As you know, the real estate market has changed dramatically over the last couple of years.
Properly handling homeowners who are in Foreclosure or heading for Foreclosure has become something everyone in the Real Estate market has to deal with.
The trouble is, many of the issues and options that the homeowner faces is not fully understood by most Real Estate Agents.
If you are currently working with clients who are behind in their payments or know individuals who need a short sale, I would like to discuss an opportunity with you.
I want to offer my services (at no cost to you) to help you earn more commissions and close more deals. The process is really simple. We work with homeowners, realtors, and lenders to arrive at a win/win/win situation for all parties involved. I have seen many homeowners with their properties listed (“Subject to Lender Approval”) that end up losing the house to foreclosure when it didn’t need to happen. With a proper strategy in place, we offer the homeowner and you the best opportunity to get the house sold and earn your commission. We provide you with FREE leads, FREE listings, a direct mail campaign, and educational (we perform workshops), negotiation, and closing services as needed.
This booklet is designed to help Real Estate Agents accomplish the following:
- Educate agents on how to capitalize on the "pre-foreclosure" market and make additional commissions through short sales.
- Educate agents on how to help homeowners in foreclosure who are desperately looking for help by understanding all their options.
- Show agents additional marketing and commission streams in pre-foreclosures.
- Overcome the TOP 7 Agent obstacles.
HOMEOWNERS IN CRISIS
Working the foreclosure market does require some unique skills and experience. The homeowner’s reliance on advice imposes an obligation to maintain the highest standards of technical competence and integrity. Which means that we must always place the best interests of the homeowner above all else, and fully disclose the facts representing the true costs, benefits, and limitations of any recommendation.
Facing foreclosure is an emotionally charged event. Most homeowners in these though situations have feelings of fear and anxiety. They are in need of answers to their situation. There is a host of bad information out there. We talk with homeowners everyday that have been taken advantage of and we help them understand all their options.
Homeowners are facing more issues than they currently are aware of. We walk them through all their options and all the complications they may face down the road. In some cases, lenders may choose to seek a deficiency judgment against the seller for the shortfall. As part of our negotiations most lenders will waive their right to a deficiency judgment as part of the settlement. Some lenders may choose to send a 1099C for the shortfall, creating a tax liability for the seller. Short sales minimize the loss, and therefore any shortfall reflected on a 1099C. Depending on their individual circumstances they may fall under the Mortgage Debt Forgiveness Act of 2007 and their debt will be forgiven. Other individuals will need to get with a competent accountant to show insolvency (IRS Pub 523, Internal Revenue Code Form 982 Sec 121).
Working with us, homeowners are told the whole story so they can make the best decision for themselves. The homeowner doesn’t pay for a thing and they can avoid a foreclosure on their credit report. This allows sellers to have a greater peace of mind and to get on with their lives! There is nothing better than helping individuals who are in trouble and moving them to a better circumstance.
THE CURRENT FORECLOSURE CRISIS
The foreclosure crisis that we are currently in is not going away anytime soon. The number of individuals heading for foreclosure continues to increase as nearly 25% of all mortgages (10 million) carry adjustable interest rates. That means that one in eight households with ARMS that originated in 2004 and 2005 will default on these loans. On top of this, the foreclosure crisis has spread beyond the sub-prime, conventional loans. There are a growing number of FHA loans that are either in foreclosure or delinquent. This problem is much larger than just the sub-prime market. With all this, it is also important to understand that it costs a lender about $80,000 per foreclosure and they only re-coup an average of 59% of the original loan amount per foreclosure! Those are staggering losses. Now you can see why lenders are more desirous for individuals to perform short sales than to let the property go all the way to the Sheriffs sale even though it doesn’t always seem that way.
KNOWING ALL THIS, WHAT IF YOU COULD……?
What if you could capitalize on this market trend and use it as an opportunity to reach out and help people like never before. Everyday there are more people who need your help. With the right information and tools you could help as many as you desire. There are enormous opportunities in the pre-foreclosure and short sale market. We want to partner up with you and help you achieve your goals. At NJ Home Relief we specialize in handling all the different options available to the homeowner facing foreclosure. We are Lender Mediation Specialists and Certified Mortgage Fraud Counselors. We offer a unique approach and offerings that I know you will find indispensable in growing your business. We are here to provide solutions and help you to succeed. Working with us allows for these benefits and more:
- You will be given a weekly list of current leads of homeowners facing foreclosure. This always means potential FREE listings for you when homeowners call our office from your area.
- Pay no fees (seller, buyer, or agent).
- Outsource all the short sale negotiations to an expert who has handled hundreds of short sales. We work with you to handle all the paperwork and negotiations so that you can concentrate on what you do best. Imagine being free from having to make all those calls to the lender. You can concentrate on getting new clients and selling real estate instead.
- Get weekly status reports to tell of the progress being made on your listing.
- Have the title and escrow handled by proven experts who can handle these types of transactions.
- And most importantly, EARN FULL COMMISSIONS when the properties transfer.
WHAT IS A SHORT SALE?
When a homeowner desires to sell their house but they owe more than could possibly be obtained in the sale including closing costs and commissions a short sale is required. A short sale occurs when a lender accepts less than full payoff on the mortgage(s) to allow transfer of a property to a new buyer. Short sales are typically performed on houses in pre-foreclosure that are overleveraged. Approval must be obtained by all mortgages and junior lien holders. Short sales do not apply to houses that are currently bank owned (REOs). When will a lender consider a short sale? Consider these factors that affect your ability to perform a short sale:
- There is no equity when closing costs and commissions are factored in.
- The homeowner is in default (pre-foreclosure) or default is eminent.
- Homeowner wants to get out of their situation.
- When a lender receives an offer that is higher than what they expect to net by foreclosing.
- Realtor wants to sell the property and outsource the extra work involved in the short sale negotiations with lenders.
Why would a lender consider a short sale? Lenders are in the business of loanin money, not managing and selling real estate. Non-performing loans reduce what can be loaned out by as much as 2-8 times the amount of the bad debt. Lenders have Loss Mitigation Departments responsible for mitigating, or minimizing, losses from defaulted mortgage loans.
TOP 7 OBSTACLES TO EARNING COMMISSIONS THRU SHORT SALES
In a slow market homeowners who want to sell but cannot because they owe more than what the property is worth will list with a Realtor. Real estate agents take these listings with the hope of selling them for what the homeowner owes on the mortgage. The problem is that if the homeowner owes more than what the home is worth then the chances of selling this house quickly are slim to none. Many real estate agents truly do not know what to do with a home in foreclosure that is over leveraged. This gives us an opportunity to bring some clarity to the situation and provide options for the seller and the agent.
Real Estate Agents are sometimes reluctant to pursue short sales for several reasons.
- Commissions are discounted by the lenders. We guarantee a full commission paid on every deal that closes with extra bonuses depending on the circumstances of the deal. The listing agent and buyer’s agent each receive a 3% commission.
- Agents have found them to be a waste of effort and time when an acceptable discount could not be achieved. By working with us you maximize your opportunity to be successful and close the deal and minimize the amount of time and effort you spend on the short sale. Since we work through all the process with the lender you are not having to spend your time on it, therefore you can spend your time more wisely.
- Negotiate a discount and the buyer does not close. Working with NJ Home Relief eliminates a lot of this simply because of the strategies we use to get better discounts from the lenders.
- Estimating how long it would take the bank to approve an offer or what commission the bank would pay often led to unhappy clients and colleagues. A lot of short sales fail because the lender is not responsive enough and the potential buyer walks away before the short sale can be approved. Working with us, the short sale process will already be started and the BPO completed. We will coordinate with the agent on when an offer can be accepted and on the listing price depending on negotiations. Our process allows us to respond more to potential buyers and often times accept or make counter offers immediately. This ensures that when a buyer writes a qualified offer that is accepted the transaction can close in a timely fashion (30-45 days). Closings therefore take 15-60 days instead of 3-6 months because the package has already been submitted and the BPO already completed.
- Need an written offer to send to the banks and there are no current offers. Agents are naturally hesitant to submit an offer when a buyer has not yet been secured and/or a buyer was secured but the offer not approved. We will make an offer on every single short sale property the agent has listed as long as the property meets our criteria. Our offers are used to get the short sale process started. Once the BPO is completed we will negotiate with the lenders and raise the offer price thru lender negotiations.
- Multiple liens and judgments are too difficult to negotiate. All our offers are CASH offers and being we are the ones purchasing the properties this allows us to negotiate in ways that would be impossible for a Real Estate Agent to perform. We can get second and third lien holders to agree to a sale when others cannot. This means that we can get more deals closed that would otherwise never be able to get done.
- Waste their time negotiating with the lenders when they should be promoting their properties and/or themselves.
We handle and will perform all the negotiations and most of the time we handle the BPO and the BPO agent. This allows the Real Estate Agent to spend their time doing what they do best – marketing and promoting themselves and their houses. This allows you to continue to find more listings (sellers) and buyers instead of dealing with the lender.
This process allows you to take an active role in processing your potential short sales instead of just listing the property and waiting for a buyer. Not only do you not have to worry about negotiating with the lender, but with the process already going forward you have a built in buyer. We protect all commissions and ensure that you are always paid on every deal. You have nothing to lose and much to gain. We will help you overcome all obstacles that are keeping you from succeeding. The following list of some rewards to agents is a start:
- Allows properties with no equity to be sold at attractive prices in a short time.
- There is less competition for properties that have little or no equity.
- Allows you to earn full commissions on sales that would have been lost without a short sale.
- Provides a way for you to help people in financial difficulty who couldn’t otherwise be helped.
- Easy to demonstrate benefits to sellers in need.
- Creates new opportunities in a growing market with little competition.
- You set the price where it will sell quickly, since it is a forced sale, earning commissions on sales you would not otherwise make.
- Receive strong testimonials and referrals from people who couldn’t be helped by anyone else.
WORKING THE PRE-FORECLOSURE MARKET
We offer a systemic approach designed to help you get the most out of current market conditions. We want to team up with Real Estate Agents that we can share both leads and listings with. Each week we will provide you with a list of homeowners who are in default. We will help you in speaking with them, setting up appointments, and everything that is needed to accomplish handling their foreclosure. We will also provide all the paperwork needed and agreements. We will be sending out a direct mail piece to everyone in your area. This means that if/when someone in your area calls our office and wants our help we will be giving you the listing. Did you get that – FREE listings. We need experts in each area that we can work with and trust. We are also available for speaking engagements and workshops for finding additional leads and helping you to build additional credibility in your area. To recap, we will do the following for you (all at no cost to you):
- Provide you a weekly list of leads.
- Direct mail to everyone in your area.
- Educational, Negotiation, and Closing services (as needed).
- All leads that call into our office that are in your area are given to you to list.
STEPS IN A SHORT SALE
What follows is a typical scenario to help you get a picture of the entire process. Refer an owner in foreclosure, or expects to be, who is both interested in selling and participating. We determine the likelihood of success based on the ability to negotiate a discount and the ability to resell the property. We supply all the required forms and agreements that must be completed by the homeowner. We confer with you (the listing agent) to explain the process and coordinate gathering the required documents. Agent obtains the short sale package from the homeowner in foreclosure. We prepare, submit, and negotiate the short sale package, driving the entire process for all lien holders. We prepare a repair estimate. We make an investor offer to the start the process. We follow up on offer and get the lender to order a BPO (Brokers Price Opinion). A BPO is ordered by the lender to obtain the “as is” value, which is used to determine if the loan can be discounted and by how much. If our offer is accepted by the lender we will buy it with a quick cash close. If our offer is declined the agent lists or re-lists at a conservative CMA price, subject to lender approval, and reduces the price as necessary until sold. Once an offer from an end buyer is accepted we will negotiate a small spread from the lender and sell it to the end buyer through the agents involved. The negotiated settlement will stipulate the lender is to pay all Seller closing costs, including real estate commissions. Closing occurs with appropriate lawyers or title agencies.
Seems simple enough doesn’t it? In this short paragraph are a lot of steps that must be performed, but we have done it many times so we know what needs to be done.
CONCLUSION
A common objection among Realtors regarding a short sale is their concern that they have a “fiduciary” responsibility to the lender who has started the foreclosure process.
Some Real Estate Agents mistakenly believe that they are responsible for keeping the lender abreast of any new offers on the property during the negotiation process – even after the initial offer has been made to the bank.
This is erroneous. Realtors work for the homeowner, not the bank. While the bank has veto power over an offer, it is the homeowner who makes the decision regarding which offer to accept and submit.
The homeowner decides which potential buyer to work with, not the bank. Price and terms are not a concern. Realtors are correct in that they are obliged to present all offers – but to the other party on the listing agreement contract (the seller). NOT THE LENDER. The contract between the seller and the agent negates any conflict relating to a perceived sense of fiduciary responsibility by the Realtor toward the bank. It clearly states the agent’s obligation to work for the seller and to do what the seller asks. An effective agent acts as a coach, but ultimately does what the seller asks or agrees for him or her to do.
I believe that there is a lot of business we could and should be doing. I look forward to talking with you to go over all the details of our process to help you and your business. Please feel free to give us a call so we can meet and discuss the entire offerings of what NJ Home Relief can do for you. If you have any questions, concerns, or ideas please don’t hesitate to give us a call. We are here to help you and your business.
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