Finding Short Sale Listings

Getting Started
When executed correctly, a short sale can leave everyone better off: the homeowner walks away with his credit largely intact; the bank salvages part of a non-performing loan without the headache and high cost of repossessing a house; and, of course, the buyer gets a bargain property.

Long before there can be a short sale, even before there can be a broker price opinion, Realtors like you must locate a distressed homeowner and establish a rapport with them. Some in the short sale business use fliers or direct mail for this purpose. Others cold call distressed homeowner. A select few advertise on radio or late night television. But no one would deny that old-fashioned door-knocking is far and away the most effective way of landing a short sale deal.

Here’s a step-by-step checklist that will guide you through the entire process — from the first meeting with the prospect to the close of escrow. The following checklist will help you find short sale listing leads in your neighborhood by using RealtyTrac’s nationwide database as your springboard to short sale riches.

Find Short Sale Listing Leads:

  • Prior to meeting with any prospects, log onto RealtyTrac and search an area you work in, zeroing in on pre-foreclosures and auction properties.
  • Cross-reference the pre-foreclosures and auction properties with the MLS to make sure the property is not already listed for sale with another agent.
  • Check the property tax records to see if the borrower has multiple liens against the property.
  • Prepare a written script and stick to it. Practice the written script in front of a mirror to build your confidence and memorize the sales pitch.
  • Before you go door-knocking, prepare a list of 10 to 15 distressed properties (both pre-foreclosure and auctions) to target. Also, print out maps of where the properties are located.

Convert Prospects into Listings:

  • Print out your list of pre-foreclosure and auction properties, along with maps, from RealtyTrac.
  • Knock on the doors of the distressed homeowners and introduce yourself to the homeowner. Try to create a rapport with the homeowner.
  • If no one is home leave a business card or door hanger. Try different times of the day to reach these distressed homeowners.
  • Most people want to talk about their problems; it’s up to you to get as much information from them to make them feel comfortable about working with you.
  • After some brief chitchat, your objective is to get inside the house and get a tour. You can’t get the short sale listing until you’re in the house.
  • When talking with the homeowner, point out the benefits of short selling over foreclosure. A foreclosure puts a long-lasting black mark on a homeowner’s credit history and the process can be long and costly. Short selling can be much faster and less expensive, and it doesn’t look as bad on the homeowner’s credit report as a foreclosure.

Prepare a Short Sale Presentation for Meeting with Prospects

  • Prepare a PowerPoint presentation providing the prospect with an overview of the short sale process, walking the prospect through the options available to them and how a short sale works. (Use a laptop computer or hardcopy presentation).
  • Review homeowner’s financial situation and discuss the home current market value, loans outstanding and homeowners goals.
  • Give homeowner Mortgage Forgiveness Debt Relief Act of 2007
  • Review CMA material to determine list price.
  • Explain and get signatures on all real estate contracts and disclosures.
  • Provide a sample hardship letter
  • Provide a sample financial statement

Prepare a Short Sale Contract Package:

  • Agency disclosure
  • Residential listing agreement
  • Short sale listing addendum
  • Authorization to receive and convey information form
  • Seller’s advisory

Documentation Requirements for Short Sales:

Real Estate Forms
1. Real Estate Agency Relationship Disclosure
2. Standard Residential Listing Agreement
3. Short Sale Listing Addendum
4. Seller’s Advisory
5. Authorization to Receive and Convey Information

Financial Forms

  • Borrower’s signed letter of authorization for lender to release financial. information about the loan in default to the buyer.
  • Borrower’s hardship letter – (Written explanation of financial hardship).
  • Borrower’s financial statement.
  • Borrower’s completed and signed short payoff sale application.
  • Borrower’s payroll check stubs from employer.
  • Borrower’s state and federal income tax returns and W-2 for the past two years.
  • Borrower’s bank statements for the past six months.
  • Borrower’s mortgage statement (s).
  • Borrower’s credit report files from Equifax, Experian and TransUnion.
  • Borrower’s net sheet.
  • Completed and signed purchase agreement.
  • HOA bill (if applicable).
  • List of comparable sales of similar properties in the area the past six months.
  • Itemized listing of repairs and the cost to put the property in resale condition.
  • Pictures of the property’s as-is condition.


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