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November 17

What Is A Short Sale? How Does It Apply To Your Business?

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In this video, I go through what a short sale actually is. I realized I’ve never broken down what a short sale is, what the process looks like, or how it applies to your business as a realtor. So, we’re going to cover that today!

Video Transcript

hey guys Nicole Espinosa with the short sale queen and I’ve been going over all your questions and looking at the Facebook group and looking at the channel and I realized that I’ve spent so much time this last year in this journey with this channel of coming up with videos of really honestly just trying to provide as much value as possible with really complicated things but I have yet to break down what an actual short sale is [Music] I want to make this as simple as possible if you are a new subscriber or if you are new to the industry or you have been doing this a while and you just really don’t understand um I’m gonna this video is for you this is going to be a breakdown of what a short sale is and how you can apply this to your business in order to qualify for a short sale a homeowner has to owe more than the house is worth so they have to owe with all closing costs mortgages everything they have to owe more than the actual value of the home so let’s break that down you have a mortgage of a hundred thousand dollars you have closing costs let’s just throw in you know traditional eight percent if you included a realtor and you know whatever associated fees let’s say you have hoa of 500 and let’s just say you have a second mortgage of 20 000 so you have the total here if you look at other houses in the area and in the neighborhood and you see that the value is a hundred thousand dollars as is meaning that the same condition uh similar square footage if you factor in all of that because remember in a short sale no one’s going to make any repairs if you’re an investor generally you buy houses as is and if you’re a realtor and you represent a homeowner they can’t afford to sell it anything but as is right they can’t afford repairs so you’re now looking at a hundred thousand dollars and yet they owe way more than that right we’ve looked at this balance after you include all of those fees so in this situation they’re upside down if if after considering the value you see that the homeowner has to come to closing with any type of funds that’s a short sale the other easy way of thinking it thinking of it is if you have to negotiate something right in order to represent them and negotiate with the bank there has to be something negotiate so if they have equity even if it’s a little bit of equity if they have equity it’s not a short sale a huge misconception is that investors come to us a lot and say okay go negotiate this because it’s not a good enough deal put a big x nope that’s not a short sale a short sale is not to get the bank to just take a bigger loss or to take a loss at all the bank is only going to take a loss if there is no equity there the homeowner must have a financial hardship here is a list of common hardships that we see that are that’s easy to prove that that’s easy to get approved by the bank i think the most common hardships we see are especially with covid loss of job loss of income divorce is a huge hardship and those are easy to prove because the bank is going to require the seller to provide their financials so we have to show the bank that the seller has some type of finance financial hardship that they cannot afford the house so one they have to be upside down which means that they have to owe more than the house is worth and then the second way to qualify is they have to have some type of financial hardship that we can prove have to have both in order to qualify for a short sale we see a lot of times people get confused because just because a homeowner is in foreclosure does not mean that they don’t have equity okay so the best and easiest way to figure out if a seller has equity is to look at the as is value if you’re an investor what is the ARV what is the after repair value and what is the as is value and then you’ll be able to see the numbers to see okay well this doesn’t make sense because in order for me to buy it i need to buy it at this number but it’s a lot lower than what they currently can actually afford to sell the house so hopefully this answers a lot of questions or clears things up and i tried simplifying it as much as possible so you guys can get a full understanding of how to help these homeowners so let’s let’s apply it to real life right because who cares a bunch of definitions and I think you guys know by now on my channel like I’m no right like if I’m gonna talk let’s let’s talk about things that can hopefully help you and help give you a better understanding so if you’re an investor so real estate investors listen up okay do I have your attention listen up a short sale applies to you with properties that have no equity so immediately when you think of those dead deals I want you to look or think about all the properties you’ve passed up on because you’re like the numbers don’t make sense this person has no equity move on all of those people are potential short sale candidates yes you can’t make it work as is because of the numbers but this is something that you would partner with us or our companies like us where we can negotiate on the seller’s behalf to take a loss so that you can still buy those houses so I want I challenge you go through your entire inventory go through your pipelines and see all the deals all those dead deals those dead leads that you’ve been that you’ve been throwing away call them find a way to reconnect with them you’ve already built rapport you’ve spent money on those leads and now you have a whole other opportunity that you didn’t have before so that’s how it applies to you as an investor especially if you are out there direct marketing you have the like best opportunity to get these leads and short sales you know I get a lot of people that schedule calls with me about like how do I market directly for short sales and you know what the next six months to a year you probably are going to get so many more because of how many people are gonna need help but the best way to look at it when you’re marketing is that this is just another tool on your tool belt it’s just another exit strategy to add so that you can be a solution for the homeowner anytime that you talk to somebody and you’re able to build rapport get the contract get the person on board you want to be able to provide a solution i mean unless you like throwing away money right like you know how hard it is to get someone on the phone well first of all how to get the data right that’s the first thing how do you get the data how do you get the right phone number and then you finally do and then it’s not a deal anymore so what do you do you need to be able to educate yourself on different exit strategies so that you can get compensated and your cost per lead can go down significantly so just keep that in mind when you’re doing direct marketing and you’re prospecting agents the best thing that you can do is if you are working with sellers people in your sphere of influence people that you have you know that are reaching out to you for help especially in the next six months to a year you need to be able to ask the right questions to be a resource for the people in your life including identifying if this person is a short sale don’t just stick the house on the market and hope for the best if the person has a foreclosure date you are now up against a timeline we would love to be your resource if you guys need help with any particular deals we’re not going to try and sell you on anything we built our entire business and network off of being a resource for the community so you always feel free to call our office at 972-832-2621 and you can always visit our website as well at www.thessqueen.com and let me know your thoughts did you learn anything new can you apply this to your business what are you guys seeing um as always you can always join our Facebook group the only short sale group worth being a part of and I’ll see you guys next time!


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