Everyone knows that a good short sale professional needs to have leads to be productive. That means that part of your workload needs to include finding new opportunities and getting your name out there. It doesn’t matter if you are a short sale investor or agent; without leads you have no work!

There are two major methods to finding leads, passive and active. We will describe each type and then give examples of what you can do in each category (and you should be using both methods!)

Don’t underestimate the effort involved with finding leads. Some of our members report spending almost 50% of their working time just working on building leads and their pipeline! Remember that marketing  is is a curve; especially as you are starting out and building a name for yourself, it can take a lot of effort to build your reputation, but it is a snowball effect, so keep pushing! The most successful short sale professionals use a combination of tactics to keep leads coming in 24 hours per day!

Passive Short Sale Lead Finding

No, passive does not mean you don’t do anything at all! What it means is that you build systems where the leads come to you. This is a great system, and once setup, can drive business to you without needing too much additional upkeep and effort when compared to Active lead finding. There are a lot of ways that you can find short sale leads passively!

Maintaining a Short Sale Blog

Keeping a blog is a great way to get traffic and get your name out there. The National Association of Realtors has said that almost 9 out of 10 individuals use the Internet to research their home options. But it does take time and effort! All Short Sale Artisan users get a free WordPress blog that can be customized and used with their own domain name.

Using a blog for short sale leads is more than simply creating it, as we alluded to earlier. You need to post content. You can easily find content by searching Google News, other blogs, or writing opinion pieces. Be sure to use keywords from your local area to target local investors – for example, a headline could be “How to Handle a Short Sale in Las Vegas, Nevada!”.

Make it a part of your routine to regularly post content on your blog to keep it active, and encourage comments and networking. You should write at least a post per month at the absolute minimum (preferably one per week). A typical post should take you no more than 2 hours to write, proof, and put out there, and it helps you establish credibility as well.

Syndicating your Blog Content

Don’t keep your blog on your site – get the word out there! There are a few ways you can syndicate your blog content. One way is by submitting your blog using your blogs RSS feed – this RSS feed is a special URL that can be used to automatically feed updates of your site out into the Internet. You should also install plugins to your blog to automatically post your short sale content to Twitter, Facebook, and other social networking accounts.

You can also manually copy your blog content onto various sites that allow you to post blogs, including sites like ActiveRain, BiggerPockets, and RealTown.

One final thing you can do is author articles on authoring sites – such as eZine articles. Another benefit of syndicating your short sale content is that all these link to your blog and increase traffic to your site, which in turn builds awareness of your services and products.

Twitter

Twitter lets you push out your short sale tips in small fashion. Start by interacting with the vibrant short sale community that exists on Twitter. This will also help build a reputation for you. Find other people’s blog posts through Twitter and comment on them. It’s important as well to build followers on twitter, and there are several automated tools that will post relevant content to your twitter account on a regular basis, like Twitterfeed.

Facebook

If you don’t know about Facebook, you have been living under a rock. Using Facebook for short sale lead finding can be very useful – Start by setting up a “page” for your business and branding it. Encourage people you have worked with before to become a fan and post relevant information frequently. Remember, blatant advertising is often a turn-off in social networking, so be sure to give some good tips and advice, for free, interspersed with mentions of your services that you provide.

Word of mouth

Meet people! Visit your local chamber of commerce. Hand out business cards. Encourage people you have worked with to spread the word about your services. The Referral Engine for short sale leads is one of the best ways to keep business coming in – but it relies heavily on your clients having had a stellar experience with your services, so make sure you deliver!

Seminars / Conferences

A great way to meet people with whom partnerships can be formed is seminars and conferences. These occur at real estate and short sale conferences nationwide. There are local chapters nationwide of the Real Estate Investing Associations (REIA), Real Estate Agent conferences, and more. Find them, attend, and be liberal with your business card! If you are an investor, you will want to meet with lots of realtors who you can work with. For agents, you will want to meet with other agents and talk about their lead generating strategies. Networking in general is a great way to build your influence and seminars and conferences feature like-minded individuals in the same industry.

LinkedIn

Similar to Facebook, create your company (if you are self-employed) on LinkedIn and promote it!

Finding Partners

This doesn’t mean splitting your work. It means partners to do portions of the work. For example, an investor may partner with a real estate agent, or a real estate agent may partner with a short sale attorney. If you find a person that has been a pleasure to work with, keep the relationship thriving and they will think of you when opportunities arise that they are made aware of.  It is very similar to the referral engine from past clients in this regard.

Media Exposure

If you are a knowledge expert, pitch to the local news agencies. Foreclosures and the short sale market are in hot demand right now; and local news loves to hear from people involved in the industry to pitch their ideas and commentary. Another benefit of media exposure is that it also creates trust in your operation, which is very useful in an industry that certainly has its fair share of scam artists.

YouTube / Video Sites

Putting your mug up on YouTube or Vimeo is a great way to get your name out there. An example of two guys who have had good success with this is Group 46:10, who provides short sale training.

Active Short Sale Lead Finding

Active short sale lead finding means actively pursuing those who are in default. This is a tried and true method, but requires constant attention and pressure. Temporarily halting your efforts also temporarily halts any results or leads you may find from these methods!

Most of these methods involve scouring sources for potential leads and then actively following up on them. The benefit to this method is that you are targeting people who are in need directly; as opposed to blanket passive marketing where you hope someone will find you or be referred to you. This is more of the traditional “sales” types of activities.

Direct Mail

A tried and true short sale lead generating method. Sending direct mail to homeowners who are behind on their mortgages simply works. Short Sale Artisan sells leads to its members at discounted rates for homeowners in a given area who are behind on their loan payments by 30, 60, or 90 days but have not yet received a Notice of Default. These are prime candidates for a short sale, as they are behind on their payments but have not entered public record yet as being behind on their mortgages.

There are many methods of handling direct mail, but generally the suggested process is:

1. Identify who you will send our mail campaigns too (using pre-NOD lists is the best method)
2. Send out a first round of letters informing the service (Short Sale Artisan has full templates for all these docs in our Template Library!)
3. After a certain amount of time, send out a follow-up letter reminding them of the services you offer
4. After a period of time, send out a final third letter

It has been generally proven that going beyond a 3rd letter is unnecessary and wasteful. It does take time to build and manage these mail campaigns, but they nearly always result in new work in your pipeline!

Cold Call / Door Knocking / “Bird Dogging”

Similar to the Direct Mail, this often works but is time intensive. Pre NOD lists your purchase may include phone numbers. Door knocking is even more preferable than cold calling (be sure to dress for success!), but the disadvantage is time. You can call 15 people in an hour but perhaps only visit 4 or 5 houses on foot. Plus, phone calls can be used to market outside of your geographic area.

Another option on door knocking is “bird dogging”. This is basically outsourcing your door knocking operations to novice short sale investors. Bird dogs will go door knocking for you in return for a commission on any successful closes. The benefit is less time you need to spend going from house to house; but the negative is you lose some of your profit to the bird dog.

“Bandit Signs”

Bandit Signs are the signs you see on telephone poles and street lights around your home town that proclaim “We buy houses cash!”. These have limited success. Additionally, you should be aware of any town ordinances against public advertising – some towns will levy fines if you staple these signs on every streetlight in an area.

The benefit of bandit signs is that they are quick to put up and get you exposure. The call rate is very low, but even a handful of calls can make it very worthwhile if a lucrative opportunity pops up.

MLS Search

The MLS is a great site to find new leads. Search for keywords that are typical of short sale eligible properties, such as “Distressed” or “Quick Sell” or “Motivated Seller”. these are indications that there is a time constraint on the sale of the property. You can search the MLS directly from Short Sale Artisan’s Lead Finder.

Specialty Sites (foreclosure.com)

Foreclosure.com is similar to the MLS except it focuses on foreclosures and, more recently, short sales as well. Foreclosure.com contains REO properties and other distressed properties. The downside is it costs some money to become a member; however they do have a free trial period if you see something of interest.

Craigslist / eBay

Other searchable sites include Craigslist and eBay. On Craigslist, you can also post your services directly. eBay has a properties section, and similar to the MLS, you will want to search for keywords that correspond with short sales, like “distressed” and so on.

Keep it up!

Remember, marketing is not a one – time job. Finding leads takes a considerable amount of time – so build a system and a process in place where you utilize all the marketing channels effectively.The best marketers use a variety of methods and integrate them cleanly – for example, new blog posts are automatically posted on Facebook and tweeted on Twitter.

Do you have any tips of additional ways to find Short Sale Leads? We’d love to hear about them in the comments!

We have spent a lot of time talking with our users over the past year about what works (and perhaps more importantly, what doesn’t work!) when managing your short sale pipeline. One of the key differences between successful investors and agents and ones that struggle (and a key factor in improving your successful closing rates) is quite simply putting yourself in all involved parties shoes and finding common ground. You need to think about the motivations of the bank or lender, the homeowner, the real estate agent, the buyer(s), and any 2nd lienholders that drive the decision making process. Understanding how these motivations conflict with each other will help you find common ground to get deals closed.

Let’s run through them one by one!

The Bank or Lender (Primary Lienholder)

This is it – the big kahuna. The bank has the keys to the castle, so don’t underestimate their motivations when it comes to a short sale transaction. The bank’s short sale decision making process is driven by a single factor – money. Remember – the bank’s ideal situation is that you continue to make your payments on the agreed-upon schedule. This ensures that they make the interest on the loan and get the balance paid in full.

Let’s circle back to motivation. What motivates the bank to accept a short sale offer? If you guessed $$ Money $$, you are right! It’s a bit of an inverse situation though – banks get into loans expecting to be repaid the principal balance plus interest. In this case, you are asking them to take less money – and the only way that is going to work is by demonstrating that the alternative is even MORE less money. In other words, the burden of proof is on you to motivate the bank to accept your offer by proving to them that their financial position will be worse if they do not accept the short sale. This is typically done by carefully explaining to the bank what the outcome will look like if they go all the way to foreclosure, and then additionally proving that foreclosure is imminent.

So, let’s recap on how to motivate the bank -

1. Prove that foreclosure is a more financially damaging than a short sale and back it up with evidence! (See screenshot below)

1. Prove that foreclosure is imminent and cannot be prevented and back it up with evidence! ( A good short sale hardship letter helps)

The Homeowner

The homeowner is in a different situation. They are falling behind on their payments, are hopelessly underwater, and it appears to them there is no way out!

Similar to how the bank is mitigating their losses in a short sale, the homeowner also wants to mitigate the damage to themselves and their families. The motivating factor for a homeowner to pursue a short sale is getting themselves out of a bad situation that is going to get worse. The interesting thing about a short sale from a homeowner’s perspective is that, unlike a typical home sale transaction, the homeowner / seller really does not care any more about the sale price of the house. This is because they are already underwater – and to them, getting out of $50,000 or $75,000 really isn’t significant – it is the getting out that is significant.

The only time that changes is when the lender is looking for the homeowner to assume a deficiency judgment. In that case, the homeowner will still be motivated to minimize the loss, since they will be responsible for it after the sale completes.

Use the homeowner’s motivation to get out of their situation to get them to play their part in the transaction – including providing necessary supporting documents about their financial situation and a good, strong hardship letter. It is best if you can negotiate away any deficiency judgment (HAFA properties will automatically have no deficiency) to keep the motivation of the homeowner strictly on leaving the property – but recognizes this directly conflicts with the bank’s motivation – money. Our recommendation in this scenario is to try to work for the homeowner’s benefit – carrying a deficiency without having any asset to back it up is not a fun situation to be in.

The Realtor

Like any real estate transaction, realtors want to close the deal and make commissions (under the guidelines of NAR or other realtor ethics codes). It’s their job, after all!

A motivating factor for agents is most certainly the time involved in a transaction. Time is money, and many real estate agents despise working with short sales because (yes, it is true) they take more effort than a standard transaction. Being in the middle of a real estate transaction is enough work, now you have to throw in the multi-month bank approval process and due diligence phase and deal with additional red tape, for the same commission.

Motivating realtors, then, can be done by improving their processes or saving them time. If you are the real estate agent, then your motivation should also be to save more time. If a particular home nets you a commission check of $2000, and it took you 30 hours to make it happen, vs. 60 hours for a similar check on a short sale, you worked for half the rate on the short sale! ($66 an hour vs. $33 an hour, respectively).

How do we improve time? By building efficiencies and work flows into the process, especially for repetitive tasks. Short sale software like Short Sale Artisan is certainly one way to improve efficiencies. So is a simple spreadsheet. Another one is simply making win-win situations right off the bat by reading blogs like this and understanding how to meet the motivations of the parties involved in a transaction to improve both rate of a successful close as well as reduce the effort needed for each transaction.

Another motivating factor for agents is simply business. They just want business – quantity is important! Even if agents do not like short sales, the bottom line is being a successful agent in today’s market depends on understanding and working the short sale process successfully. If you want to have a good pipeline of work going, then you need to include short sales in your portfolio.

The Buyer

The buyer’s motivation is the same in a short sale transaction as a normal transaction – it is all about getting the best price! Whether the buyer is an investor looking to eventually flip the property or a family looking for a place to live, the price is what matters. Many buyers are attracted to short sales and are motivated to work through one despite the onerous timelines and red tape simply because they often represent a good deal.

We again have a conflict here – the conflict that in a normal transaction exists between the Buyer and the Seller, in a short sale transaction is between the Buyer and the Lender. In a short sale, the buyer still wants the lowest price possible, but this time the lender, not the seller, wants the highest price.

Like any other real estate transaction, keeping a buyer motivated depends on their needs. For a family, it might be demonstrating a property to be a good family home, in a good neighborhood, or demonstrating a great value. For an investor, it might be demonstrating the ability to improve the value of the property and resell it at a future point in time, or keep it and rent it out. In any case, there is really nothing unique with the motivations of an end buyer in a short sale transaction to differentiate from your typical transaction.

The 2nd Lienholder or Subordinate Lender

The second lienholder, if there is one, has the exact same motivation as the first lender – money. So the same rules apply. The only additional wrinkle with the 2nd lender is that their “loss” in a short sale is typically much more than the first lenders. For example, a second lienholder may have a principal balance of $25,000 and only expect to recieve $1000 at closing – a measly 4% of the principal balance in such an example.

This is why the case needs to be ironclad that foreclosure is imminent (in which case, the 2nd lienholder would get nothing). The bottom line though: if there is any doubt as to the validity of the hardship, a $1000 check may not be enough to keep the lender motivated to accept the terms of the short sale arrangement. So it is doubly important to make your case well to these parties!

Keep the motivations of everyone in mind

The bottom line: when handling a transaction, you are effectively juggling the motivations of all parties involved in the short sale transaction. Keep that in mind when you are dealing with individuals, and you will close more deals and be able to find common ground when disputes occur quicker. Flexibility and some political posturing apply!

What are your thoughts on motivations and how to use them to inspire success? Post in the comments!

Nothing is impossible and there are always silver linings in the cloud. When the market does come back, those realtors who succeeded through these times will be some of the best around!

Courtesy of TheSunNews.com comes this article about Short Sale training growing at a huge clip, which is GREAT news for everyone involved in the transaction:

Short-sale training widespread

Realtors along the Grand Strand and throughout the country are rushing to get a new certification in short sales and foreclosures to keep up with changes in the real estate market since the downturn.

The short sale and foreclosure resource certification has taken off since it was launched by the National Association of Realtors in November. The association expects that 20,000 people will be certified by this weekend.

“That is definitely a national trend,” said Walter Molony, a spokesman for the association. “It is quite a national phenomena. We have people all over the country and it just started a few months ago.”

He said Realtors were looking for information on how to deal with those distressed properties as more customers expressed interest, so the certification was developed.

To obtain the certification, Realtors must complete a six-hour, in-person course and three online seminars. Attendance at the past few classes at the Coastal Carolinas Association of Realtors has been strong, said Laura Crowther, the association’s CEO.

“A lot of people are just coming out to determine ‘what else can I learn about short sales, are the short sales transactions for me,’” she said.

The association also has offered several additional programs such as an audio conference this week, which drew more than 80 real estate agents and others to listen to representatives from Bank of America, Wells Fargo and Freddie Mac discuss short sales.

“Because of the market, our folks are finding a need to get the designation,” Crowther said. “It certainly helps them understand the process better.”

Sam Hassell, a Realtor at Coldwell Banker Chicora who moved to the Grand Strand in the past year, said he got the certification because short sales will continue to be part of the market, and he needed to know more about them.

The classes taught him the basics and that he has more to learn because every bank has its own way of handling short sales.

“At this particular point there isn’t a Realtor out there that couldn’t gain something from learning as much as they can about this,” he said. “It’s something that we’re going to need in the day-to-day going forward.”

Mike Childs, a Realtor with the Watermark Real Estate Group, agrees that knowledge about short sales is important, but he got certified for a different reason.

“It’s useful to have the certification in our marketing,” he said. “A lot of our clients are asking ‘are you certified, are you knowledgeable?’”

Childs has been working with distressed properties as an investor for years so he was familiar with most of the information presented in the classes.

Still, he found the certification beneficial.

“I found it useful,” he said. “Any information, any training, any update is always useful.”

I think this certification was a great move by the National Association of Realtors, and the growth of it is very encouraging, for these four reasons:

1. It helps to ensure that Realtors know what is going on and the knowledge is standardized.  We all know it is still often the case that every person you talk to will have a different understanding of how a short sale works, what the steps are, and so on. Standardizing knowledge is a great way to keep everyone on the same page and make sure correct information is disseminated
2. As loan modifications and non-traditional transactions continue to grow, this training helps Realtors think “outside the box” when it comes to assisting buyers and sellers structure their deals.
3. The increasingly complex short sale environment means that education is critical. Realtors are so often the center of an entire transaction, that this training will help them play that role more effectively, and hopefully increase rate of getting deals completed successfully!
4. Realtors will have a better understanding of the many pitfalls that can occur when negotiating a short sale transaction (including liens, timeframe, finding a buyer, etc.) – this will help to mitigate those risks more accurately.

Ultimately I think training helps agents do their jobs better and will increase the likelihood of a successful short sale transaction. Likewise, investors would be smart to work with properly trained agents who know the ins and outs of the short sale transaction. Also,  Realtors who pick up this training are only helping themselves to be more flexible in a market. There are still a lot of Realtors out there who try to avoid the pre foreclosure market, but learning about it and working it can be an enormous boon, as evidenced by the many real estate agents who actually specialize in short sale transactions.

What are your thoughts? Any experiences with the training program and how it has helped?

Interesting little article today from MyFoxPhoenix talking about how lawmakers in Arizona are proposing to send real estate agents to school for short sale training to improve efficiencies in the system.

Published : Tuesday, 16 Feb 2010, 2:37 AM MST

PHOENIX — One in four homeowners are under water in their mortgages, meaning they owe more on their loan than their home is worth.

In a short sale, you sell your home for less than you owe and the bank usually forgives the difference. But, the process can take a long time, which turns some sellers and buyers off.

Now there’s a move to speed up short sales. Lawmakers are considering a bill that would send realtors back to school to learn all aspects of short sales.

Today, more than 13,000 homeowners are trying to short sale their single-family homes.

Realtor Brent Kastanowski says he knows one family that has been living in a home without paying for a full year while waiting for a short sale to go through.

State treasurer Dean Martin says we’ve never seen the volume of short sales like we’re seeing today. Martin has created a Short Sale Task Force that is recommending realtors take 15 hours of short sale classes so they know the process.

“The financial institutions are so overwhelmed with short sale requests, that if you don’t have every I dotted and every T crossed, it gets set aside until they can get back to it,” says Martin.

Martin says our economy won’t recover until the excess inventory of homes on the market goes down. Short sales are a way to avoid foreclosure, he says.

In April, the federal government plans to come out with guidelines on how to streamline the short sale process.

I think this is quite positive for real estate agents. Education is critical, and knowing how to process short sales as efficiently as possible can save time and effort. What are your thoughts on this initiative?