Short Sale Strategy: How to Use the News to Your Advantage

As a short sale investor, you are probably simultaneously loving and hating the media right now. On one hand, more sellers are aware of and interested in doing short sales than ever before. They are certainly a more “accessible” subject than they have been in the past. On the other hand, more sellers are operating on heightened alert, fearful that any short sale investor that is not planning on personally moving into their home could be a con artist with a scam at heart that could get themselves and the seller into trouble simply by generating a profit. It is a tough position to be in, and it can be frustrating. After all, you know that you can help a lot of these people, but you have to spend so much of your time defending yourself against things that you would never do – like fraud.

Ultimately, the increased coverage is more positive than negative, and you can make your potential sellers – and buyers – see that with some careful, direct conversation. When you approach a person about short selling their home, make sure that they understand the entire process. Emphasize to them that you have a legal team or advisor that is making sure that everything you do is entirely legal and appropriate in their specific area of the country. After all, there are a lot of new rules governing transparency in short sales, and you do need to be certain that you are meeting all requirements. Explain how the entire process will work, including an application for a loan modification if necessary, and how their property impacts the process. For example, a second home does not qualify for HAMP, while a primary residence may come with mandatory HAMP participation depending on the lender in question.

Your transparency will not only protect you from overzealous, hyper-suspicious buyers who may be a bit too eager to call “fraud,” but it will also reassure average, concerned, distressed sellers who simply want out of their home in a way that causes the least pain possible to their bank accounts and their credit. If sellers ask, draw direct comparisons between yourself and the “bad guys” in the news. For example, the real estate agents awaiting sentence in Connecticut on charges of fraud were deliberately misleading to both the sellers and the lenders. You are going to be completely transparent in accord with your legal obligations, and you have already showed the sellers that by describing the entire process. Once sellers can see that you are certainly in the real estate investing business to make money, but not at their expense, you will find that they will want to help you expedite the short sale in any way possible.

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