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Getting started in short sales – how to cherry pick your listings

Inaccurate calculations can cost big bucks

Everyone already knows that one of my favorite topics is short sales. In fact, my son says that I use the word foreclosure more than any other word in the English language. In a recent blog post, I discussed the importance of making correct calculations on the Estimated Settlement Statement that is sent to the bank with the short sale package. I can talk about that subject until I am blue in the face. However, oftentimes real estate agents don’t understand the negative impact of inaccurate calculations until this error costs them a portion of their commission.

One of my Florida friends made a comment to me that really hit home. He said that a $500 error hurts a lot more when we are talking about a third of your commission.

Yeah, that’s a real bummer. And, as a California agent, I am blessed because the property values are not quite so low. (I’m also blessed by the fact that we do not have alligators—except at the zoo.) While there is certainly a fair share of properties under $100,000 in California, there are many properties with values higher than one million dollars.

Cherry Pick Your Short Sale Listings

Agents frequently contact me because they want to get “into” the short sale business. They have read an article, attended a workshop, or seen a presentation that has prompted them to explore this new business model. They always ask where they should begin.

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Well, in order to venture into the field of short sales, you need to begin by obtaining some listings–some short sale listings. And, if you can cherry pick your listings, attempt to prospect for short sales in the millions of dollars, so that you will not end up with that $1500 commission check that my Florida friend sees far too often.

While some short sale aficionados may disagree, I must say that my experience negotiating multi-million dollar short sales is always easier and more satisfying than the negotiations of the fifty thousand dollar transaction. In a fifty thousand dollar transaction with multiple liens and a homeowner’s association, there never seems to be enough money to make everyone happy.

On the other hand, the two million dollar short sale seems to have a little more wiggle room with regard to the negotiations. And, of course, there is the other obvious benefit: 6% of two million dollars is quite a bit more than 6% of fifty thousand. You do the math!

How to Locate Prospective Short Sale Listings

Perhaps you are wondering… How can I identify people with two million dollars homes that need my help?

There are several ways to go about doing this:

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  • Identify a neighborhood with high-end homes built after 2000. Use your local MLS records tool to determine whether anyone in that neighborhood is in pre-foreclosure.
  • Speak with a local title company representative about opportunities available to search data through the local title company. Many title companies can provide agents with some information and access to online records free of charge.
  • Join an online service. There are some online subscription services where you can create an account (for a fee) and then log in and download all sorts of foreclosure and pre-foreclosure data.

While every short sale closing is very satisfying, I’m sure you will agree that the high-end short sale (with its higher commission and easier negotiation phase) may be a great place to start.

 

Photo: flickr creative commons by Tim Pearce

Written By

Melissa Zavala is the Broker/Owner of Broadpoint Properties and Head Honcho of Short Sale Expeditor®, and Chief Executive Officer of Transaction 911. Before landing in real estate, she had careers in education and publishing. Most recently, she has been able to use her teaching and organizational skills while traveling the world over—dispelling myths about the distressed property market, engaging and motivating real estate agents, and sharing her passion for real estate. When she isn’t speaking or writing, Melissa enjoys practicing yoga, walking the dog, and vacationing at beach resorts.

20 Comments

20 Comments

  1. Angie @AgentKnowHow

    September 13, 2011 at 3:06 pm

    Thanks Melissa for sharing this. I couldn't agree with you more. I cherry pick all of my listings for sure. But, when it comes to a short sales. I have to know if the seller is going to cooperate fully and even advocate for him or herself if necessary. Good article. I will share it with my group.

  2. Richard Murphy

    September 20, 2011 at 9:23 am

    I feel Shortsales should be Negotiated by a Third party Negotiation team because these Agents moving into Shortsales are just setting up relationships with the Negotiators at the Banks and do not know the procedures and make mistakes that are causing buyers to walk, plus the Selling agent shares in that discount caused by a "So Called Shortsale Specialist"
    A third party Negotiator works on the Deal, have Seasoned relationships with the Bank Negotiator, and doesn't leave the Agent open to sue if they did something wrong.
    A Lawyer will be advertising soon on TV, saying did you Realtor do something wrong representing you while Negotiating your shortsale, did they do what was best for you, or were they really doing what was best for the Bank while representing you. There may be a conflict Please call 1-888-888-8888

    I think those that know should and those that don't should hire a Negotiator because they are giving us all a bag name just because they want to try this shortsale thing. 1% of a Deal that closes is better than 5 deals sitting around for 124 days waiting for a response.

  3. MaryAnn

    September 28, 2011 at 10:28 am

    I do not agree with this. Some 3rd party negotiators have way too many files and let them sit until they get to it just like some of the bank negotiators. Bottom line, if you are not certified and chose not to take the time to educate yourself to prevent yourself from lawsuits, then one should stay away. This is why the banks refer a certified short sale specialist to their past due data base. On a final note, the banks are starting to kick off the charges for attorneys and 3rd party negotiators. The banks want Realtors who are certified to negotiate the whole deal.

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