As a Realtor, how do you help sellers who are over-leveraged on their mortgage? Do you refer them to someone else – anyone else – or try to find a buyer before the sheriff’s sale? Did you ever help anyone work with their lender instead? It’s not the easiest transaction you’ll ever deal with, is it?

A short sale is often the best way for a homeowner to avoid foreclosure, and the best way for a real estate agent to handle a short sale is to outsource the negotiations to an expert short sale negotiator. But why?

I hear a lot of objections when I talk to real estate agents about helping them with their problem properties. I’ll list seven of their most common objections, and then I’ll give you another way to think about each of them.

“I don’t have time to keep track of the paperwork.” It’s true – negotiating a short sale requires timely information as to the status of the transaction. That’s okay. Your local short sale expert has access to special software programs that manage status updates. Go to www.realeflow.com and check it out. All you have to do is check the status, update the sellers, and remind them that there will be periods of time where it looks like nothing is happening, but where the file is actually moving closer and closer to a resolution on the loss mitigator’s desk.

“Every time I submit a short sale package, the loss mitigator just sits on it.” Loss mitigation departments are overloaded lately. They’re not sitting on files on purpose, but they are giving preference to organized, properly submitted short sale packages which already have everything they need in them. Make it easy for the lender to approve your short sale and use an experienced short sale negotiator who knows how to get your files to the top of their piles.

“It is a breach of fiduciary duty to involve an investor who is only going to buy and resell the property for a profit.” There is no detriment to the seller here if the resale price is less than the original indebtedness owned by the seller in distress or default, and the market itself will virtually guarantee that. The investor is only being compensated for their time and effort in negotiating the short sale, and there is a greater likelihood of success in getting that short sale approved if the negotiator understands how to overcome any lender’s concerns or objections regarding an approval.

“The seller might feel that they could have gotten more from the house without involving a third party.” This is simply a misunderstanding on the part of the seller, and it needs to be corrected. First, buyers won’t pay more than the current market value of a property. The only way to sell the property before the lender does it for them is a short sale and, when that happens, the lender will make sure that the homeowner who is in distress or default is not going to receive any of the sale proceeds irrespective of whether the property sells for $20,000 or $30,000 more or less.

“When an investor gets involved, their profit ends up increasing the seller’s deficiency judgment.” This is a valid argument that a real estate agent could make. When you look at each situation more closely, though, this reasoning relies on several events going wrong all at once, which doesn’t happen often with a professional short sale negotiator. In reality, when you use a short sale investor to handle the negotiations, it is more likely that a lender will accept the final deal as payment in full, and there will be no deficiency at all. Deficiency issues can also disappear when the homeowner decides to use a Chapter 7 bankruptcy to stay in the property for as long as possible.

“The closing on a short sale takes too long for the buyers I work with.” Actually, it takes too long for everyone, especially a buyer who needs to move in right away. Involving a professional short sale investor can help in one of two ways, though. First, the investor may come on board with a buyer already in mind. That solves a huge problem for you right there. Second, a potential buyer may look at the investor and be reassured that, even though it may take a while, both the short sale and the property itself will be in good hands until the closing.

“If the short sale isn’t approved, the investor still makes money from the seller’s misfortune.” If you work with an ethical investor, this isn’t true at all. At the end of the short sale negotiation process, the lender may still completely refuse to work with the seller on the deficiency. In these rare cases, the investor will avoid hurting the seller and back out of the transaction and let the house sell directly to your end buyer. You can discuss this with the investor before working with him or her.

Specialized training is important in real estate. Not every agent is familiar with commercial or new construction issues, for instance. This also applies to working with properties in pre-foreclosure. You will help those sellers more by working with someone who specializes in working with homeowners in distress.

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