, low comps, negative articles on the area or city).
10) Make sure the loss mitigator remembers that you’re able to bring cash to the table and close quickly.
We’re not selling any magic potions, and we’re not selling any hyped-up baloney. The truth is much more powerful. Lenders don’t normally view short sales as their best option, but short sales aren’t their worst option either. All you have to do is convince the loss mitigator that your solution makes the best financial sense for them. If you’re ready to educate yourself, develop a good attitude, and be persistent, you can successfully negotiate a short sale.
Want to learn more about negotiating short sales? Check out the Strategic Real Estate Coach website and treat yourself to everything you need to know about loss mitigation in America!
