Ten Mistakes to Avoid When Doing Short Sales
Short sales are thrilling transactions. In a shortsale, an insolvent homeowner about to be foreclosed sells a property for less than what is owed. The remainder of the debt is forgiven. The key to being successful at this is to be a dedicated professional. Dedicated professionals know what to do and what to avoid. These are the top ten mistakes to avoid.
- Not knowing the business. To attempt a short sale without knowing what to do is simply reckless. Unless there is plenty of immediate help, most likely the transaction will fail. This is totally disrespectful of the client. Not only that – this brings bad reputation to the short sale business community.
- Not understanding the foreclosure process. Each state has its own foreclosure rules. In most states, there are two types of foreclosure, each with its own set of rules. To be effective in short sales, it is critical to dominate this subject.
- Not knowing the legal boundaries. In real estate, for the most part, the law is broken unintentionally. However, regardless of good intentions, the law is unforgiving of ignorance.
- Working with unmotivated clients. Short sales require full cooperation from clients who understand the benefits of the transaction. Attempting anything with unmotivated clients is a waste of time.
- Not being selective about transactions. Not all transactions are viable. Viable transactions have a reasonable chance of success and a potential profit congruent with the needed effort and risk. It is much better to have a few well-selected transactions than many random deals.
- Not walking out of a transaction when it is not working. Any negotiation in life needs to have an alternative. In shortsales one alternative must always be to discontinue the transaction. A short seller must always have the alternative of walking away if more convenient. The instant walking away is no longer an option, the negotiation ends, and the asking for favors starts.
- Not having the right team. Short sales are not a solo game. Good connections are must. These include title companies, mortgage brokers, building inspectors, attorneys, etc. There are plenty of competent professionals eager to contribute. It is not hard to find compatible teammates.
- Not explaining well the process to clients. This has to do with fear of the unknown. Not knowing what has to be done, or what will happen, is scary. Understanding matters makes clients a lot more confident and comfortable.
- Not being win-win. For any transaction of any kind to succeed, unless there is no other choice, everybody needs to benefit. People that see benefit make things happen. The benefits need to not only be real. They also need to be perceived as such. For a client perception is reality. A client not fully convinced of the shortsale benefits cooperates less. If matters do not improve, the client may even withdraw from the transaction.
- Being too greedy. Too much greed is real estate’s enemy number one. Wanting just a little more than what works often results in loss of great opportunities.
Short sales are professional endeavors. As such, it is just as important to know what to do as well as what to avoid. Avoiding the top ten short sales mistakes will result in a much more prosperous shortsales career.
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