Short Sales are a Viable Option in Times of Economic Turmoil
Many homeowners during these troubled times will be forced to take action and sell their homes quickly. Whether their mortgage payments have become un-affordable, they are at-risk of foreclosure, or they are compelled to move for employment; these people often find themselves in the position of having to sell their homes for an amount below their remaining debt on the home. And who can afford to do that?
One possible answer lies in short sales, which involves convincing the lien holders to accept partial payment of loans taken out against the home as full payment. Although loan brokers will rarely accept a short sale where the homeowner makes money, most will accept a deal to let the homeowner break even in order to avoid the cost and headache of foreclosing.
Real estate agents can be key to securing short sales. The majority of homeowners have no knowledge of short sales, and even if they do, they don’t know how to start and have no experience in negotiating with lenders. Also, loan companies are usually closed-minded to brokering a short sale agreement directly with a homeowner. Conversely, they are usually more open to dealing with an agent, whose status and reputation lends credibility from the perspective of the lender as the agent will be versed in current market values.
Brokering short sales for clients can be beneficial to real estate agents in several direct and indirect ways. The homeowners you help out of a serious dilemma will be more likely to list with you in the future. It is good word-of-mouth advertising as the homeowners you help with praise you to their friends, co-workers, and acquaintances. It is beneficial to the local housing market to avoid foreclosures. New professional relationships are formed with lenders that can lead to future opportunity.
Before an agent begins the process of negotiating a short sale they should have written authorization to negotiate from the homeowner. It is usually easiest to negotiate with junior loan officers as they are hurt the most by foreclosure. Foreclosure can cancel their lien on the home, costing them everything. By working out a deal for a short sale, they at least leave with something. Also be prepared to negotiate on your commission, as many lenders will use it as a way to get more out of a short sale arrangement.