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Another Lesson in Short Sales

By Stacey Moncrieff, Editor in Chief, REALTOR® Magazine

Stacey Moncrieff

Stacey Moncrieff

The more I learn about short sales, I told Scott Thompson yesterday, the more complex they seem. That’s pretty much par for the course, according to Scott, whose company, Mortgage Resolution Services of Sacramento, works on short sales every day.

Scott and I were having breakfast yesterday, preparing for our second short sales webinar. The first, in March, enjoyed an enormous response. Besides the thousands who joined the call, more than 14,000 people have either played back the session or downloaded it.

Yesterday’s session was a bit of a free-for-all. We fashioned it as a way to answer the questions we couldn’t get to in the first session. Some of the key points I took from Scott’s comments yesterday were:

  • Second-home and investment short sales are possible. A lot of participants asked about this. Both second-home owners and investment property owners stand a chance of making a short sale work — as long as they’re upfront and honest about their situation. Scott talked about the importance of an effective hardship letter. It should include three elements:
    • “Dear Lender: I’m sorry about this situation I find myself in.”
    • “Here’s the modification or action I’m requesting.”
    • “I’ve exhausted all other possibilities.”

Scott strenuously urged listeners yesterday to keep hardship letters to one page. Mortgage servicers are overworked and understaffed and probably won’t read a longer letter.

  • Don’t be a flipper. Finding investors who want to flip short sales — or doing it yourself — might seem like a great business opportunity, but it probably doesn’t serve the seller or the lender well.
  • Don’t take on liability unnecessarily. A lot of buyer’s agents sent questions asked whether they could contact the lender directly. Scott’s advice: Don’t go there. Yes, it’s possible to get authorization from the seller to contact the lender yourself, but it puts you on the line.
  • Be very careful about calling yourself an expert. I don’t know if he said it explicitly during the session yesterday, but during our breakfast meeting, Scott expressed serious concern about real estate salespeople calling themselves “experts” in short sales. Yes, build your expertise — but advertise yourself as a “specialist,” he recommends. The rules and policies are changing so quickly, it’s difficulty for anyone to live up to the title of expert.

I’ve thoroughly enjoyed working with Scott on these webinars. He’s not only extremely hard working but also — with 20 years’ experience as a broker — extremely sensitive to the hard work that real estate practitioners are doing, sometimes for little pay, to close short sales.

Here’s a link to our Webinar page, where you can find a playback to the three webinars we’ve conducted, including both of our sessions with Scott. Don’t forget to sign up for our June 25 mortgage finance webinar, which will be hosted by REALTOR® Magazine’s resident expert, Senior Editor Robert Freedman.

And keep your short sales questions coming tonarpubs@realtors.org. Scott’s company has agreed to do additional webinars for REALTOR® magazine to provide you timely guidance as government programs and lender policies on short sales evolve.

Stacey Moncrieff

Stacey is vice president of business-to-business communications for the National Association of REALTORS®, overseeing the association's key communications with NAR members and REALTOR® association executives.

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Comments
  1. Eva Pusich

    link to Webinar replay does not work.

  2. Brian Summerfield

    Hi Eva:

    The link to our webinar page should be working now. Thanks for the heads up!

  3. Thank you for valuable tips here on short sales. Dealing with these short sales from a realtor’s or broker’s perspective can be very annoying. I might suggest that you seek out a full time short sale investor and see what tips they can offer to ease the process.

  4. Terry Jonethis

    I just tried to download, and playback the first Short Sale Webinar, but got a message that the url was invalid. Any suggestions?

  5. Great tips! I am working with many investors and in the Florida market this is a big issue. Take a look at my blog anytime for updated commercial information, http://salesforcefl.blogspot.com

  6. As an investor who has influenced the positive outcomes of dozens of property owners through the use of ethically sound Pre-foreclosure Investor Buyouts (PFIB’s) as a vehicle for stopping foreclosure and avoiding deficiency judgments, I am saddened by the outright lack of knowledge and blatant attempted competitor sabotage exhibited by Scott Thompson and facilitated by Stacey Moncrieff.

    They caution, “Finding investors who want to flip short sales — or doing it yourself — might seem like a great business opportunity, but it probably doesn’t serve the seller or the lender well.” On what grounds is this being said? Based on what facts? I know differently and I can prove it! Doubt me? I’m available for an interview anytime — I’m not afraid of you bullies — shame on you! Shame on you for distributing unsubstantiated and biased opinions in an attempt to smear the good names of legitimate short sales investors and preference the private business enterprise of your “good buddy Scott.”

    The fact is that investors utilizing PFIB’s to save property owners from foreclosure, while making a fair profit doing so, are not taking advantage of people, and are no different than Mr. Thompson, who makes a profit through his company’s work on short sales. What you have done is unconscionable and you owe honest short sale investors an apology!

  7. Gerri deBeer

    Is documentation required from seller by lender in a short sale similar to documentation required to apply for a new mortgage? i.e. last 2 years tax return, credit report, business tax records, savings and checking account records, assets, debts, etc.

  8. I want to thank Ms. Moncrieff for posting my comment/rebuttal regarding short sale investing and Pre-Foreclosure Investor Buyout transactions (PFIB’s).

    My words were stern and it showed both courage and class that they were posted. Kudos to you Ms. Moncrieff!

    All the best,
    John Michailidis
    http://WillJohnMakeIt.com

  9. Make sure you meet the BPO person at the property take of lockbox if necessary. This is the key to getting a realistic price on the home for the Banks.

  10. Robert Hall

    Ms. Moncrieff: I sent the below email, but got no response. Can you direct me to the form referenced by Scott Thompson? Thanks. RH

    narpubs@realtors.org

    Stacey Moncrieff, editor in chief:

    I listened to the first Short Sale webinar last night. Well done and thanks. The presenter mentioned:

    “Step 1 – pre-qualification; complete an over-the-phone pre-qualification interview. Don’t drive to property. Get the form for the interview from NAR.”

    Can you direct me to the form? I give up; just can’t find it.

  11. Stacey Moncrieff

    I finally got back to Robert!

    For others looking for Scott Thompson’s short sale prequal form, here’s a page at REALTOR(R) Magazine Online that’ll take you to it: http://www.realtor.org/rmodaily.nsf/pages/News2009031301

  12. Great webinars, thank you. I’m out in the Northern Virginia area and as of my comment short sales have been gaining steam over the last year and a half. I agree 100% with Scott’s reference about not calling yourself an ‘expert’.

    We are also very cautious with our clients about making statements about what a bank will or will not due based on what that same bank may have done in the past. It not only depends on policies and guidlines from the banks but the skill set that the particular negotiator you work with has.

    As for the comments from John Michailidis, Esq. I agree with him that there are strong reasons for investors in the short sale market. For example when a seller is in a dead market with no offers, zero prospects, auction date around the corner and an investor is willing to jump in and make an offer they believe will save the home from foreclosure – great in my opinion. I guess it all revolves around the ethics and full disclosure of the investor but isn’t that true of us Realtors as well?

    I’m sorry for the market that has brought short sales to us but am so grateful for those like Scott and NAR doing everything they can to educate the masses.

    Steve Bradley
    http://www.ShortSaleSteve.com

  13. Aly

    You need to use Internet Explorer, not Firefox to view the webinars.

  14. I just completed Scott’s Short Sale Webinar-Tough Market. In the beginning of it, he mentioned having the over the phone pre-qual interview available for us. Can you please tell me where I can find that?

    Thank you!

    Kim Weinstein

  15. SHORT SALE for an Investor….I have been searching for answers to the TAX Liability-if any… for a small investor on a SHORT SALE. I have been unable even through my MLS Board, NAR, and various other entities to get answers:

    Question: Does the BANK/Mortgage Company write-off the difference in Sale/versus balance owed….or does the SELLER get hit with a 1099 having to report this as INCOME?

    Answers, or a direction to where I may obtain this information and more would be greatly appreciated! ThankYou!

  16. Ran across your blog. Good info! I have dealt with Short Sales and I have also dealt with investors who really took the Short Sale seller for granted. Its always best when the short sale works out for the buyer and the seller :)

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