Every short sale guru has a secret to share, but their secrets to successfully negotiating a short sale approval can get pretty crazy. Their spreadsheets have never been seen before, they’re the only ones who know the magic words to open the approval door, and they know how to work an inside job in the loss mitigation department. It’s mostly a bunch of baloney.
We have been through hundreds of negotiations like this, and we have learned that there are more than a few steps to take before we can finally receive that approval letter. None of those steps suddenly enable you to jump from A to Z right away. You simply have to learn what you’re dealing with so you can know how to manage the process more effectively.
You see, the best way to get through the process successfully is to understand the lender’s goals and how they view the whole process. They know that they’re going to lose money if the house goes into foreclosure. They’re going to spend thousands of dollars on attorney fees just to try to collect the debt. Add the lost interest income, negative escrow, appraisal fees, and realtor fees once the property becomes bank owned, and you can see how this can add up. And that doesn’t even include the property maintenance that they’re obligated to pay for until the REO is resold.
So, straight from real-life experience – without all the hype and garbage – here is my short list of tips for anyone who wants to specialize in short sale negotiations.
1) Call the loss mitigation department after you submit each complete short sale package, make sure they got it, and ask for the name of the loss mitigator it was assigned to. They don’t like to admit it, but lenders do lose things once in a while. And if that package doesn’t get assigned to a specific person, your offer won’t be considered.
2) Don’t give up. With all the foreclosures being processed lately, the loss mitigation departments are swamped. Pleasant persistence is the only way to get past this roadblock. If you don’t find the information you need, call them back once every two or three days until you do. You don’t have to be a pest and leave a message every time you call. Just say “thank you” and call them again another day.
3) Find out who owns the loan (FNMA, FDMC, FHA, VA, conventional). Make sure to ask the mitigator who owns the loan and record this in your notes. Trust me – it will make negotiating much easier. Each loan investor has their own idea of what they will and won’t accept from a short sale.
4) Give your loss mitigator a quick overview of your offer and politely ask them to immediately order a new interior BPO.
5) Perfect your ability to handle the BPO.
6) Make sure you know what’s on title by pulling a title report after the BPO has been done. You don’t want to get to closing and find liens you didn’t know about.
7) Ask the bank about the number for the BPO. This is self-explanatory. Just ask. Sometimes they won’t tell you, but sometimes they will. And then you know you’ll pay about 90 percent of that number.
If you can’t get the loss mitigator to tell you the BPO amount, ask him or her for a counteroffer. (The answer may actually be the same amount as the BPO.)
9) Submit your own counteroffers with additional proof to validate your offer (days on market from the MLS listing, repair estimates, low comps, negative articles on the area or city).
10) Make sure the loss mitigator remembers that you’re able to bring cash to the table and close quickly.
You don’t need special tricks, and you don’t need a buddy in every loss mitigation department. You just need to realize that you can use the leverage from the fact that a short sale is generally better than a foreclosure in the eyes of a mortgage lender. Your job is to make them a sensible offer that will help them unload a problem property with the least amount of expense. Focus on what they need, and you’re on your way to getting what you need.
Need to know more about conducting a short sale negotiation? Visit the Strategic Real Estate Coach website and learn from the latest information on loss mitigation in America!
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