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Part 2: Steps to Building a Short Sale Business

Mosca: You talked a little bit about the hub, what about the spokes and the wheels?

Williamson: The work and the knowledge come in play when it comes to talking with the bank. You can't be scared to talk to the bank. They are not that bad. The Loss Mitigation Department, which is the section of the bank that will take your call when you are trying to submit a short sale offer, will determine whether or not your offer on the house is going to make sense for them financially. The person who talks to the Bank, whether it is mom, dad, or son, needs to be the most organized person. They're going to be the one who makes all the phone calls, follows up, organizes every piece of paper, and keeps the whole family on track. The person who is going to talk to the bank has got to be looking at every deal. You are going to need someone who is manning the phone and looking at these files every day and making the calls to the 800-number and sifting their way through the bank bureaucracy. In today's world with over 300,000 foreclosure filings a month you have to have a commitment to follow their process, which means you fax one document to this number, you fax another document to that number, you call this person to tell them you faxed the number, you call this other person to see if they received it, and then you call next week to see if they scanned it in their systems.

Mosca: Let's make our way through loss mitigation. What's the next step?

Williamson: Once you get the file into loss mitigation, they are going to say the offer is too low. You will then mention the numerous rehab costs and that the house is not worth the price the bank wants. When get an acceptable range, they won't tell you what that range is but they will indicate it to you when you follow up and they say can you submit the price to the investor. When they say yes, that means you hit the least minimal or bottom of their range. Once they do that, they will need to send somebody out to the house and do a bank appraisal, which they call a Broker Price Opinion or BPO for short. The reason they do that is it's cheaper because the person they send out there is usually another realtor in town who is charging them $50-$90 to come out and take pictures and give a quick report and an appraiser cost 200 or $400 to get the same information back to the bank.

When you are getting into a short sale and you have walked this effort down the process and through all the gates and you finally get an appraiser out there to meet you at the house, you better make sure as the investor or person who is putting this deal together that you are the one that they meet out at the house. You start showing them everything that is wrong with the house and why this house is in a bad neighborhood that's going down and it's getting worse and it's getting bad quick. Bringing comparables with you is strategically a very small thing that you can do that can have a very big effect same as contractor repair bids. A contractor repair bid is usually the highest price possible for fixing something because everyone is trying to make as much money as possible. You may know you can get it done for $500 but it would cost $5,000 to bring in the pros and that's who's contractor bid you get and you bring that little bid with you because that's important knowledge for that person who's evaluating the value of that home.

Mosca: So what you are basically doing at this point is down selling the property. Right?

Williamson: Absolutely. The most entertaining part of that is if you want to make money without ever owning the house, you're doing that almost at the same time. You are actually marketing the property to potential buyers on Tuesday and then getting the appraiser to come in on Wednesday and your continuing to show the house. That always happens and that is one of the more humorous moments of this business is how you present information.

Mosca: What about REALTORS, are they a part of this process?

Williamson: On the REALTOR note, there are two types of situations and two types of REALTORS you want to be using. If you are trying to sell to investors, you find the REALTORS who are selling all of the REO; the bank owned properties and they know all of the investors in town. That person can sell your property in 30 minutes on his cell phone while he is standing in front of it. That's the type of REALTOR you hire when you've got a junker house, one that an investor is going to have to buy. When you have a nice house for Joe and Susie homebuyer who are going to move the family in, then you hire a REALTOR that is selling really well in that neighborhood.

You want to use the best REALTOR in the best situation and you want to make sure that they are knowledgeable of the short sale process. Whether they're negotiating the short sale or an investor is negotiating the short sale, everyone better know what's going on because when a person makes an offer to buy the house you may not even have the approval to get it yourself from the bank. That's what you are doing when you are marketing the sell while you are attempting to buy. You may still be working on getting your approval from the bank so you have to have a REALTOR that's understanding of that, and can communicate those messages appropriately to buyers. It's important to have an open line of communication and as the ball moves down the field in the loss mitigation department, the REALTOR can apply more pressure to those who are walking through the house. You need to use REALTORS but you need to use them intelligently and make sure you are working with REALTORS that understand short sales.

Mosca: What more do we need to know about organizing a business plan for Short Sales success?

Williamson: If you are going to be in the real estate business, you need two things: a filing cabinet for paper versions of your files and if I may, you need a Uvestor account to keep all of your files in digital format and to be able to manage the entire process with simple, fast, and effective tools that help you coordinate your communications with the loss mitigation side, the REALTORS, with the sellers whom you are working with, with potential buyers who come in. Uvestor is like a dashboard panel that's very easy to use and it simplifies the real estate transaction, especially when you are doing multiple transactions, where there is a lot of information floating around. Post-it notes won't cut it anymore. We've partnered with an advanced mobile communications company to be able to deliver typed messages as voice and then you can actually press a button, leave a message and that recorded message comes back to you at the dashboard at Uvestor.com. It's really a very cool system and it's very efficiently designed.

Mosca: What's your golden nugget for today?

Williamson: Persistence, persistence, persistence. The bank doesn't call you. You call the bank.

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