Short Sales Can and Do Make a Difference

A Personal Look at This Industry Trend 

By Short Sale Specialist Will Weaver 

On any given day, I receive three to four calls from people who are in foreclosure and find themselves in a frightening whirlwind of red tape, debt and decisions most feel too overwhelmed to absorb.  Many I meet have been met with brick walls, intimidation and apathy and are truly desperately in need of an ally.  Those are the days when you know that having a job that helps people can be extraordinarily rewarding and that providing solutions can and does make a difference.  

I listed a property with a woman who had lost her job, her family and was just about to lose her home.  With a debt of $410,000 in a deflated market, we managed to sell the home for $305,000.  While that might not sound like a joyous ending to most people, in this situation, the lender was happy to accept the offer and not seek a deficiency and the homeowner happy to have the weight of the world off her shoulders and the capacity to move on with her life.  Across the closing table you could actually see the light come on in her eyes again, she cried and the experience once again solidified how important and incredible it is to be a resource for today’s consumers. 

There are so many questions to be answered for agents and sellers alike across the nation.  I hear them in my workshops, see them on blogs and message boards and certainly they are reflected in media publications far and wide. The top three from my experience and my best answer for each are as follows:  

1. How do you justify the list and sale price for a short sale?  You don’t.  It is not up to you as the REALTOR^® to justify either.  The lender just needs an offer.  It is then their job to look at everything, analyze the numbers, determine how much has been paid, interest earned, etc.  It is your job to present the offer.  It is when agents try to be all things to all people in this situation that they begin to muddy the waters.  So, it is vitally important that you are the REALTOR^® and nothing else.   
2. What advice do you have for someone who wants to file bankruptcy because of a foreclosure?  I would recommend that they talk to their tax advisor first.  The reason being that they may not have much by way of additional debt such as credit cards, etc. and sometimes filing bankruptcy can create more damage to their credit than a short sale.  Each situation is different and carries its own set of entanglements.  We are not bankruptcy attorneys or tax advisors but always caution consumers to get the best professional advice possible before making a decision of that nature. 
3. Can a real estate agent do a short sale on their own property?  I would strongly advise against it.  I would tell that agent to refer their property to another associate.  Why?  Because it avoids conflict of interest, lenders prefer to work with a third party negotiator and finally – it is just too personal.  The ability to look at these cases objectively is critical for everyone involved.

 

The decision to become a short sale specialist for some agents is a very personal one.  For others it seems like a viable business opportunity.  For me, it was a couple of reasons.  One, the market in the Detroit area was declining at a rapid rate and I needed to make an income.  I also began to see the effect that decline had on honest, hard-working people.  The economy shifted, corporations began laying people off in record numbers and good people were losing their homes.  I felt it was my duty as a real estate professional to do what was within my power to help them save their credit.   

From a speaking standpoint, I saw an industry trend of seminar after seminar pop up teaching agents and investors how to take advantage or essentially steal people’s homes.  There was also an influx of companies out there claiming to be “Loss Mitigation Services,” stating that they had relationships with all the banks.  As a REALTOR^®, I knew that just wasn’t true.  As a speaker, I wanted to teach agents what is true, and a step-by-step process for helping their customers in their market area out of a tough circumstance. In my experience, lenders prefer to work with REALTORS^® rather than investors or Loss Mitigators for four reasons:

1. We are licensed by the state.
2. We adhere to a code of ethics.
3. We carry E & O (errors and omissions) insurance.
4. We have too much to lose.  As licensed professionals we are less likely to commit fraud for fear of losing our ability to practice real estate. 

 

As an organization, Floyd Wickman and our entire team have always made it our mission to bring the best possible tools to the table for real estate professionals.  We saw good agent after good agent having to leave the industry they loved for lack of business in a shifting economy.  Sharing with them ways that they could stay in real estate, earn a living and help the customers they had dedicated their careers to is something we are passionate about.  

There is a very real connection made when you work with families in crisis like this.  I helped a gentleman who, because of an auto accident, had extensive liens on his property and no viable source for work and was facing foreclosure.  We sold his home, the lender accepted the offer, removed the liens and now that nice man is restarting his life in another area.  

Matt Hodges from Exit Realty shared this recent experience with me. “I went to Will's seminar about 2 months ago and it sparked interest with me.  Obviously in this market "traditional" real estate was getting harder and harder. As a brand new agent, I knew I needed an edge in order to compete and survive. Will showed me a way to get listings that were almost guaranteed to sell if you price them right, and that is the great thing about it, you have more control to price it to sell quickly even in a down market. 

In the two months since the seminar I have created five new listings and helped two of my existing clients go thought the process. I have closed three of these so far and predict many more on the horizon.  In fact just this week I have had three homeowners call me and asked me for help.”   

There are literally hundreds of stories just like these that I could share about the magic of seeing that light come on for people when they realize that they have options to survive the storms they are facing.  So, if you, like me, want to learn first hand how short sales really do make a difference, I am happy to help, and I wish you every success.   
 

WILL WEAVER  Will has over 12 years of real estate experience and is a three time graduate of Floyd’s results getting training systems.  He is also a Floyd Wickman Certified Trainer and Speaker.  Will brings an enormous amount of expertise in the field of Short Sales and truly teaches from experience—not theory.  His work with lenders and sellers in this arena brings him great pride as he has had the ability to bring hope to clients in tough situations.  It is an incredible joy to now bring those processes, tools and strategies to real estate professionals across the nations who look to offer that same kind of hope to their customers.  Will can be reached at www.willshortsale.com

The American Dream.

Understanding the economy’s toll on the American Dream and how dedicated REALTORS^® can make a difference  

An insightful Q&A session with Julie Escobar and Will Weaver 

These are challenging times, to be sure. Our economic conditions, market fluctuations and, of course, the extraordinary efforts our media puts forth to fuel the negative all play a part in what has become a “perfect storm” for consumer fear and information. Perhaps none as evident as the market in Detroit, Michigan.  

It’s there that I caught up with national speaker & Real Estate Agent Will Weaver. To discuss how that perfect storm affects our ability as a nation to realize the American Dream. Here are a few excerpts from that conversation:  

Q: Will, you have an interesting take on what you believe to be the American Dream. Can you share that with our readers?  

A: The American Dream means something different for everyone, really. Some would say it’s freedom or the pursuit of happiness, or the ability to work hard and get paid accordingly. Others believe home ownership defines the phrase. I believe it’s all of those things and more. In fact, historian and writer James Truslow Adams coined the phrase “The American Dream” in his 1931 book The Epic of America and shared that it is "that dream of a land in which life should be better and richer and fuller for everyone, with opportunity for each according to ability or achievement.” 

Unfortunately, today’s shifting economy has created shortcomings and loss for many consumers who are working hard to live richer, fuller lives yet find themselves losing jobs, family and homes. What’s more unfortunate is that so many feel like they are all alone, with nowhere and no one to turn to for help.  

Q: It’s something that affects so many people these days, Will. I know that you and a team of Floyd Wickman trainers specialize in teaching real estate professionals how to really be there for their customers with the information and resources they need to keep their heads above water. What can you share with them here?  

A: First of all, get educated so you can educate. So many customers are in the dark as to their legal rights and the options that are available to them. They’re starving for information and an ally they can trust. I urge all real estate professionals to be both for them. A partner and I recently ran a full-page ad in four local papers inviting consumers to a free workshop called What Every Homeowner Needs to Know About Foreclosures and Short Sales. The response was tremendous, and the opportunity to really help some folks in need was priceless.  

Q: What should agents teach their customers about those two things?  

A: What worked for us was starting with a relatively simple format. Our goal was to give them the basics they needed to make the right decisions for their families. It’s always amazing to me to see the “light bulbs” go on for people who realize that there really is hope. 

We covered a handful of important topics, including:  

• Definition of a short sale
• The Top 10 short sale situations
• Why a short sale is a win
• Short sales vs. foreclosure
• Steps to a short sale
• Three stages of a short sale

 

Q: Well, then, I guess that begs the next question: “What is the definition of a short sale?”  

A: Good question! The “short” in short sale actually refers to the fact that the payoff amount agreed to in the transaction is “shorter” than the mortgage balance on the property. Simply put, there is more owed on the home than it will sell for. 

Q: And how about sharing the “Top 10” list with us? 

A: I’m happy to! The Top 10 hardship situations are:  
 

1. health issues

2. rate increase (3-5 year ARM expiration)

3. predatory lending/borrowing
4. divorce/separation
5. overextension of credit/number of mortgages
6. job loss or transfer
7. two house payments
8. distressed sellers
9. declining market
10. pre-foreclosures

 
 

Q: Short sale is a scary term for those who don’t understand what they are and how they work. Can you tell us why they can be considered a “win” for many of today’s distressed homeowners?  

A: Short sales can be a win because they can provide a way to avoid foreclosure and, in many cases, bankruptcy. It’s important to note the differences in terms of the long-term effects on consumer credit. Let’s take a look at short sales vs. foreclosures:  

Short Sale negotiated settlement seller’s credit bruised no attorney fees peace of mind buy again in two years liens negotiated

Foreclosure court settlement seller’s credit ruined big attorney fees no peace of mind buy again in 10 years all liens exhausted

 
 

Q: That sure makes short sales look like a much better option for many. Do you have time to take us through the steps of a short sale? 

A: To start, it’s important for consumers to find an advocate–agent they can really trust who will walk them through this often-emotional process. I would say that’s definitely the first step. Here they all are in a nutshell: 

1. Talk to a REALTOR^®
2. List the property
3. Gather the needed information
4. Complete a hardship package
5. Get an offer accepted

 

Q: You mentioned three stages earlier. What are you referring to there?  

A: There are three stages of foreclosure: pre-foreclosure, foreclosure and post-foreclosure. It is in this initial phase that we can help so many people lessen their credit damage, get out from under a tough situation and move on to the next stage of their lives. That offers great relief.  

Q: There’s no doubt a lot of fine print that real estate professionals need to comprehend to be the best resource possible for their clients. Can we visit those in a future article, and can you tell agents how they can reach you to learn how to become the “short sale specialist” in their area?  

A: Absolutely. I’m happy to help. There is a lot of fine print. As the old saying goes, “The devil’s in the details!” In our next article, we’ll explore: 

• the components of a hardship package
• the benefits to a lender
• why lenders prefer to work with REALTORS^®
• the truth about loss mitigation companies
• when a short sale isn’t a good idea
• how commissions are paid

 

I think it’s our job and our responsibility to help protect the American Dream whenever and however we can.  
 
I am reminded of a great quote by President Lincoln: “I am a firm believer in people. If given the truth, they can be depended on to meet any national crisis. The great point is to bring them the real facts.” That’s my passion: to bring people the facts.