Why should I consider listing short sales?

I agree with the all the comments I hear about the difficulties of dealing with short sales. Very few people in our area truly understand the purpose and process. According to statistics compiled by the local realtor board, approximately 3% of short sales listed are successfully completed. I’ve been very fortunate to get training on short sales from a nationwide group of negotiators based in Ohio over the last year. Our group averages 30 to 50% successful short sale closings. Free, detailed information on the HUD approved Pre-foreclosure Sale process is available on my website, at the Short Sale Qualifications page. Local one-on-one and group short sale training is available free to qualifying Brokers and Agents. Contact me through the website. I’ll share with you the top 10 reasons why short sales are currently not closing and what Agents can do about it.


What commission will I be paid?

Our goal is to negotiate a purchase price with the lender that is suitable for our investors to purchase the property. In the negotiation it is our intent and goal to have the mortgage lender approve paying a full 6% commission: A full 3% paid to the selling agent and a full 3% paid to the buyer’s agent.

There are two reasons; Bank management and bank accounting. Typically, top bank management makes a bad decision, thinking that they can get more for the property at the foreclosure auction than they can get through a short sale. They find out about that mistake when the property fails to sell at the auction. At that point, the bank has to report the property as a non-performing asset on their accounting books. All costs of the foreclosure, the additional missing monthly payments plus the costs of re-selling the property finally hit the bank's bottom line. They now become the distressed seller and price the property on the market accordingly. It does make you wonder why, if the banks have loss mitigation departments, they don't minimize their losses before it's too late. Good news, some do.

How can I be certain this process will work?

Because the lender is solely responsible for the approval, no guarantees or promises can be made. And although there are no guarantees, we can improve the odds by about 1,000 %. The local Realtor Association released statistics that show a 3 % close rate on short sale listings. Our nationwide negotiation group averages between 30-50 % closings on short sales. Good 2 Go Home Investors work exclusively with the largest Title Companies and Title Insurance Underwriters that have reviewed and approved our unique “full disclosure” method to clear problem properties from the marketplace. We are part of the largest and most successful independent short sales negotiation team nationwide. In our local changing marketplace, Good 2 Go is The Short Sale Expert.

How long will this take?

A typical short sale transaction will take between 2 – 18 months depending solely on the mortgage lenders and how quickly they process the short sale offer. And some lenders won’t cooperate at all. Because the lender is solely responsible for the approval, no guarantees or promises can be made.

What are my responsibilities in the process?

You have five main responsibilities when working with Good 2 Go Home Investors on a short sale:

1) Gather & review the appropriate documentation for the short sale package with Good 2 Go.

2) Set a price “as-is” that will allow the house to sell quickly, in the next 15-30 days. (BPO?)

3) List the short sale property on the MLS and aggressively market to find an End Buyer.

4) Call Good 2 Go when the BPO Agent calls. Good 2 Go will meet the BPO Agent at house.

5) Call Good 2 Go if the Lender contacts the Seller or the Listing Agent during negotiation.

What about my responsibility to present the highest offer to the mortgage lender?

When a Seller signs a Listing Agreement, the Listing Agent takes on a fiduciary responsibility to the Seller, not the Lender. The Lender simply has a Lien against the property. In no way does the Listing Agent have a fiduciary responsibility to the Lender. The Listing Agent needs to do what is in the best interest of the Seller. The first priority is to sell the property so that the foreclosure process is stopped.
 
Remember, the short sale is a negotiation.  Success depends on our team approach during the entire negotiation.

During negotiation, the Seller and Good 2 Go and the Listing Agent are all on the same side of the table, our side. 
 
During negotiation, the Lender and the BPO Agent and End Buyer’s Agent are all on the other side of the table, not on our side. Be very careful if contacted. They are professionals negotiating for their side.

Call Good 2 Go to discuss how to handle any contact with the opposing side of the short sale negotiation table.

When do I change the short sale MLS listing to Pending?

The new Short Sale Addendum, FAR SSA-2 Rev. 7/08 sheds new light on this question. All offers received on a short sale should include this addendum. Before the Listing can be changed to Pending, the Lender(s) must approve the short payoff of the Mortgage(s) and Lien(s) on the property for release and satisfaction, supposedly within 45 days (Item 1). But, the Lender is not party to the contract between the Seller (defaulted homeowner) and the Buyer and therefore the Lender is not obligated to approve anything within any time frame (Item 4). The Seller and Broker are not liable for the Lender’s delays or failure to close or the costs associated (Item 4). The Seller may continue to market the property (not changed to pending) and accept additional offers to get the best offer and perhaps to replace offers from Buyers who can’t wait on the not-guaranteed approval of the Lender (Item 5). Only after the Lender has approved the short payoff and the Seller agrees to the terms and conditions of the Lender’s approval (accepting a deficiency judgment or 1099), then the Seller can sign acceptance of the best Buyer’s offer and change the Listing to Pending.  

How does this arrangement benefit my client, the Seller?

If you are unable to sell their house it will go through the foreclosure process and be sold at auction. If this occurs, your client’s credit will be severely damaged. Also, the mortgage lender may file a deficiency judgment for the difference between what was owed on the property and what it sold for at the sheriff’s auction, or as an REO. When Good 2 Go Home Investors negotiate a short sale, we do so with the understanding that the lender accepts our offer as full payment. Some lenders may want to file a deficiency judgment despite the approval of the short sale. If this should happen, you and your client, the Seller, will know in advance and will be in control to take appropriate legal and financial action. Good 2 Go does not offer legal or financial advice. We advise the seller to seek professional help. Good 2 Go does not charge the seller any fees for the negotiation. We make a cash offer to the lender.

How does this arrangement benefit me?

You earn commission on a house that you otherwise would not be able to sell due to market conditions and your business benefits as a result. You also gain recognition as one of the relatively few short sale successes. You save your time for marketing and finding an End Buyer by outsourcing the lender negotiations. Good 2 Go does not charge the agent any fees for the negotiation. We make a cash offer to the lender.

Since you don't charge any fees, how does this benefit you?

Good 2 Go Home Investors, Inc. has two ways to earn profit from their services, but only if everyone wins:

1) We successfully negotiate with the bank to buy the house at, or near our offer price, so we can cash flow it as a rental, or rehab it and sell it.

or

2) We successfully negotiate an acceptable purchase price with the bank and earn a small spread between our purchase price and the Realtor's selling price to the MLS End Buyer.

What paperwork do I need to gather from the Seller and review with Good 2 Go?

1) Purchase Offer Package – Originals initialed & signed by all sellers & spouses, Notarized including:

    A. Authorization to Release Information (one for each mortgage)

    B. Option Contract for Sale and Purchase (cash offer)

    C. Notice of Option Contract (for county records)

    D. Affidavit of Understanding (full disclosure, protecting all parties)

2) Financial Hardship Package -- for all sellers & spouses– including:

    A. FDMC Form: Borrower Financial Information – Original, signed

    B. Hardship Letter – Typed or legibly written -- Original, signed

    C. Most recent Mortgage Statements – Copies (both sides)

    D. Last 2 years of complete Tax Returns – as submitted to IRS -- Copies

    E. Last 2 Pay Stubs – Copies

    F. Last 2 months all Bank Statements – Copies (both sides)