Real Estate Agents: How to Get Short Sale Listings (Part 1)
By D.C. Fowler
Purpose #1 - To develop a roadmap; where real estate agents and realtors will learn how to earn profits from listing short sales. I will show you how to literally have investors lining up at your doorstep giving you their listings. Not once but twice! That's right; can you imagine getting paid commission twice on the same property, within the same year? Listing agents will benefit the most from this information which is evident by the articles' title.
Purpose #2 - To give the short sale investor an idea of the level of competency, character, and skills they should look for in a real estate agent or realtor. Choosing the right agent is an extremely important part of the short sale process.
Let's be frank. If you are a licensed real estate agent your primary goal is and always will be to prospect for listings and buyers. Not only am I a real estate investor I am also a licensed real estate agent. In addition, I work with a handful of other real estate agents who would find it hard to replace their income if I stopped giving them my business.
Did you know that a mortgage lender who holds title to a property that is in danger of foreclosure will often allow up to a 6% commission to be paid to a real estate agent if it is sold through a short sale? There is a huge market for agents who truly understand the short sales process and can handle the various tasks involved in order to assist the investor.
As an agent, I would suggest that you communicate with your broker before you attempt to pursue a short sale listing for the first time. Make sure that you are in line with the company and office guidelines and that you are not jeopardizing any terms of your license agreement. It will also be a wise idea to find out if any other agents in your office have had success listing short sale properties. Don't be surprised if your broker is not too familiar with the short sale process. I've found that many are not.
There are several items that are necessary for the process to work. First, you must be able to convince a short sale investor that you are capable of doing all of the following:
1. Pulling accurate comps that justify the amount of the short sale.
2. Writing up a sales contract.
3. Filling out a net sheet for short sale transactions.
4. Negotiating the terms of the agreement with the lender if needed.
5. Showing the property to prospective buyers.
6. Flexibility on terms of a traditional listing agreement.
7. Marketing the property.
8. Providing referrals and recommendations of valid service providers.
Your responsibilities will not be limited to the list above. There is a still a vast amount of hard work and dedication needed to become known as a preferred agent for short sale investors. However, the reward is well worth it.
Once you feel confident and knowledgeable of the short sale process you are now ready to market your services to investors. Short Sale investors who are being proactive and finding his/her deals before the foreclosure process starts will usually have the most need for your services. Agents that I work with spend more than 60% of their time matching my properties up with buyers, pulling comps, and filling out net sheets. I would say they spend approximately 6-8 hours on each deal and receive an average of 4.5% in commission that I almost always have pre-negotiated with the lender.
The real bonus is that if I decide to put the property back on the market immediately after the first closing I will 9 times out of 10 list it with the same agent. Now they have the opportunity to re-list the property and make another commission. Because of this arrangement, I always agree to pay a discounted commission. Once the property is re-listed, it typically sells quicker than the average listing; mainly because it is sold below market value which makes it an excellent purchase for another investor or a homebuyer looking for a steal of a deal.
The agents that I work with are capable of handling the short sale process from the moment I submit my package to the lender. Based upon my knowledge of certain lenders processes, I determine whether it's best for me to take on the negotiations as an investor, or if I would rather quarterback the deal and let my agent be the main point of contact. I always have that option. No matter which route I take I still make sure that the lender pays a commission. So it's a win-win situation for everyone involved.
I hope that you are not too confused at this point. I will do my best to explain more on this topic in part 2 of this article.