So today I want to talk about the four questions that you need to ask any homeowner, any prospect that you come across in order to get the information that you need to get a contract.
So this can be for a short sale, or this could be for a traditional sale, depending on the answers to the questions.
And we get this a lot in our office where investors will say, “What questions do I need to ask before sending it over to you?” or realtors that say, “What do I need to be talking to the homeowners about to even determine if this is a short sale?”
So depending on these four questions and the answers to them, then you’ll know which direction to take. So let’s just dive right in.
How much do you owe, or what liens are you aware of on the property?
So, number one, how much do you owe, or what liens are you aware of on the property?
The reason why this is so important is because you want to make sure that whatever your offer is, as an investor, or if you’re a realtor, and you’re trying to figure out, if you can actually list the home, you need to make sure what’s owed on the property.
A lot of times people will just kind of make up this number or something that they think, they don’t actually know.
So whenever I ask this question, I always ask, “how do you know that number?” So say, for example, you come across a homeowner and they say, “Hey, I owe about $100,000 on the house.” Okay, great.
So, is that from a mortgage statement? Did the bank tell you that, how do you know, how did you come up with that number?
A lot of times if you are prospecting, pre foreclosures or people that are actually behind. A lot of times, they just look at the mortgage statement, and it doesn’t include the late fees and the interest and so you need to actually get a payoff from the lender.
So this is very important, get the payoff from the lender, because that is going to be the true number of what’s owed on the property.
The other thing to ask when you’re asking how much is owed is, “Do you have a second lien? Do you have a second mortgage? Are you aware of anything that’s outstanding on the house that would come up if we did a title search?”, because all of those fees are going to have to be factored in.
If the homeowner doesn’t have the funds, then they’re definitely not going to have funds to cover a homeowner’s association fee, or taxes, or a second mortgage. Whenever I ask about a second mortgage, I’ll ask a couple different ways because if they’re not paying on it, then they’ll forget.
So, out of sight, out of mind, right?
I’ll say, “Hey, have you ever had a second mortgage that you remember? Or do you remember taking one out?” so that way, I’m asking you a couple different ways to hopefully jog their memory.
Are they in foreclosure? How far behind are they on the mortgage?
Number two, the Most important question is “are they in foreclosure? How far behind are they on the mortgage?”, and if they are, you may be coming across probate liens or people that are in bankruptcy or people that might be upside down or have good equity, and maybe they’re not behind on their mortgage.
But that’s definitely something that you need to ask, because some people either won’t be aware of it, or they just won’t be forthcoming with that information upfront.
So ask if they’re in foreclosure and how far behind they are, if they are on their mortgage.
Are they on the mortgage or are they on the title?
The third question that you need to ask any prospects that you’re speaking to is, “are they on the mortgage or are they on title”, and this comes up a lot in divorce situations where you will be speaking with the wife and she’s on the deed, but the husband’s actually on the mortgage.
When you’re dealing with short sales specifically, remember, we’re negotiating with the bank. So if the person that you’re talking to is on the deed, so they can actually sell the home but they’re not actually on the mortgage, this can be a huge issue, because they’re not the ones that are actually financially responsible for the house.
So in that case, even though the husband is the one that signed off, saying that he doesn’t have any rights to the house, he’s the one that we actually have to work with in regards to negotiating with the bank.
As far as title, then she would be the one signing at closing. If this is not a short sale, then you just need to find out who’s on title, who actually owns the home, who is the person that’s making the decisions, so that you know that if you’re going to get this under contract, that you’re working with the right person.
This comes up a lot, I’ve seen situations where it’s a cousin, uncle, stepdad, sister, whatever, and we’re negotiating or working with them, and they’re not even the ones that have the right to sign the documents.
So remember, we’re all about not wasting time and being as efficient as possible so that way, anytime that you are talking to someone that you can get this to the closing table.
Why are they Selling?
The fourth question is “why are they selling?” In order to find out how to close the deal, how to get someone under contract you have to find out what’s motivating them. This is really important.
A lot of times, investors, entrepreneurs, or even realtors that are trying to close a deal, they try to talk someone into it.
Take a step back, be quiet, and listen to what the prospect has to say.
Find out what is driving them, why are they even talking to you? Why do they have any level of interest of selling at all? When it comes to short sales, I talked about in my book about the three motivating factors: time, credit or money.
I explain generally, it’s one of those things that are motivating them to actually want to move forward with the short sale. But if it’s a traditional sale, if they’re talking to you and they are still holding the conversation, there has to be a reason why.
Either they want more money in their pocket or they want more time to stay in the house, or they’re just trying to get out of this situation. So find that out, do less talking and more listening so you can figure out what’s going on and how you can use that to secure the deal.
I really hope this helps. I think that if you stick with these four questions, you have a good foundation to figure out an exit strategy or figure out what solution to be able to help this homeowner because remember, all of the exit strategies, they’re just tools in your toolbox to figure out how you can get this under contract.
Don’t throw away the leads if they owe too much, or if you can’t figure out a solution.
So hopefully this helps. We have the Facebook group, the only short sale group worth being a part of that you can always come and ask questions, as well as the book that I wrote Short Sales Uncensored that you can find on Amazon. So always feel free to reach out to us if you have any more questions or if we can help in any way.