1. Short Sales are Impossible and Never Get Approved 2. Banks are Not Accepting Short Sales; They are Waiting on a Bailout 3. A Borrower Must be Behind in Their Mortgage in Order to Negotiate a Short Sale 4. Buyers are Not Interested in Short Sales and Avoid Them 5. Agents Can’t Make Money with Short Sales 6. Bank Would Rather Foreclose than Bother with a Short Sale 7. There is not Enough Time to Negotiate a Short Sale Before Foreclosure
The 7 Most Dangerous
Short Sale Myths
That are costing agents a fortune and landing homeowners in foreclosure
PANTONE 540 C
Alex Charfen, Co-Founder of the Distressed Property Insitute www.cdpe.com 800-482-0335
The 7 Most Dangerous Short Sale Myths
PANTONE 540 C
“Rumor travels faster, but won’t stay put as long as the truth.” Will Rogers
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ne of the most dangerous and pervasive issues the real estate industry faces today the overwhelming amount of misinformation in the marketplace. Now t a week goes by that we don’t hear “someone told me…” or “I once heard…” followed by the latest rumor or false truth being spread among agents. It is simple what happens with one of these misconceptions, it goes from rumor, then the rumor is believed, the belief is repeated and before long it is accepted as truth. This is only reinforced when the individual who started the rumor hears it from someone else! Then it is confirmed! The reality is it may never have been true to begin with. Following are the seven most dangerous Short Sale Myths that have been perpetuated in the market today. With your help we can reverse the damage that is being done!
© Distressed Property Institute, LLC 2009 | 800-402-0335 | www.cdpe.com
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The 7 Most Dangerous Short Sale Myths
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1. Short Sales are Impossible and Never Get Approved Nothing could be further from the truth! Are short sales more difficult? Yes. Do you need to learn a new process? Yes. Are they impossible? No, No, No! We have agents who collectively are getting thousands of short sales approved on a monthly basis. The reality is that while they do require some extra effort, however with Short Sales and foreclosures expected to be up to 50% of the market for the foreseeable future you need understand them, well.
2. Banks are Not Accepting Short Sales; They are Waiting on a Bailout Really? We hear this constantly; the reality is that banks (and the government) are trying to do anything they can, within reason, to avoid foreclosing on property. To think that they would deny a Short Sale in hopes that some future legislation will pass and pay them for their loss is preposterous. The reality is that more banks are aggressively pursuing Short Sales and agents who understand how to process them. Freddie Mac® recently hosted a national training webinar for real estate agents where they expressly stated the organizational goal of “eliminating distressed assets through modification or short sale”.
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The 7 Most Dangerous Short Sale Myths
PANTONE 540 C
3. A Borrower Must be Behind in Their Mortgage in Order to Negotiate a Short Sale While it is true that initially some lenders wanted a borrower to be in default before they were willing to consider a short sale—this trend has almost all together reversed. Today lenders are looking for verifiable hardship, monthly cash flow shortfall or pending shortfall and insolvency. If your client meets these three requirements and is running out of money to continue paying their mortgage—list the property immediately! Don’t wait until the countdown clock to foreclosure has started and you have even less time left.
4. Buyers are Not Interested in Short Sales and Avoid Them Again, if we continue to perpetuate this myth it may become true—thankfully the reality is that today it is not. In fact you may not have yet however you will soon get a call from a buyer who says “I only want to look at foreclosures and Short Sales!” Short Sales and Foreclosures have become synonymous—not with issues—but with GOOD DEALS. International buyers specifically are interested in these properties.
5. Agents Can’t Make Money with Short Sales This is another one of those myths that we feel are perpetuated by agents who aren’t making money—not by those who are listing and selling short sales. The reality here is that not only will you get paid on short sale, the real issue is how will you get paid without them? With 40 to 60% of the sales in the US predicted to be Short Sales or foreclosures can you afford not to be in this business?
© Distressed Property Institute, LLC 2009 | 800-402-0335 | www.cdpe.com
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The 7 Most Dangerous Short Sale Myths
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6. Bank Would Rather Foreclose than Bother with a Short Sale The average foreclosure on a $200,000 property can cost a bank as much as $30 to $80,000! This is before we take into account the affect on the bank on their reserve rates, lending abilities, staff and REO resources or more. If your seller is qualified, rest assured that lenders are more than ready to work with you on your short sale now. Doesn’t it make sense that in a declining market you would want to sell an asset that is losing money right now rather tomorrow? It makes more sense to lenders as well.
7. There is not Enough Time to Negotiate a Short Sale Before Foreclosure This is a myth that probably hurts homeowners the most. Many don’t realize that foreclosure is a process and there is time. Be aware of the timeframe in your state and be ready to explain it to your potential clients. These days many lenders will stall a foreclosure with as little as a phone call form the borrower letting them know that they are trying to sell. Almost all lenders will stall a foreclosure with a legitimate contract, in our view there is time up to the day the ‘gavel falls’ and the property is lost.
© Distressed Property Institute, LLC 2009 | 800-402-0335 | www.cdpe.com
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The 7 Most Dangerous Short Sale Myths
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word about the Certified Distressed Property Expert (CDPE) designation, we clearly feel that this is the best designation available for agents today. Not only will it help you accomplish each of these objectives; it will give you the tools, strategies and tactics you need to accomplish them quickly. We could speak for hours about the CDPE and what it does for agents but it is much easier to let the agents we have trained do it for us; these are all recent testimonials from real agents who have given us permission to use their names: “If anyone intends to do short sales, they need to take this course. The information provided and contained within the field manual is invaluable.” Rick Coco Re/Max Partners
“It is frightening that I thought I knew how to work my short sales before I attended this class. I now know that I was way “winging” it and people who need this help cannot afford for me to “wing” it. I have a huge confidence level now.” Rita Ann Driver Re/Max All Stars
“By far the best class I’ve taken anywhere. You all did a fantastic job, Thank you so much.” Roz Anton Re/Max Absolute
For more information on the Certified Distressed Property Expert Designation visit our web site at www.cdpe.com or call 800-482-0335.
© Distressed Property Institute, LLC 2009 | 800-402-0335 | www.cdpe.com
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