Do I need to list a short sale lead to the MLS with a Realtor?

16 Replies

Hello!

Hope this post finds you well :).

My partners and I recently started mailing to preforeclosure list on a bi-weekly basis. And we have been getting some calls. So far most have been from individuals who owe more then what their house is worth, so they would be a candidate for a short sale. I took a class on pre-foreclosures and foreclosures, so I have most of the paperwork you would need and the process is somewhat laid out on how to negotiate with the bank.  I did have one lead that I was going to negotiate a short sale with the bank but I could tell he wasn't being honest and upfront about somethings but I still was going to see how I could negotiate a short sale (with no experience lol). From the class that I took, they told me all I would need either the case number of the loan officer information who was working on the case. He had neither. So I wasn't sure how to proceed. He had a number for the bank but I had no way to reach someone what would know about his case per say.

I started doing some more research on short sales because I do want to be able to navigate some of these potential leads to more of a systemized tailored strategy butttttt during my research I kept coming across articles that stated that the lender would require the property that is being negotiated for a short sale to be listed on the MLS. Which has me scratching my head because I'm wondering how other investors are closing on shot sale deals if the property is on the MLS. In my head, it would be hard to get it at a good discount. possible but not that easy.

I would like to hear from those who have had some experience with negotiating with the bank on a short sale? and is it really necessary to have it listed on the MLS? especially if it is coming from our own marketing?

TIA!

Good morning!

Portsmouth, NH - my hometown!

As an investor, it is going to be challenging to negotiate the short sale on the seller’s behalf. The reason is because the short sale must be an arm’s length transaction. The bank might have an issue with the buyer negotiating for the seller because of this.

In addition, most lenders require that the property be listed in MLS for 7 business days (this timeframe can vary) before an offer will be considered. That does not mean that the seller can not accept YOUR offer, but the lenders usually require that the property has exposure in MLS.

New Hampshire is a non-judicial state. You won’t be able to find much online in reference to foreclosure activity. Best recommendation is to find out who the bank’s attorney is and follow up with them directly to make sure there is no sale date. You can also search the Union Leader Marketplace where foreclosure sales must be posted.

Would be happy to refer an experienced short sale agent to you in Portsmouth, to help you get through the MLS issue. Please feel free to private message me with any questions, would be happy to help guide you through any other issues.

Good luck!

Also, in regards to speaking to the bank: all you need is the seller’s written authorization as well as the lender name and loan number. From there, you should be able to speak to anyone in the loss mitigation or loan servicing department, once authorized.

But again, you may face a challenge if you are also looking to purchase the property. I would recommend teaming with a realtor and/or negotiator who can do the communication and negotiation with/for you, so that you are not turned down as a buyer by the bank.

Originally posted by @Alexis Adams :

Good morning!

Portsmouth, NH - my hometown!

As an investor, it is going to be challenging to negotiate the short sale on the seller’s behalf. The reason is because the short sale must be an arm’s length transaction. The bank might have an issue with the buyer negotiating for the seller because of this.

In addition, most lenders require that the property be listed in MLS for 7 business days (this timeframe can vary) before an offer will be considered. That does not mean that the seller can not accept YOUR offer, but the lenders usually require that the property has exposure in MLS.

New Hampshire is a non-judicial state. You won’t be able to find much online in reference to foreclosure activity. Best recommendation is to find out who the bank’s attorney is and follow up with them directly to make sure there is no sale date. You can also search the Union Leader Marketplace where foreclosure sales must be posted.

Would be happy to refer an experienced short sale agent to you in Portsmouth, to help you get through the MLS issue. Please feel free to private message me with any questions, would be happy to help guide you through any other issues.

Good luck!

 Thank you, Alexis, for your response! 

I will definitely follow up with the bank's attorney and follow with the bank's attorney. Also, I am investing in the Hampton roads area in VA. But I am sure that the process is the same. If you know any experienced short sale agents that work in the Hampton roads area that would be great. thank you!

Nephtalie

Anytime! Sorry, I don't know too many realtors in Virginia. 

The bank will require that the short sale be listed on the mls by an agent.

The others are correct, unfortunately - in pretty much every instance now, if a lender is going to consider a short sale, they need to see that it has been marketed on the MLS for a period of time. This means, even if you do get some early intel on a distressed seller pre-foreclosure that will require a short sale because they're upside down, you will end up competing with the rest of the world once it hits the MLS. I bought several homes before 2005 or so, negotiating directly with the lender (as the buyer) and was able to make those acquisitions, but things are different now! As an investor (especially paying subs to do the work and using private funding....) you are at the bottom of the pile in that there are several categories of buyers who can pay more than you, as follows (starting with the highest-paying...): 1) Handy retail buyers with financing who can do the work themselves and plan on living in the house, 2) Retail buyers with cash, 3) Builder flippers with cash using their own guys to do the work, 4) Builder flippers using private money and their own guys to do the work, 5) Other investors with cash, using subs and finally, 6) You or me using private funding and subs to do the work. (THEN, of course, wholesalers who have to buy it EVEN cheaper because they need to fit in their margin in addition to selling it cheap enough for #6 to buy it!!).

You're always best dealing with sellers and off-market properties that have equity - just takes patience, lots of marketing and the tenacity to keep vetting deals, to get to the ones that are worth considering! Hope this helps, I'm happy to provide more insight if you need it! Richard  :)   

 @Russell Brazil thank you for your response! @Alexis Adams it's ok thank you for your responses anyways! 

@Richard Dale-Mesaros  thank you for your response as well. We might have to reconsider preforclosure as one of  our marketing leads. We are going to start marketing to absentee owners with equity and we are already doing probates, preforeclosures (which we might have to drop), and tax delinquents . Are you doing anything different? What works best for you?

SOMETIMES, pre-foreclosures can have some equity, but not very often...... you could always refer the short sale leads to your go-to Realtor (I can refer you to someone if you don't have one...) and hope they reciprocate by pulling comps for you or sending you deals (not too many of those in Portsmouth, though!). I would say that all of the numerous methods we use to find deals work, just track what you're doing so you can review and figure out how you need to tweak things going forward. It's a numbers game and it takes some persistence because you have to find so many leads to filter down to the ones you get to talk to and filter those until you get an actual deal here and there. I've had good luck with what you mentioned and also networking (ask EVERYBODY you meet if they know of anyone who's thinking of selling....), wholesalers, driving for dollars. Hopefully, you have your funding already lined up, so you can legitimately make offers as you get deals! Onward!

@Richard Dale-Mesaros Awesome advice. Thank you so much for your input! I will continue to monitor our marketing and tweak things going forward.  And we might consider maybe referring some leads to a realtor with experience in short sales. 

Richard - This is a great list of competitors.  I have verbally told my clients the information but I think I will use your list (with attribution) :):)

My short verbal spiel would be 1) handy owner occupants don't need to cash flow or make money / profit and 2nd will you have a dumpster onsite the day of closing with day labor for the demo, know EXACTLY which electrician, plumber, flooring, cabinet guy, sheetrocker.....that you will use and when will they start, the PART NUMBERS for the cabinets, flooring, paint colors, doors, light fixtures.....

Nephtalie, While many of my friends will disagree - I don't mean to be a "Debby Downer" but.....

Representing a mortgagor(ower) to help reduce/modify a loan with a Mortgage(lender/bank).   In New Hampshire, your activity would be considered a "Foreclosure Consultant"  Per NH RSA 479-B...., You can do it but there are a whole bunch of hoops and disclosures to contend.  I used to know all the hoops but that was wayyyy back in the 2006 / 2007.

Real Estate agents, Lawyers and mortgage brokers are exempt from a lot of the hoops due the contention that these folks already had a bunch of oversight due to their NH License(s). 

I have not read any of the stuff lately, but I just looked to ensure that RSA 479 was still in place.  

Your mileage may vary, Tim Dolan.

@Nephtalie Pierre  We used to do a lot of short sales in 2004 to 2006, but we've only done a couple since then. The ones we did were referred to a local realtor and they listed it. But we were able to still buy it because these properties needed a lot of work - more than the handy homeowners @Richard Dale-Mesaros pointed out could buy.  And because we got in early, we had done extensive evaluation of repair costs and were able to make a strong offer with no contingencies. 

If I were to ramp back up my own short sale business, I would find a couple of good local realtors to send all the leads to. If they could sell it for more than I could pay, so be it. That's best for the seller and the bank. If you have your license (I do), you could get referral fees on all these you don't buy. Then there will be a few odd ducks that need lots of repairs or where there is a big 2nd mortgage to negotiate down and you'll be first in line to buy these.

I actually like this model better than what investors used to do (negotiating directly with the bank) because it's a lot less work and we as investors can focus on the other parts of the business.

Good points Chad! I'm just bummed I wasn't around for the early nineties crash when banks WERE selling stuff for pennies on the dollar!  :)

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@Tim Dolan Thank you for your feedback. I am actually investing in VA but I will see if I can talk to a lawyer to make sure we are working within the laws in VA.

@Chad Carson Thank you for your input. One of my business partners has a good relationship with a realor and so I'll see if we can work something out with them.

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