How to Present Yourself to the Bank During the Short Sale

Hi Folks,

Wow! I never got over how great Hawaii is...warm, sunny, nice people, great food, did I mention - warm:-).

We are super excited to teach this class this week. We have almost 150 people coming! We are adding a day on the bus to tour houses on the island...maybe we can find something for ourselves:-).

When you first start doing short sales, you may not know how to present yourself to the bank. Here are some tips that should help...

The key to success is to pin the rep down as to when you can expect an answer. If you are dealing with a bank for the first time, you may want to call the loss mitigation department to confirm that the bank accepts short sales before you spend time preparing the entire package.

All of the larger banks do short sales:

• Washington Mutual
• Bank of America
• Wells Fargo
• Countrywide Bank
• First Union
• Option One Mortgage Corporation
• Ocwen Financial Corporation
• First Franklin
• Litton Loan Servicing

There are many more. The problem with calling the bank first is that you may get a new person who has no idea what a short sale is and tells you no when, in fact, the bank does do short sales. We prefer to prepare the package, call loss mitigation, and ask who we need to fax the package to in order to get our deal accepted. We assume that all banks will say yes.

Most banks do say yes to some sort of a short sale. If you have a property worth $100,000 with a $100,000 mortgage balance, and the bank accepts $90,000, the bank considers that a short sale. It’s just not a short sale we would accept.

If the bank does not have a loss mitigation department, ask for the foreclosure department, workout department, loan modification department, late payment department, bankruptcy, or who ever helps homeowners in distress.

Give the seller’s name and loan number and ask for the representative who is handling the seller’s account. Once you have the right person on the line, ask for the fax number and fax the authorization to release form while you are on the phone with the rep.

Before you begin dealing with the loss mitigation reps, it is important you understand the mind-set of this person. Most of these folks are overworked and underpaid. Remember, some have as many as 700 files on their desk at any given time. Because these reps are so overwhelmed with their case loads, they often blow you off on the phone if you don’t appear to know what you are doing.

There are several ways to represent yourself to loss mitigation:

• As a friend. You could represent yourself as a friend trying to help. The problem with this approach is that the rep may think you have no experience and may not want to bother with you. On the positive side, the bank may like the fact that you are not a smooth-talking investor.
  
• As an investor. The rep may think that as an investor you are out to take advantage of the homeowners as well as make a killing from the bank’s loss. On the positive side, the rep will like the fact that you have experience and will be less trouble than someone with no experience. With bank reps having as many properties to unload as they currently have, presenting yourself as an investor is a really good thing. The reps know that you have experience, that they won’t have to train you, and that you will make their hectic job easy.
  
• As a real estate agent (if you have a license). The bank realizes that as an agent you are a neutral third party, but the bank may not have the confidence that you will follow through without a buyer, because agents show houses, not purchase them. On the positive side, the bank may take your offer more seriously because you are an agent and are considered a professional.
  

You have to decide which role best suits you. We have been able to use all three with great success. There is no right or wrong way to present yourself. The key is to let the rep know that you are easy to work with and will make the transaction as smooth as possible.

When speaking with the loss mitigation representative, always be professional and refer to the sellers by their first names as often as possible. Bring as much emotion into the conversation with the rep as possible in the hope that this will help the rep’s decision to accept a short sale become more meaningful rather than just financial.

Your initial conversation with the loss mitigation representative will go something like this:

You: Hello, Mary, my name is John and I am working with Bob and Sally Brown to help them with their situation. May I have your fax number so I can send you my authorization to release?

Bank: Sure, my fax is 555-456-7890.

You: Hold on, I’ll send it right now. (Fax it while you have the rep on the phone.)

Bank: Okay, I’ve received it. How can I help you?

You: As you know, Bob and Sally are in foreclosure. I told them I would do my best to help them if I could. Upon researching the property it looks as if they owe more than it’s worth. Bob thinks their mortgage balance is $100,000. Is that correct?

Bank: Yes, it is.

You: Great! When is the property set for the sheriff’s sale? My real estate agent says the property is worth only about $40,000 to $50,000 because it needs so much work. Based on the fact that Bob and Sally owe far more than their property is worth, I’m willing to purchase the property, but only if you can take a short sale. Where do we need to be pricewise to get this deal closed?

Bank: Fax a sales contract and a net sheet and we’ll see what we can do.

You: Great, Mary. I will have that faxed to you as soon as possible. I’d like you to know that I am prepared to close quickly and will not make you work hard on this deal only to bail out at the end. I can close as soon as you can get me a yes.

Bank: Fine.

You: I’d like to ask you a few questions if I may. Do you make the decisions or does your boss?

Bank: My boss does.

You: Great. How often do you meet with your boss?

Bank: I meet with my boss twice a month.

You: Great. When was the last time you met with your boss?

Bank: We met last week.

You: So … if I get you everything you need today, will you be able to present my offer to your boss next week?

Bank: Yes, if you get the information I need I’ll present your offer next week.

You: Okay, great. I’ll get you as much information as I can by the end of the day. Then I’ll call you to see if my offer is in a range that your bank can accept. What percentage does your bank usually discount?

Bank: It’s different with every deal. Get your offer to me and we’ll discuss it then.

You: One last thing: I just want to remind you that I can close quickly. I am sending you a cover letter, a sales contract, a hardship letter from the homeowners, a list of repairs, a net sheet, and pictures. Is there anything else your bank requires?

Bank: Wow, it sounds like you have a great package ready. That will be plenty of information to get started. Get your package to me and I’ll do my best.

You: Great, I’ll stay in touch.

See how often we use the homeowner’s names? We also reassured the rep that we could close quickly. We also told the rep what we were sending and asked if there were any other items the bank required. This shows your professionalism and experience.

Once your package is submitted, follow up until you get a yes.

OK - that's it for now. I have to get some sun before the sun sets...

Have a Wonderful Evening,

Dwan

www.youtube.com/dwanbenttwyford

Look at the bobble head video - it's so funny!