Build Your Short Sale Referral Network Now!

Some of Your Best Short-Sale Leads May Come From People Who Already Know the Homeowner!

We’ve spent a lot of time over the past several months explaining how to identify homeowners who may be heading toward financial trouble.

We’ve discussed mortgage delinquencies, underwater properties, HOA liens, loan vintages, foreclosure notices and a number of other ways to identify potential short-sale opportunities.

All of those are important.

But there’s another source of business that I think far too many agents overlook.

Other professionals who are already working with the very same homeowners who are experiencing financial difficulties!

Think about it.

By the time a foreclosure notice appears in the public records, that homeowner may already have been struggling for six months, nine months or even longer.

And once that notice becomes public, every investor, wholesaler and real estate agent with a foreclosure mailing list starts contacting them.

You’re competing with everybody else.

Wouldn’t it be better to reach that homeowner three or four months earlier?

Even better, wouldn’t it be nice if someone the homeowner already knows and trusts actually referred them to you?

That’s exactly what a good referral network can accomplish.

You Don’t Have to Find Every Distressed Homeowner Yourself!

One of the biggest mistakes I see agents make, is believing they have to generate every lead themselves.

They spend hours searching public records, buying lists, sending postcards and trying to contact homeowners.

There’s nothing wrong with any of that.

But what about all the people who already know these homeowners are having problems?

Consider how many homeowners speak with an attorney, mortgage professional, another real estate agent or a housing counselor long before their property enters foreclosure.

These professionals may already know that the homeowner is behind on payments, struggling with an HOA lien, considering bankruptcy or trying to sell a property without enough equity to pay off the mortgage.

And many of those professionals have no desire to handle the real estate transaction themselves.

They just need someone qualified to help their client.

That someone should be YOU!

Who Should Be in Your Referral Network?

Let’s look at some of the people I believe every Certified Short Sale Expert should be developing relationships with.

Other Real Estate Agents

This can be one of your referral sources!

There are approximately 1.3 million Realtors in the United States, and a tremendous number of them have never successfully completed a short sale.

Most have no interest in even learning how.

They may be good agents when it comes to conventional listings and sales, but when they encounter a homeowner who owes more than the property will net, they don’t know what to do.

Some agents won’t even take the listing.

Others will try to handle the transaction themselves, often without understanding the approval process, documentation requirements, lien negotiations or deadlines.

That’s where you come in.

Make sure other agents in your market know that you’re a trained Certified Short Sale Expert and that you’re available to help when they encounter these situations.

You can discuss referral arrangements where legally permitted or potentially work together on the transaction.

And remember, you don’t necessarily have to take the client away from the referring agent.

Depending on your brokerage arrangements and the needs of the transaction, there may be opportunities to cooperate and let the original agent remain involved.

The important thing is developing a relationship that benefits everyone, especially the homeowner.

Bankruptcy Attorneys

Bankruptcy attorneys regularly encounter homeowners who are experiencing serious financial difficulties.

Some homeowners are trying to save their properties.

Others have determined that keeping the home is no longer financially realistic.

And some are considering surrendering the property without realizing that a short sale might provide another option.

A knowledgeable bankruptcy attorney understands the legal issues, but they may not have relationships with qualified short-sale agents.

This is a tremendous opportunity.

Introduce yourself. Explain your training. Let them know you understand the importance of coordinating with legal counsel and complying with bankruptcy requirements.

And make it clear that you’re not there to provide legal advice.

You’re there to help with the real estate side when the attorney determines a sale may be appropriate.

Divorce and Family Law Attorneys

Divorce can create some very complicated real estate situations.

A couple may own a property together but neither party can afford to maintain it independently.

One spouse may have moved out.

The mortgage payments may be falling behind.

Or the home may have very little equity, leaving the parties unable to sell without bringing money to closing.

Now add disagreements over who is responsible for the mortgage, who will sign the documents and how the property should be handled.

These transactions require patience, communication and experience.

Family law attorneys may appreciate having a real estate professional who understands how to coordinate a potentially complicated short sale while allowing the attorneys to handle the legal issues.

Housing Counselors

This is a referral relationship I’d particularly encourage you to develop.

Housing counselors work directly with homeowners who are experiencing mortgage problems.

Their first objective is generally helping the homeowner understand available options, including repayment plans, modifications and other foreclosure-prevention programs.

And that’s exactly how it should be.

But not every homeowner can save the property.

Sometimes the available loss-mitigation options simply aren’t sufficient.

When a homeowner needs to evaluate a sale, particularly one involving insufficient equity, a trained short-sale agent may be able to provide valuable assistance.

Contact the housing counseling organizations in your area.

Explain what you as a Certified Short Sale Expert does and offer to serve as an educational resource.

Don’t approach them asking for a stream of referrals.

Approach them offering to help homeowners understand the real estate options available when keeping the property is no longer feasible.

That is how you build relationships that last.

Mortgage Loan Officers and Mortgage Brokers

Mortgage professionals often encounter borrowers who are experiencing financial problems long before anyone else knows about them.

A homeowner may contact a loan officer hoping to refinance, obtain a home equity loan or restructure existing debt.

Usually, the numbers don’t work.

The homeowner may have insufficient equity, excessive debt or a financial hardship that prevents qualifying.

That could mean they need a short sale.

If you’ve developed a relationship with that mortgage professional, they may be able to refer the homeowner to you when appropriate and with the homeowner’s permission.

And here’s something else to consider.

That same mortgage professional may eventually help some of your former short-sale clients become homeowners again when they’re financially ready and meet lending requirements.

That’s a relationship worth developing!

Probate and Estate Attorneys

Inherited properties can present unusual problems.

The deceased homeowner may have left behind a mortgage, reverse mortgage, HOA balances, property taxes or other obligations.

The heirs may not have the financial ability or desire to maintain the property.

And sometimes the total debt exceeds what the property can realistically sell for.

A properly managed short sale may offer a possible solution, depending on the loan, estate circumstances and lender requirements.

Build relationships with probate attorneys and estate professionals who encounter these situations.

Again, your role is to handle the real estate transaction, not to provide legal advice.

Title Companies and Closing Attorneys

Here’s a referral source many agents completely overlook.

Title companies and closing attorneys occasionally discover that a conventional transaction cannot close because the seller doesn’t have enough proceeds to satisfy all the liens and obligations.

Maybe there’s an old second mortgage.

Maybe an HOA payoff is much larger than expected.

Maybe there’s an FHA partial claim or deferred balance nobody accounted for.

The agent may not know how to proceed.

You do!

Make sure your local title companies know you handle complicated transactions involving mortgage shortfalls, subordinate liens and lender approvals.

You might be surprised how often these situations arise.

Don’t Just Ask for Referrals – Give Them a Reason to Call You!

This is where many agents get it wrong.

They meet an attorney or loan officer, hand over a business card and say, “If you know anyone who needs to do a short sale, send them to me.”

Then they never follow up.

That’s not building a referral network.

That’s collecting business cards!

Instead, demonstrate that you know what you’re talking about.

Share information that will actually help them and their clients.

For example:

• Explain why a homeowner with positive equity on paper may still need a short sale.
• Share information about partial claims, deferred mortgage balances and HOA liens.
• Explain how a coordinated sale differs from a traditional agent-initiated short sale.
• Discuss why identifying a problem early can provide homeowners with more options.
• Offer to provide a preliminary seller net analysis when a client may have insufficient equity.
• Help them understand what information a lender typically needs before considering a short-sale request.

You’re not trying to sell them a service every time you speak.

You’re establishing yourself as someone who understands this complicated part of the business.

And when a real problem comes across their desk, who do you think they’ll remember?

Here’s a Simple Way to Introduce Yourself

You don’t need an elaborate marketing presentation.

Sometimes a simple phone call or email is all it takes.

Try something like this:

“Hi, I’m a local real estate broker and a Certified Short Sale Expert. I specialize in helping homeowners who are having financial difficulties or who may owe more than their property can net at closing.

I’m reaching out because I know you occasionally encounter clients in those situations.

I handle the real estate side of these complicated transactions, including working with lenders, servicers and lienholders to obtain short-sale approvals when appropriate.

I’d be happy to be a resource if you ever encounter a homeowner who needs that type of assistance.

And if there’s anything I can do to help you or your clients understand the process, please don’t hesitate to call.”

That’s it.

You’re not asking them to send you five listings next week.

You’re introducing yourself as a professional who may be able to solve a problem for them.

Then follow up periodically with useful information.

That’s how relationships develop.

Become the Person Everyone Thinks Of, When They Hear “Short Sale”

This ties directly into what we discussed earlier in this newsletter about marketing and establishing yourself as the local expert.

When someone in your community says they need help with a short sale, whose name comes to mind?

That’s the position you want to establish.

And you don’t need a huge advertising budget to accomplish it.

You need consistent marketing, good professional relationships, a reputation for knowing what you’re doing and the ability to get difficult transactions closed.

Remember, one successful short sale can lead to several additional opportunities.

The homeowner may recommend you to someone else.

The referring attorney may send you another client.

The buyer’s agent may remember how you handled the transaction.

And the lender or servicer may recognize that you understand the process and can complete these transactions professionally.

That’s how a business grows.

Don’t Overlook the Institutional Side of Networking!

We’re also seeing increasing interest in “coordinated” sales and other pre-foreclosure disposition programs.

As those programs expand, lenders and servicers will need agents with broader geographic coverage and specialized experience.

This is another reason I want our Certified Short Sale Experts to get to know one another.

If you’re working with a lender that has properties in multiple states, wouldn’t it be helpful to know qualified CSSE agents in those markets?

If you receive an assignment outside your coverage area, wouldn’t it be nice to have someone you trust who can handle it properly?

And if you’re building a centralized short-sale processing operation, relationships with other agents can become even more important.

Networking isn’t just about getting homeowner referrals.

It’s also about establishing the professional relationships that may help you participate in larger institutional opportunities as this market develops.

Of course, referrals, compensation arrangements and client information must always comply with applicable licensing laws, RESPA where relevant, brokerage policies and other requirements.

Your Assignment for October: Build Five New Referral Relationships!

Here’s what I’d like every CSSE graduate to do before the end of the month.

Identify five professionals in your local market who regularly encounter homeowners experiencing financial difficulties.

Not 50.

Just five.

Contact them personally.

Introduce yourself, explain what you do and offer to be a resource.

Follow up with a useful article, market update or something from the CSSE training that might help them understand the opportunities and challenges we’re seeing.

And don’t stop after one conversation.

Building a productive referral network takes time.

But once those relationships are established, they can continue generating business for years.

One Final Thought

There’s a reason we’ve invested so much time in the marketing portion of the Certified Short Sale Experts course.

We didn’t want to create another certification that simply teaches agents how to process a short sale after somebody hands them the listing.

We wanted to teach you.

• How to build the business.
• How to find the opportunities.
• How to identify the homeowners.
• How to establish the relationships.

And how to position yourself so that when the business starts increasing, you’re already the person people know to call.

That’s what separates agents who occasionally handle a short sale from professionals who build successful businesses around them.

Don’t wait for the foreclosure lists to fill up.

Don’t wait for lenders to start assigning coordinated sales.

Don’t wait for the rest of the agents in your market to discover the opportunity.

Start building your network today.

Because the relationships you develop now could become some of your most valuable sources of business over the next several years.

The agents who build the relationships first, establish their reputations and know how to handle these transactions will have a tremendous head start!