1. 5 Short Sale Pitfalls
…and how to avoid them
Presented by:
Scott Newman- Newman Realty

2. The Problem…
1) Many buyer’s agents are uneducated on the short sale
process
2) Those same agents pass along that poor education to their
clients
3) Those clients become afraid of short sales
4) The agent is all to happy to avoid them all together and
plays into the buyer’s fear and advises them not to even
bother looking at them
5) Buyer and agent are left scratching their head when they
have very little inventory to see together

3. The Facts…
- In many neighborhoods short sales account for close
to 50% of the inventory- in some areas that number is
exponentially higher
- If you’re not showing short sales you’re missing out on
amazing opportunities for your buyers
- You’re not maximizing your earnings potential
- You’re missing out on a golden opportunity to
demonstrate value to your client and earn their referrals
and future business

4. The Solution…
Get Educated
- Earn a short sale focused designation
- Take advantage of training opportunities
- Team up with established distressed property experts
to learn to do things the right way
- Learn what tools and unique skills you need to be an
effective short sale buyer’s agent for your clients

5. The Plan…
Today’s presentation will be focusing on 5 key things you need to
focus on to make short sale buyer representation a profitable part
of your business
The 5 key things are:
1) Earnest Money
2) Attorney Review/Inspection Contigency
3) Financing Contingency
4) Purchase Price
5) Understanding the Nature of Your Relationship with the Listing
Agent

6. Earnest Money
- As a listing agent we have non-negotiable minimums
for earnest money to protect our sellers
- Benefit from submitting an offer despite insufficient EM is
far outweighed by the consequences of buyer bailing on
the deal because he/she has no skin in the game
- If you want to take the property off the market for months
and want to protect your buyer’s interest in the property
it’s only fair that they show their seriousness with a
quality amount of EM
- Do not split the amount up- it significantly weakens your
offer. If your client is putting down $5K in EM give it all
up front

7. Attorney Review/Inspection
Contingency
- As a listing agent we require attorney review and
inspection periods to begin upon seller execution
- Your offer is essentially worthless if the attorney review
and inspection period don’t begin until bank approval.
- Why?
- Your buyer can walk over a nail-pop
- Your buyer’s EM is not at risk
- Sellers want to see skin in the game. If your buyer is
unwilling to spend the $300 on an inspection prior to
bank approval how serious are they really?

8. Financing
- As a listing agent we require any mortgage contingency to conclude
no more than 30 days after seller acceptance and that all buyers be
pre-approved through our preferred lender on the file
- Just because it’s a short sale doesn’t mean you get to horse around
with lining up financing
- Appraisal to be done within that 30 day period too
- File should be clear to close well in advance of the bank approving the
short sale so the closing should be able to happen in a matter of days
not weeks
- Buyer’s inability to obtain financing despite they and their agent
believing they’re “pre-approved” is a top reason for short sales not
getting done
- If your buyer is unwilling to be pre-approved through your lender and/or
the seller’s preferred lender how serious are they really?
- As listing agents we should not be the ones finding out your client is not
really qualified and that you’ve wasted a lot of time showing them
places

9. Purchase Price
- As a listing agent we are looking for a justifiable price
and have very little interest in submitting low ball
offers
- If there aren’t comparable sales to support your price
you’re wasting everyone’s time
- Banks work off of data and information not emotions and
wishes
- Sellers need relief from a mortgage they can’t pay not an
offer which is just going to further delay the process for
them
- Know the rules of BPO’s
- 3-6 months back in time and 1 radial mile out

10. Understanding The Relationship
- As a listing agent we routinely advise our clients to accept an
offer that isn’t necessarily the highest because we feel that the
overall offer presented by another agent gives us the best chance
to get to the closing table
- This is not an adversarial relationship where you want the
cheapest price and the listing agent wants the highest
- Demonstration of your expertise as a short sale buyer’s
agent goes a long way
- Everyone wants the same thing- your job is to make sure that
the listing agent knows you and your buyers are the right
team to get them to the closing table
- Listing agents are in the business of listing short sales not
arguing with a combative agent or wasting time educating
agents on things they should already know before their client
even showed up to see the place

11. Summary
Short sales are not going anywhere for the next 5-7 years and
if you want to maximize your potential as a buyer’s agent-
love them or hate them- you need to make it your business
to learn how to effectively close short sale for your buyer
clients
- Follow the 5 Keys to Success I’ve Outlined
- Take Advantage of Educational
Opportunities/Designations
- Make it a point to make short sales a part of your
business plan in 2012 and beyond!

12. More Information
Scott Newman
Newman Realty
www.newmanknowschicago.com
Facebook.com/newmanrealty
@newmanknowschi and @newmanrealty