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.
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:
- 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