Short Sale Negotiation: Preforeclosure Phone Calls With The Homeowner

By Author: Colin Egbert
Total Articles: 6
Comment this article

You have a great preforeclosure marketing campaign and people are calling. So what are you going to do? There are several ways to make sure you display yourself as a professional in that first phone call.

1) Confidence: People want to deal with professionals who know what they're doing and seem like they can help them out. Homeowners must believe you are a professional to get that first meeting.

2) Listen: Some investors are so excited about their services that they just talk and don't listen. Make them feel that they're understood before you help them understand. Let the homeowner tell their story and talk about their problems. Don't let this progress too far. Some people start crying. When they expose themselves like this, it hurts your ability to deal with the situation. Listen 70% and speak 30% of the time.

3) Be honest: No need to chase deals in this business. Don't make unrealistic promises. Ask the homeowner to take a look at their other options. If the person wants to keep their house, take a look at the avenues through which that might be possible. Let them attempt ...
... it—if it doesn't work, they will come back to you because you had their best interest in mind.

Always use a two-call approach. Never solidify an entire preforeclosure deal on the first call. It shows that you don't chase deals, shows the customer that you need to check to see if this will be a fit and gives you control. When you look at the deal and then call the homeowner back, they immediately know that you are a business and that they may not qualify for your services. This practice insures time spent with the homeowner is in their best interests and yours.

Once you get that first phone call you'll have to work to get the homeowner's continued interest in a preforeclosure deal. There are eight steps to make the first phone call work for you.

1) Introductions: This seems simple, but often on the phone we are so anxious to jump into our services that we don't take the time to introduce ourselves. Tell the homeowner that you are a preforeclosure specialist giving people help in tough situations.

2) Tell me more: Ask the customer to tell you more about their story. Don't ask direct questions like, Are you in foreclosure? Take the responsibility off of them and put it onto the house. Tell the homeowner you may not be able to help them out, but you will give them their best option. This lets the homeowner know they can open up to about the situation.

3) Qualify the deal: Does the deal make sense? You can't accept every deal and neither should you. Realestateinvestor.com recommends you don't take any deals less than $100,000 or from people with bad attitudes. Avoid people who are angry, upset, have a poor me mentality. Also look at the amount owed on the mortgage. Banks work on percentages, so take this into account. Is this an area, where houses are selling? Check to see if there is a second mortgage. You can do a wonderful job knocking off second and third mortgages for a deeper discount. If the deal makes sense, continue with the interview. If it doesn't, let the homeowner go and wish them the best of luck.

4) Other information: There's more to the deal besides equity and location. Ask about FHA loans or VA loans. You can get huge discounts on FHA loans and have more time to close, sometimes up to 90 days to close rather than 30 days. Ask about needed repairs? Make sure there are enough repairs to get a great discount but not so many that no one will look at the property. Ask about their mortgage holders. Different banks have special docs that are often required. Is there a realtor involved? If so, you'll ask them if they can have the listing released with the realtor. What is the spousal situation? Divorce often comes up in these foreclosure situations. Ask when they are moving? It's best to be out in 30 days or at the latest 60 days. The system is becoming so fast that you can often have short sale negotiations completed in 30-60 days.

5) Explain function of company: Segue into talking about your preforeclosure services. You specialize in working with folks who are behind in payments. Let clients know that there's good news and bad news. Good news is you don't charge anything for your services no matter the cost of the house or the preforeclosure deal. The bad news, you don't charge everyone and there are a lot of people who need your services, so you can't accept everyone. Always let the homeowner know that there's a very good chance you may not be able to help them out.

6) Let's pretend: This is a very powerful system because it doesn't hold you accountable for everything. Say, Let's pretend we're able to help you out. Does this sound like it would be a fit for you? This is a very loose question that doesn't put them on the spot or make you sound like a shyster. If they say yes, go over all the documents.

7) Go over documents: Go over exactly what the homeowner will need so that they can get the documents the bank requires completed. Let the homeowner know that the bank needs them, not just your company. There are six documents:

· 2 years of tax returns

· 2 months of bank statements

· 2 recent pay stubs

· Financial hardship letter—a brief letter describing what's going on with their house and why they are unable to pay. Include bankruptcy in the letter if they're considering it.

· Financial statement—List the homeowner's income at its lowest and all monthly expenses at their highest. Your goal is to show the bank that the homeowner's expenses are higher than their income.

· Mortgage statements—These are statements from the lender of the past due loan. You'll need copies of these to know who to contact to start the short sale.

8) Follow up: Always have the two-call system. You can have a second person, the director follow up with the homeowner. Make sure you edify them by raising the influence of something or someone. If you edify the ‘director', the homeowner will have a respect for him or her when they call. If it's just you, get another person who can call up ASAP. For now, set yourself up and say you have other folks you need to check with to make sure this is a deal you can do.

The first call, just like first impressions, is very important to a preforeclosure deal. If you handle the first call well, your second call will be a breeze. In the second call, you call up the client and follow four steps.

1) Congratulate: Let the client know they should feel good that you are able to qualify them to work on a short sale deal. Your service is much better than the others out there. The homeowners should be congratulated that they have chosen you rather than your inferior competition that could take advantage of them.

2) Review documents: Go through all the documents that you will need once more. Make sure the clients understand it and everything is clear.

3) Schedule a time: Pick a time to meet with the homeowners and go over the short sale deal. Either at their house or meet at your office. Make sure they understand when and where the appointment is and that they remember. The last thing you want is to have them forget the appointment after all the work you've done.

4) Confirm: Let them know your time is valuable. Emphasize strongly that you are very busy and that making the appointment is very important. Many clients are in situation because they are a little flaky and have had trouble meeting obligations. They may not have the best scheduling or organization skills. Let the homeowner know that this is an appointment they can't miss.

These steps will ensure that your first real meeting with the clients goes smoothly and quickly. Make sure these steps—the first call, second call, and meeting—flow as seamlessly as possible and each step move easily into the following step. This will ensure that you have a successful short sale package and a client that appreciates your preforeclosure services.