Short Sales: Child's Play or Not?

As a kid growing up in a rural area during the early 60's, the only place to buy new toys was a sparsely stocked aisle in a department store located about 15 miles away. It offered model airplane kits, model car kits, model rocket kits, and jigsaw puzzles. So, whenever anyone had a birthday party, it was no surprise that the guest of honor received several 2,000 piece jigsaw puzzles or model rocket kits requiring an engineer's degree to assemble. So at an early age I learned to assemble model airplanes, and put together the pieces of a puzzle. Guess what? I'm still doing that today. Short sales are very much like assembling an intricate model airplane, or putting together a jigsaw puzzle. It requires some time, forward thinking, organization, assembly, and cooperation.



First, I had to find out from Mom how long I could use the kitchen table to set up the puzzle. If dinner was is in about an hour or two, forget it. There is no point in even opening the box. But if Mom said it's OK to use the table all day today, tomorrow, and up until Sunday dinner, then I knew that I'd probably have enough time to complete the puzzle.... if and only if all the pieces were included in the box, and if nobody (like my little sister) came along and bumped the table, or carried off a piece or two. The same holds true for a short sale. Would it be possible to structure a negotiated short sale before the anticipated completion of the foreclosure? I need to know how much time is available to effectuate a negotiated transaction. Two weeks? Not enough time. Two months? Maybe.



I then had to visualize what the completed puzzle would look like. How big would it be? Where would I put it when it was done? How would I move it? Who would help me to move it? Would I even want it when it was done? Would anyone want it when it was done? Does this sound like a real estate deal?



Next, I had to lay out all the pieces right side up. I had to identify the straight edges, those with right angles, and by common colors. I learned that if I failed to organize the pieces early on, the assembly would be much more difficult.

Just like in the short sale process, you've got to identify all the players and where they fit.



Then there was the job of actually assembling the puzzle, keeping others away from the table, and assuring Mom that I would be done in time to return the table for Sunday dinner.



Isn't this what short sales are all about? Visualizing, organizing, and assembling the pieces of a puzzle in a limited period of time? In "A Short Sale Primer" I discussed the importance of a comprehensive, compelling, written Short Sale Proposal. Once the empowered (decision making) individual (or body of individuals) receives the written Proposal, you must follow that up with a series of telephone conversations.... the negotiations.



Just about everyone recognizes the uncertainties in negotiating creative real estate transactions, especially a mortgagee approved Short Sale. Despite how critical this aspect of the business has become, most 'freshman investors' lack both the skills, and a sufficient understanding of the negotiating process. Negotiations are subject to constant assessment and change as new information is introduced and evaluated. I've found that being prepared, organized, and businesslike is an absolute prerequisite to the negotiating process.



(They say that a first impression is a lasting impression, so make sure that your written Short Sale Proposal makes a good, first impression.)



I've been involved in hundreds upon hundreds of negotiated short sales in several capacities. Here is my best advice to anyone who wants to include the negotiated short sale technique in their real estate acquisition toolbox:



* Don't scrimp on pre negotiation information gathering (due diligence).

* Be knowledgeable about the matter being negotiated. Know your facts!

* Identify the mortgagee's essential and desired goals. Listen carefully!

* Don't enter into a negotiation with unrealistic, self centered expectations.

* Propose mutually beneficial, win-win situations. With cooperative goals,

agreement leads to mutual gain.

* Be non-adversarial. Be honest. Avoid inadvertent bluffs.

* Communicate calmly, politely, and effectively.

* Respect your opponent's time constraints.

* Be prepared to concede ... but have preconceived alternatives.

* Build trust by volunteering to be penalized on Failure to uphold a deal.

(offer a nonrefundable good faith deposit)

* Be prepared to act on your Proposal!





If you aren’t quite sure about how to proceed with an opportunity you’ve created, feel free to post a question or two on TCI. If you need specific, more individualized or time sensitive help, I offer private E-Coaching, and E-Consulting to help you effectuate your preforeclosure short sale (&/or discounted REO) acquisition.