Short Sale Success Strategies
Like anything, there is a right and a wrong way to approach a short sale transaction. At The LAMB Group, we've seen almost everything and we know exactly what it takes to bring short sale success for you. Everyone's needs are different, so specific success strategies will vary between clients; however, the following list can be used as a checklist of "best practices" to employ, for homeowners who are thinking about completing a short sale of their home.
Strategy #1: Choose the right REALTOR®
Why? Because the REALTOR® who represents you is essentially in control of your destiny. It sounds dramatic but, in a short sale, every task which determines success or failure is 100% handled by the REALTOR®. And, if your agent is too busy with other clients or working their second job, calls from your bank will be missed and your short sale could fail as a result.
Beyond availability to take phone calls, your REALTOR® must understand short sale strategies that they just don't teach in real estate school. And they need to know people within the short sale & mortgage industry that agents simply don't know. To be successful, your representative also needs management systems that aren't sold online and they require a staff of specialists who are always available to take phone calls from your mortgage bank, no matter what time during the business day the bank might call.
We believe that more than 90% of the short sales which failed in 2013 could have succeeded if not for the failure of the Real Estate Agent or the Homeowner. If you're the type of homeowner who is prepared to do your part, make sure that you find an agent who has the experience, the industry connections, the staffing and the systems to support you in the best way possible.
Strategy #2: Get pre-qualified
Why? Because knowing what to expect will help you reach your goals more easily.
Just don't let the word "pre-qualified" trick you... it has nothing to do with your mortgage bank. Their red tape and bureaucracy prevents them from being able to give you an honest answer about your "chances" in a short sale, much less guarantee that you'll be approved. They may say things that "sound" like you're being pre-qualified but the fact is, the fine print means that they don't have to stand behind it. Why? It's better for them to make you think positively so you'll continue to try to workout your mortgage but, when that is their only goal, it also means that you can't really trust anything they say. The fact is, nothing they say can be trusted until after the transaction has closed.
The best way to get pre-qualified is to discuss your specific situation with a qualified short sale expert. A trained adviser who doesn't work for the bank can look at your finances and your property and then offer you feedback on your qualifications for being approved in a short sale. After all, if you make the right decision before asking the bank for a short sale, you may save thousands of dollars or prevent short sale failure down the line.
Strategy #3: Prepare your home for sale
Why? All buyers, even short sale buyers, respond more favorably to a well-kept property than to one which looks abandoned, misused or decrepit.
A short sale never requires you to perform any expensive repairs to your home. But a short sale is still a lot like a regular sale when it comes to the opinion of the buyer and the mortgage bank. The mortgage bank is going to want you to sell your home for the most money possible so the amount of money that they lose is not as great. The buyer wants to pay as little as possible because they will always want to feel like buying your home is a "good deal."
As the homeowner, you are in a position to help ensure that the bank and the buyer agree, when it comes to the purchase price of your home. Often times, the most important things that you can do don't cost any money at all. From cleaning to basic yard work, when you make sure that your home looks as good as it possibly can (within your budget), the offer that you receive will be higher than if you did nothing. Higher offers increase your chances of success by preventing disagreements between the bank and the buyer over property value. When you consider the fact that a short sale can erase tens of thousands in negative equity, the investment of a small amount of time or money towards basic home improvements can pay off BIG down the road.
Strategy #4: Prepare your finances for evaluation
Why? The mortgage servicer and mortgage investor who owns your loan will evaluate your finances in an effort to determine whether you qualify for a short sale. They will also be evaluating whether you can afford to pay a portion of the deficiency at closing or whether you can make payments towards the deficiency after closing.
The highest and best outcome of a short sale is not only obtaining a short sale approval, but also obtaining an approval which doesn't require you to pay any money at closing or after closing, either.
Sometimes, especially when you have a job and you're not entirely broke, it is best to make certain financial decisions in advance of a short sale to prevent the bank from requesting payment at closing. You can never misrepresent anything to the bank when it comes to your finances. But, for example, if you have a large sum of money in a savings account which is earmarked for a special expense (like college tuition or medical bills), then it may benefit you to go ahead and spend this money on those expenses earlier than you otherwise would. This way, you're still able to pay for college and the bank won't penalize you for having this money in your checking account. There are many other, legal & ethical ways to prepare yourself financially for a short sale. For more information regarding exactly what you can do to protect yourself, submit your questions using the secure form on this page, or call one of our expert mortgage counselors today.
Strategy #5: Get a fax machine/scanner
Why? Like everything else these days, short sales have become highly dependent on the transfer of information quickly and efficiently. Often times, your bank may request documents from you and then threaten to cancel your short sale if you do not return them in just a few days. And, if you can do even better by providing them even faster (in just a few hours), then your chances of success may be vastly improved.
Obviously, standard snail-mail just isn't fast enough. Homeowners who own a fax machine or scanner are statistically more likely to be approved than those who do not. We're not sure exactly what the statistic is... but we do know that regular mail causes foreclosures in short sales.
So, we recommend that every homeowner invest in an all-in-one device that can fax, scan, and print the documents that you'll need in a short sale. With The LAMB Group, you won't need to provide as many documents as with other providers... we handle almost everything for you. But we'll still need a few, and when your bank needs something from you immediately, this machine could make the difference between success and failure.
Note: We understand that money may be tight and so we'd never recommend anything that costs you money if it wasn't absolutely worth the cost. However, this is not a "requirement", but rather just one of the things that you can do to improve success. If regular mail is your only option, don't worry, we can still help you find success in a short sale. Just be sure to mail out any requested documents on the same day as the bank asks for them so we can avoid any additional & unnecessary delays. You can also utilize scanning/faxing services which are provided by retailers like The UPS Store or FedEx Kinko's.
Strategy #6: Check your email often
Why? Any professional short sale REALTOR® who is doing a good job is going to spend the majority of thier time on the phone with your bank... not necessary with you. This is just the nature of the business and it's like this as a result of what works best for you. In order to always know what is going on, you should be able to check email at least once per day; however, several times per day is best. If you have a smartphone and already do this then, great. If you do not, at least log in to your email account from work or home in order to stay caught up on the status of your transaction and to stay apprised of anything that may be needed from you.
Strategy #7: Update your mailing address
Why? Because your bank and other creditors will often mail you urgent documents which require our immediate attention. If you do not receive these, no one may know that a task must be completed and if certain tasks aren't completed in a short sale, you may not receive the results that you desire.
Many homeowners who are behind on payments choose not to leave forwarding addresses when they move. We completely understand; when paying creditors simply isn't an option, it's sometimes easiest when you don't have to look at their daily letters. But the fact is, they're gonna find you eventually. If you turn utilities on in your name, change your address with the DMV, or even sign up for a random user account online - your creditors may locate where you have moved and the letters will simply resume, sooner or later.
When it comes to a short sale, you want them to be able to find you, now.
Why? When creditors can't find you, their collections actions simply continue without your knowledge. They may file judgments against you and attach liens to your property, all without you ever having known. And once these things have happened, the consequences to short sale success can be pretty severe... but only if you don't know about them. An expert short sale specialist can still be successful (even with liens or judgments) but our ability to help is measured by our knowledge of these problems. The more you know, the more you can tell us. And the more we know, the better we can help you.
If you have recently moved and did not file a change of address with the US Postal Service, please Click Here to go to USPS.com to take care of this important task online, now. It's fast, easy, and it ensures that you will always know about issues which could affect the success of your short sale transaction. Plus, they send you some pretty great coupons for filling out the form.
Of course, if you ever receive anything from your mortgage bank or other creditor who is threatening collections actions, you should always forward that to your short sale adviser, immediately. So long as you made the right decision outlined in #1 above, then this person will know what to do and how to help you.