Everyone always overreacts. The housing frenzy gets carried away one way…and then the other. Many buyers are sitting on the sidelines watching and waiting to see when the bottom hits, but of course, we learn when that was after the fact.
Don’t confuse this author with someone slinging NAR propaganda. I’m more along the lines of doom and gloom myself. I believe the trend for real estate values is on the slippery slope downward. I also believe it’s a great time to buy. After all, you’re not buying an index of home values; you’re buying a house. Let me type about the short sale.
We have a FSBO sign program with the call capture. People call the 800# and hear a recorded message describing the property and the price. After that, they have the option of connecting to a loan officer. Most people hang up at that point and don’t connect through to the LO. I’m sent a text message that someone called and hung up. I’ve volunteered to call back the hang ups for my LOs [I’ll return to my room at the Ivory Tower in the future when the housing market is at peace].
The callers are generally a mix of neighbors, realtors, and some buyers on the sidelines who are curious about the market. Here’s how a typical callback goes:
Buyer: Price is too high, not interested.
Buyer: I’ve already been pre-approved by my bank.
(buyer is trying to exit the call at this point)
Me: Are you familiar with the real estate term ‘short sale’.
Buyer: No.
I explain.
They like it.
I get them to my LO for a pre-approval.
Not to make this post too long, but here is an example of one of our short sales. The home is in a $200,000 neighborhood. Here is the payoff of the loan at $170,427.83. The short sale payoff is $92,000. This buyer is buying this home for $92,000 and the lender is forgiving the remainder.
If that doesn’t get your buyers off the sidelines then I don’t know what will.
Posted by Paul - Seller Helps Buyer
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{ 13 comments… read them below or add one }
46% short sale, that is much higher than I’ve been led to believe is typically even considered for short sale. I’ve been told that short sale discounts don’t typically exceed 20% - 30%? Are many of you seeing short sale numbers in excess of 30%???
HI Paul… Couldn’t figure out how to email you directly.
How do you explain the short sale to your potential clients? Who does the negotiating on that?
JP
Hello Howard,
The discount is more a function of the BPO or appraised value. There are also investor guidelines. For example, on an FHA short sale, the home must be appraised for at least 63% of the total due on the mortgage and the ‘net sales proceeds’ must be at least 82% of that appraised value.
Hello John,
We are in the loan biz and the client or the client’s realtor negotiates the price with the seller. Once we get a contract, we handle both sides of the transaction – processing the mortgage loan for the borrower and processing the short sale for the seller.
The client and the client’s realtor don’t need to be experts on short sales.
First let me state that in the current environment every potential opportunity to serve our clients should be investigated.
Some concerns:
Is the short sale note holder at a minimum not at least attempting to be the source of financing for the short sale buyer?
Doesn’t the loss mitigation department not flinch once they see the pursuit of professional fees or commissions, balking at the short sale offer due to “percieved” conflict of interest issues?
Shouldn’t the current borrower take the lead, seeking professional guidance through the process?
Is the short sale note holder at a minimum not at least attempting to be the source of financing for the short sale buyer?
The note holder has a loan in default (usually) and wants the loan satisfied.
Doesn’t the loss mitigation department not flinch once they see the pursuit of professional fees or commissions, balking at the short sale offer due to “percieved” conflict of interest issues?
2.5% realtor fee is the norm and the mortgage originator gets paid as well.
Shouldn’t the current borrower take the lead, seeking professional guidance through the process?
I recommend professional guidance.
Good idea Paul. Thank you for sharing a great use of call capture marketing and serving FSBO prosoects. I notice the comments are typical “but I can’t do that in my market” or “but what about all these fake problems I am imagining will happen in my business if I try this”. The amount of the “short-sale” is meaningless. The point is get a new loan funded. I ran a branch with 30 LO’s and I was always frustrated by “salespeople” reacting with the problems of new marketing ideas instead of embracing and executing. I believe if is a fear reaction.
FIRE, READY, AIM is my game plan in this market.
Thank you again for sharing what is working.
I’ve got a weak link in my presentation - FHA short sales. you say 63% / 82%- where can I get more info?
Do you deal with the lender and they deal with HUD?
Hello Brett,
Yes, you deal with the servicer.
HUD delegates LM to the servicer and later audits servicers for compliance to HUD’s standards. They have a Tier Ranking System to track servicer performance and if need be, you can go over the servicer’s head by petitioning HUD directly.
National Consumer Law Center has some great publications with up-to-date guidelines/case law.
Paul - Thanks for your help. Very generous of you to share your ideas.
I work for a call capture company (yes in sales). I have been having quite a bit of trouple presenting this prodcut during this “Market Cricis”. I am suprised to here what agents have to say or ask when I aproach them about this service. When I came on board to market this service, I figured it to be a no brainer either an agent would want it or not. But I have found that it is much harder than that. I am having to educate many on what it does and what it can do for them. Here comes the purpose to my adding to your blog. Why is this? When I was in Technology sales I did not have explain what a computer did, I just had to have the best price for the biggest bang.
Let me tell you my take on call capture. Ready?
The key is to call them back.
Sounds simple right? I think so.
Clark, one of my LOs was talking to one of your target market recently about call capture.
The realtor said “Oh, we have call capture.”
LO said: “You do?”
Realtor: “Yeah, we return the calls on Saturdays”
(cymbal tap)
LOL
Thanks Paul..
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