An Agent’s Guide to Short Sales, Foreclosures, and REOs Master the Market of the Moment Breakthrough to Mastery
Main Ideas <ul><li>Perspective </li></ul><ul><li>The Foreclosure Process </li></ul><ul><li>Short Sales </li></ul><ul><li>F...
Perspective <ul><li>Opportunity Exists  </li></ul><ul><li>Dropping home prices can lead to defaults and foreclosures </li>...
Perspective  (continued) <ul><li>Are You Able, Ready, and Willing?  </li></ul><ul><li>“ These skills can be mastered— but ...
Perspective  (continued) <ul><li>Short Sales, Foreclosures, and REOs Require </li></ul><ul><ul><li>Leveraging systems, too...
The Foreclosure Process Page  11 REOs  Postforeclosure  Foreclosures  Public Auction  Short Sales Preforeclosure  Three Ph...
The Foreclosure Process   (continued) Phase 1:  Preforeclosure Short Sales Phase 2:  Public Auction Foreclosures Phase 3: ...
<ul><li>Defining the Three Areas </li></ul><ul><li>Short sale </li></ul><ul><li>Foreclosure </li></ul><ul><li>REO </li></u...
The Foreclosure Process   (continued) <ul><li>Why Do Properties Go into Foreclosure? </li></ul><ul><li>Subprime loan </li>...
The Foreclosure Process   (continued) <ul><li>Potential Challenges and Rewards </li></ul>How can you set yourself apart fr...
The Foreclosure Process   (continued) <ul><li>Other Options </li></ul><ul><li>Forbearance </li></ul><ul><li>Mortgage modif...
Short Sales <ul><li>The Win-Win </li></ul><ul><li>Six Key Sources </li></ul><ul><li>Qualifying Short Sale Candidates </li>...
Short Sales   (continued) <ul><li>The Win-Win </li></ul>Truth A short sale can be a win-win for the  agent , the  homeowne...
Short Sales   (continued) <ul><li>Six Key Sources </li></ul><ul><li>Your Solutions-Based Unique Selling Proposition (USP) ...
Short Sales   (continued) <ul><li>Qualifying Short Sale Candidates </li></ul><ul><li>Market pricing must be less than the ...
Short Sales   (continued) <ul><li>Additional Considerations </li></ul><ul><li>Bankruptcy </li></ul><ul><li>Private Mortgag...
Short Sales  (continued) Page 28 The Eight Steps to a Short Sale Close the Deal Step 8 Negotiate the Deal Step 7 Submit a ...
Short Sales  (continued) <ul><li>“ The selling and communication cycle  in a short sale is long and tenuous. You cannot wi...
Short Sales  (continued) <ul><li>Step 1: Gather Information </li></ul><ul><li>Proof of income and assets </li></ul><ul><li...
Short Sales  (continued) <ul><li>Step 2: Open Communication </li></ul><ul><li>Obtain and submit authorization </li></ul><u...
Short Sales  (continued) <ul><li>Step 3: Develop the Proposal </li></ul><ul><li>Information from “Step 1: Gather Informati...
Short Sales  (continued) <ul><li>Step 4: List the Home </li></ul><ul><li>Develop a pricing strategy </li></ul><ul><li>Educ...
Short Sales  (continued) <ul><li>Step 5: Obtain an Offer </li></ul><ul><li>Determine lender’s requirements </li></ul><ul><...
Short Sales  (continued) <ul><li>Step 6: Submit a Proposal </li></ul><ul><li>Add the offer to the proposal </li></ul><ul><...
Short Sales  (continued) <ul><li>Step 7: Negotiate the Deal </li></ul><ul><li>Balance negotiations between  lenders if mor...
Short Sales  (continued) <ul><li>Step 8: Close the Deal </li></ul><ul><li>Complete the deal within thirty days of lender a...
Short Sales  (continued) <ul><li>After the Short Sale </li></ul><ul><li>Ask the seller for a testimonial </li></ul><ul><li...
Short Sales  (continued) <ul><li>Are You Able, Ready, and Willing? </li></ul>What systems, tools, and people can you lever...
Foreclosures <ul><li>Develop a Criteria Filter </li></ul><ul><li>Buying at Public Auction </li></ul><ul><li>Are You Able, ...
Foreclosures  (continued) <ul><li>Develop a Criteria Filter </li></ul><ul><li>Location </li></ul><ul><li>Type </li></ul><u...
Foreclosures  (continued) <ul><li>Buying at Public Auction </li></ul><ul><li>Benefits </li></ul><ul><ul><li>Great deals </...
Foreclosures  (continued) <ul><li>Are You Able, Ready, and Willing? </li></ul>How can you leverage systems, tools, and peo...
REOs <ul><li>Breaking into the Business of REOs </li></ul><ul><li>Services That Listing Agents Provide in Working REOs </l...
REOs  (continued) <ul><li>Breaking into the Business of REOs </li></ul><ul><li>Apply to a lender or asset management compa...
REOs  (continued) <ul><li>Services That Listing Agents Provide in Working REOs </li></ul><ul><li>Put a notice on the front...
REOs  (continued) <ul><li>Services That Listing Agents Provide in Working REOs </li></ul><ul><li>Complete tasks quickly </...
REOs  (continued) <ul><li>Leverage Great Administrative Help </li></ul><ul><li>“ There is a lot of pressure in REO that yo...
REOs  (continued) <ul><li>Break into the Business of Servicing REO Buyer Leads </li></ul><ul><li>REO listing agents focus ...
REOs  (continued) <ul><li>Educate Your Buyers </li></ul><ul><li>Buyer may have to be patient </li></ul><ul><li>Lenders don...
REOs  (continued) <ul><li>Are You Able, Ready, and Willing? </li></ul>What systems, tools, and people can you leverage to ...
The Bottom Line <ul><li>Some markets have a growing need. </li></ul><ul><li>You can succeed! </li></ul><ul><li>Prequalify ...
Productivity Boosters <ul><li>Market With Your USP </li></ul><ul><li>Stay in Touch After the Short Sale </li></ul>Page 59
My Action Plan <ul><li>Don’t put away this guide without developing a plan to put what you have learned into action! </li>...
Take the other courses in the Breakthrough to Mastery Guide series! <ul><li>Gaining Mind over Market </li></ul><ul><li>Ups...
<ul><ul><li>Thanks for being here! </li></ul></ul><ul><ul><li>Please complete an  </li></ul></ul><ul><ul><li>evaluation fo...
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Short Sales Foreclosures Re Os Instructor Power Point V3[1]

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Short Sales Foreclosures Re Os Instructor Power Point V3[1]

  1. 1. An Agent’s Guide to Short Sales, Foreclosures, and REOs Master the Market of the Moment Breakthrough to Mastery
  2. 2. Main Ideas <ul><li>Perspective </li></ul><ul><li>The Foreclosure Process </li></ul><ul><li>Short Sales </li></ul><ul><li>Foreclosures </li></ul><ul><li>Real Estate Owned Properties (REOs) </li></ul><ul><li>The Bottom Line </li></ul>
  3. 3. Perspective <ul><li>Opportunity Exists </li></ul><ul><li>Dropping home prices can lead to defaults and foreclosures </li></ul><ul><li>Foreclosure creates needs </li></ul><ul><ul><li>Homeowners </li></ul></ul><ul><ul><li>Investors </li></ul></ul><ul><ul><li>Financial institutions </li></ul></ul><ul><ul><li>REO listing agents </li></ul></ul><ul><li>Look to your local market </li></ul>Pages 7-8
  4. 4. Perspective (continued) <ul><li>Are You Able, Ready, and Willing? </li></ul><ul><li>“ These skills can be mastered— but they will take time.” </li></ul><ul><li>Dave Jenks </li></ul><ul><li>Keller Williams Realty International </li></ul>Page 10
  5. 5. Perspective (continued) <ul><li>Short Sales, Foreclosures, and REOs Require </li></ul><ul><ul><li>Leveraging systems, tools, and people </li></ul></ul><ul><ul><li>Time </li></ul></ul><ul><ul><li>Acceptance of risk </li></ul></ul>Page 10
  6. 6. The Foreclosure Process Page 11 REOs Postforeclosure Foreclosures Public Auction Short Sales Preforeclosure Three Phases of Foreclosure Process and Three Areas of Business Opportunity
  7. 7. The Foreclosure Process (continued) Phase 1: Preforeclosure Short Sales Phase 2: Public Auction Foreclosures Phase 3: Postforeclosure REOs 1. Homeowner misses loan payment . 30 60 90 120 150 180 210 240 270 300 330 360 390 days 2. Late charges begin accruing. 4. Notice of Intent to Foreclose publicized. 5. Auction 6. Redemption Period 7. REO 3. Lender sends Notice of Default. 0 Pages 12-13
  8. 8. <ul><li>Defining the Three Areas </li></ul><ul><li>Short sale </li></ul><ul><li>Foreclosure </li></ul><ul><li>REO </li></ul>The Foreclosure Process (continued) Page 14
  9. 9. The Foreclosure Process (continued) <ul><li>Why Do Properties Go into Foreclosure? </li></ul><ul><li>Subprime loan </li></ul><ul><li>Unable to refinance </li></ul><ul><li>Zero-down loan </li></ul><ul><li>Loss of income </li></ul><ul><li>Unexpected events </li></ul><ul><li>Market shifts </li></ul>Pages 15-16
  10. 10. The Foreclosure Process (continued) <ul><li>Potential Challenges and Rewards </li></ul>How can you set yourself apart from the myriad of ads and calls proposing questionable schemes? What challenges and rewards do you foresee? Page 16
  11. 11. The Foreclosure Process (continued) <ul><li>Other Options </li></ul><ul><li>Forbearance </li></ul><ul><li>Mortgage modification </li></ul><ul><li>Refinance with an FHA-backed loan </li></ul>Advise the homeowner to contact their lender immediately. Page 17
  12. 12. Short Sales <ul><li>The Win-Win </li></ul><ul><li>Six Key Sources </li></ul><ul><li>Qualifying Short Sale Candidates </li></ul><ul><li>Additional Considerations </li></ul><ul><li>Eight Steps to a Short Sale </li></ul><ul><li>After the Short Sale </li></ul><ul><li>Are You Able, Ready, and Willing? </li></ul>Page 18
  13. 13. Short Sales (continued) <ul><li>The Win-Win </li></ul>Truth A short sale can be a win-win for the agent , the homeowner facing foreclosure , and the lender . Pages 19-20
  14. 14. Short Sales (continued) <ul><li>Six Key Sources </li></ul><ul><li>Your Solutions-Based Unique Selling Proposition (USP) </li></ul><ul><li>Notice of Default Lists </li></ul><ul><li>FSBOs </li></ul><ul><li>Listing Appointments </li></ul><ul><li>Lenders </li></ul><ul><li>Public Notices of Auction </li></ul>Pages 21-23
  15. 15. Short Sales (continued) <ul><li>Qualifying Short Sale Candidates </li></ul><ul><li>Market pricing must be less than the loan amount. </li></ul><ul><li>The homeowner must be financially insolvent. </li></ul><ul><li>The homeowner must demonstrate a hardship. </li></ul><ul><li>The homeowner must be cooperative. </li></ul>Pages 24-26
  16. 16. Short Sales (continued) <ul><li>Additional Considerations </li></ul><ul><li>Bankruptcy </li></ul><ul><li>Private Mortgage Insurance (PMI) </li></ul><ul><li>Imminent foreclosure date </li></ul>Page 27
  17. 17. Short Sales (continued) Page 28 The Eight Steps to a Short Sale Close the Deal Step 8 Negotiate the Deal Step 7 Submit a Proposal Step 6 Obtain an Offer Step 5 List the Home Step 4 Develop the Proposal Step 3 Open Communication Step 2 Gather Information Step 1
  18. 18. Short Sales (continued) <ul><li>“ The selling and communication cycle in a short sale is long and tenuous. You cannot wing it. But if you stay with it, if you nurture this skill set, you can become an Opportunity Warrior in a challenging market.” </li></ul><ul><li>Dave Jenks </li></ul><ul><li>Keller Williams Realty International </li></ul>Page 28
  19. 19. Short Sales (continued) <ul><li>Step 1: Gather Information </li></ul><ul><li>Proof of income and assets </li></ul><ul><li>Proof of hardship </li></ul><ul><li>Property information </li></ul><ul><li>Loan information </li></ul>Pages 29-31 Short Sale Checklist– Information Gathering
  20. 20. Short Sales (continued) <ul><li>Step 2: Open Communication </li></ul><ul><li>Obtain and submit authorization </li></ul><ul><li>Initiate communication with lender </li></ul><ul><ul><li>Short sale application packet </li></ul></ul><ul><ul><li>Name and direct number of decision maker in Loss Mitigation Department </li></ul></ul><ul><ul><li>Information about their policies </li></ul></ul><ul><li>Systematize communication </li></ul>Pages 31-33 Short Sale Contact Record
  21. 21. Short Sales (continued) <ul><li>Step 3: Develop the Proposal </li></ul><ul><li>Information from “Step 1: Gather Information” </li></ul><ul><li>Business case for accepting a reduced price </li></ul>Pages 33-34 Short Sale Proposal Packet Checklist
  22. 22. Short Sales (continued) <ul><li>Step 4: List the Home </li></ul><ul><li>Develop a pricing strategy </li></ul><ul><li>Educate the seller </li></ul><ul><li>Considerations </li></ul><ul><ul><li>List home “as is” </li></ul></ul><ul><ul><li>Enter “Short Sale” in the agent remarks on the MLS (if optional) </li></ul></ul><ul><ul><li>Indicate “variable commission–split with buyer” on the MLS </li></ul></ul>Pages 35-36
  23. 23. Short Sales (continued) <ul><li>Step 5: Obtain an Offer </li></ul><ul><li>Determine lender’s requirements </li></ul><ul><li>Ask potential buyers for their best offers </li></ul><ul><li>Give the lender the best offer </li></ul><ul><li>Seller should approve offer </li></ul><ul><li>Lender will order a broker’s price option (BPO) </li></ul><ul><li>Educate the buyer </li></ul>Pages 36-38 Short Sale Disclosure Example
  24. 24. Short Sales (continued) <ul><li>Step 6: Submit a Proposal </li></ul><ul><li>Add the offer to the proposal </li></ul><ul><ul><li>Create a proposal for each loan </li></ul></ul><ul><li>Send it by registered mail to all appropriate contacts </li></ul><ul><li>Follow up </li></ul><ul><li>Be persistent </li></ul>Page 38
  25. 25. Short Sales (continued) <ul><li>Step 7: Negotiate the Deal </li></ul><ul><li>Balance negotiations between lenders if more than one lender </li></ul><ul><li>Create systems for communication </li></ul><ul><li>Consider leveraging help </li></ul><ul><ul><li>Services are available to negotiate </li></ul></ul>Pages 39-40 Short Sale Contact Record
  26. 26. Short Sales (continued) <ul><li>Step 8: Close the Deal </li></ul><ul><li>Complete the deal within thirty days of lender acceptance </li></ul><ul><li>Prepare so there are no surprises at the closing </li></ul><ul><ul><li>Seller cannot bring cash to the closing </li></ul></ul><ul><ul><li>Alert the closing company </li></ul></ul>Pages 40-41
  27. 27. Short Sales (continued) <ul><li>After the Short Sale </li></ul><ul><li>Ask the seller for a testimonial </li></ul><ul><li>Put the seller in your Met Database </li></ul><ul><li>Put the seller on a 33 Touch </li></ul>Page 42
  28. 28. Short Sales (continued) <ul><li>Are You Able, Ready, and Willing? </li></ul>What systems, tools, and people can you leverage to master short sales? Page 43
  29. 29. Foreclosures <ul><li>Develop a Criteria Filter </li></ul><ul><li>Buying at Public Auction </li></ul><ul><li>Are You Able, Ready, and Willing? </li></ul>Page 44
  30. 30. Foreclosures (continued) <ul><li>Develop a Criteria Filter </li></ul><ul><li>Location </li></ul><ul><li>Type </li></ul><ul><li>Economic </li></ul><ul><li>Condition </li></ul><ul><li>Construction </li></ul><ul><li>Features </li></ul><ul><li>Amenities </li></ul>Pages 44-45
  31. 31. Foreclosures (continued) <ul><li>Buying at Public Auction </li></ul><ul><li>Benefits </li></ul><ul><ul><li>Great deals </li></ul></ul><ul><ul><li>Possibly one lender </li></ul></ul><ul><li>Challenges </li></ul><ul><ul><li>Pay at sale or soon afterward </li></ul></ul><ul><ul><li>Sold “as is” </li></ul></ul>Pages 45-46
  32. 32. Foreclosures (continued) <ul><li>Are You Able, Ready, and Willing? </li></ul>How can you leverage systems, tools, and people to increase your knowledge of foreclosures, and to solidify your relationships with investors? Page 47
  33. 33. REOs <ul><li>Breaking into the Business of REOs </li></ul><ul><li>Services That Listing Agents Provide in Working REOs </li></ul><ul><li>Leverage Great Administrative Help </li></ul><ul><li>Break into the Business of Servicing REO Buyer Leads </li></ul><ul><li>Educate Your Buyers </li></ul><ul><li>Are You Able, Ready, and Willing? </li></ul>Page 48
  34. 34. REOs (continued) <ul><li>Breaking into the Business of REOs </li></ul><ul><li>Apply to a lender or asset management company </li></ul><ul><li>Leverage relationships </li></ul>Pages 49-51
  35. 35. REOs (continued) <ul><li>Services That Listing Agents Provide in Working REOs </li></ul><ul><li>Put a notice on the front door </li></ul><ul><li>Negotiate “cash for keys” or CFK </li></ul><ul><li>Accompany the sheriff on evictions </li></ul><ul><li>Secure and rekey the property </li></ul><ul><li>Clean the house </li></ul><ul><li>Repair the home </li></ul><ul><li>Pay utility bills </li></ul><ul><li>Manage the property </li></ul>Pages 52-53
  36. 36. REOs (continued) <ul><li>Services That Listing Agents Provide in Working REOs </li></ul><ul><li>Complete tasks quickly </li></ul><ul><li>Watch your accounts receivable </li></ul>Pages 53-54
  37. 37. REOs (continued) <ul><li>Leverage Great Administrative Help </li></ul><ul><li>“ There is a lot of pressure in REO that you might not get in the residential side. We have very demanding clients who are always threatening to take our business away. But we love it .… Once you get your name out there, the business just starts coming.” </li></ul><ul><li>Angela Larson </li></ul><ul><li>Roseville, Minnesota </li></ul>Page 55
  38. 38. REOs (continued) <ul><li>Break into the Business of Servicing REO Buyer Leads </li></ul><ul><li>REO listing agents focus on REO listings </li></ul><ul><li>Get into relationships with REO listing specialists </li></ul>Pages 56
  39. 39. REOs (continued) <ul><li>Educate Your Buyers </li></ul><ul><li>Buyer may have to be patient </li></ul><ul><li>Lenders don’t consider emotional letters </li></ul><ul><li>Lenders are looking for the cleanest and easiest deals </li></ul><ul><li>Contract requires additional paperwork </li></ul><ul><li>Title will be clean </li></ul>Pages 56-57
  40. 40. REOs (continued) <ul><li>Are You Able, Ready, and Willing? </li></ul>What systems, tools, and people can you leverage to master REOs? Page 57
  41. 41. The Bottom Line <ul><li>Some markets have a growing need. </li></ul><ul><li>You can succeed! </li></ul><ul><li>Prequalify yourself first. </li></ul><ul><ul><li>Can you leverage systems, tools, and people? </li></ul></ul><ul><ul><li>Can you devote time to developing these skills? </li></ul></ul><ul><ul><li>Can you accept a level of risk? </li></ul></ul>Page 58
  42. 42. Productivity Boosters <ul><li>Market With Your USP </li></ul><ul><li>Stay in Touch After the Short Sale </li></ul>Page 59
  43. 43. My Action Plan <ul><li>Don’t put away this guide without developing a plan to put what you have learned into action! </li></ul><ul><li>Refer to the Action Plan on pages 60-63 of the guide to assess your strengths and areas for improvement. </li></ul><ul><li>Write down steps you will take to improve your skills—complete it, share it, and commit to it! </li></ul>Pages 60-63
  44. 44. Take the other courses in the Breakthrough to Mastery Guide series! <ul><li>Gaining Mind over Market </li></ul><ul><li>Upshifting Your Lead Generation </li></ul><ul><li>Seller Pricing Strategies </li></ul><ul><li>Seller Staging Strategies </li></ul><ul><li>Lead Capture and Conversion </li></ul><ul><li>Internet Lead Capture and Conversion </li></ul><ul><li>Creating Urgency to Buy </li></ul><ul><li>Bulletproofing Transactions </li></ul><ul><li>Expense Management </li></ul><ul><li>Effective People Leverage  </li></ul><ul><li>Financing Solutions </li></ul>
  45. 45. <ul><ul><li>Thanks for being here! </li></ul></ul><ul><ul><li>Please complete an </li></ul></ul><ul><ul><li>evaluation for </li></ul></ul><ul><ul><li>this session. </li></ul></ul>

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