RealTown's BlogTalk

Hi everyone, I am in Tampa, Florida and was wondering how successful everyone else in the country is doing with short sales. I had a very successful one which was my list my sale but some of these banks are very hard to deal with.

Also, if anyone has anyone coming to Tampa Bay area, send them my way, I will pay a referral fee, of course.

Short sales have been extremely difficult to close in the past. But it's not totally the fault of the banks--real estate agents are partly to blame. Most agents don't know how to do short sales and send incomplete packages to the banks. I have been guilty in the past. However, I recently completed the Distressed Property Management Certification (CDPE) course and learned how little I actually knew about short sales. I highly recommend the course. I now feel confidant that I can close 80% of all my short sales. I'm no longer afraid to show short sales to buyers either. Although I prefer having control by having the listing and communicating with the bank myself, I know what questions to ask the listing agent and I also offer them suggestions and help. After all, we both want the same thing--the sale to close.

Quoting Maria "How is everyone else is dealing with the short sales?"

Hi Maria, My name is Trevor Windhorst and I'm a Realtor in Spokane County, WA and Kootenai County, Idaho. I am working on my 6th short sale now and have learned quite a bit in the process. Jim's comments hit it right on the nose - most agents or sellers are not providing the necessary 'short sale' package that banks require to make a decision in the short sale process. The listing side definitely gives you more control as typically you will be the contact person with the bank.

Typical Short Sale Package - Many banks have a required items list on their web sites but sometimes you need the seller's loan number and social security number to access the information. Start collecting the following items:

1. Authorization Form - I always start out by asking my seller to obtain what is called an 'Authorization Request Form' or '3rd Party Authorization Form' from each of the mortgage companies having liens on their homes. You can also obtain this form for your seller if you have your seller's loan number and social security number. This is the form that authorizes the bank to speak to you, the seller's agent. Without this letter delivered and on file with the seller's bank, they will not be able to discuss the borrower's loan with you. Ask your seller to have them return this to you so you can make sure it is getting to the person/department at the bank that it needs to get to. Typically this will be the bank's 'Loss Mitigation' department. Once the bank has this form they will speak to you and tell you what documentation they are going to require to make a decision on a short sale. Most banks now have lists they can fax or email you with required items.

2. Hardship Letter - A letter stating the property address, loan number, their phone number and an explanation of their hardship (why they are not able to make their loan payments).

3. Most Recent Pay Verification from Seller - My experience has been that banks typically require 2 months worth, although you may have to re-submit as time passes in waiting for the bank's response. I now proactively ask the seller to provide a new one to me as each month passes and forward these on to the bank.

4. Financial Statement - Some banks have their own forms the sellers will need to fill out, others may require last 2 years Income Tax Returns

5. Bank Statements - Varies with each bank but most require at least the most recent for all savings, checking, money market accounts, etc., your seller has.

6. Copy of Listing Contract - Your brokerages signed listing contract with the seller.

7. Copy of fully executed Purchase Contract - Some banks require verbiage in the contract basically stating that 'sellers acceptance of offer is subject to sellers bank's review and approval of the short sale offer'.

8. Estimated HUD 1 - Settlement statement based on short sale offer price.

9. MLS Listing Data Sheet - Needs to show days on market. Helps to show pictures if home is abandoned, lawn is in disrepair, etc.

Phone calls and Faxing - I thought it was important to mention some tips on phone calls with the banks. First, after you have obtained the Authorization Form (#1 above) and you have your seller's loan number and social security number in hand, call the bank and ask for the phone number for the Loss Mitigation Department. This will typically save you some phone menu/waiting time in the future.

Once you get through to the Loss Mitigation Dept. ask the person who answers the phone for the fax number that you need to send the Authorization Form to and ask how long you should expect it to take for the Authorization Form to show up in their computer system. This is typically a 24-48 hour period from the time you fax it. Very Important - Follow up! 24-48 hours after you have faxed the Authorization Form to the fax number given call and make sure it was received and entered into the computer. If it hasn't been, ask why it hasn't. I have found that not all bank employees really know which fax number the Authorization Form was supposed to go to. You may end up having to re-fax it to a different number and waiting another 24-48 hours before following up again. If they did receive it, they will then speak to you and you can ask the person on the phone to email or fax you a list of their required documentation for the short sale package and the procedure for getting it back to them. I have both e-mailed them back and faxed them back. Also ask the person to enter you as the contact person in their computer system. Tell them you are a Realtor working on the seller's behalf and give them your cell phone number.

Send in your short sale package and then follow up with the bank within 24 hours to make sure it was received. If they didn't get it the first time (usually because you were given the wrong fax number), ask for the name and extension of the person you are speaking with and ask that they go to the fax machine and confirm that they received it. Important: Note on your fax cover sheet that the home is in foreclosure if a foreclosure sale date is pending (BOLDLY!). This will expedite the review process.

Waiting - This is the hard part. Now that the bank has your short sale package, it will be assigned to a negotiator. Homes with sooner foreclosure sale dates to your client's will get handled first. These negotiators are dealing with hundreds of short sales EACH! Calling every day is not going to help the situation. If they received your COMPLETED Short Sale Package your work is done for the most part for a while. I suggest you follow up with the Loss Mitigation Dept. just to make sure you are not missing any of the required documentation and to ask if it has been assigned to a negotiator yet. They are not going to call you to tell you your package is complete and it will not get assigned to a negotiator until it is complete.

Once the file has been assigned to a negotiator, it will take between 30-60+ business days for you to even here from the negotiator, depending on the foreclosure date. You can ask someone in the Loss Mitigation Dept. how long from the time they receive the completed Short Sale Package that it will take to here from the negotiator. The banks set time-lines on this, and if you are not hearing anything from the negotiator during this timeline, you will want to keep calling the Loss Mitigation Dept. to hear of any updates the negotiator has made in the computer system. You will most likely hear from an appraiser or broker producing a Broker's Price Opinion before you hear anything from the negotiator.

The appraisal - Your negotiator is going to want to see the appraisal or BPO before they make a decision on the short sale. Depending on how long the property has been on the market (as evidenced by the MLS data sheet you sent in with the Short Sale Package and the Listing Contract) the bank will want to net between 80% - 85% of appraised value (before short payoff). If you are hearing from an appraiser or a broker to gain access to the property, this is a good sign! You are almost done waiting for your answer! Ask the appraiser or broker when they are supposed to have their appraisal/BPO back to the bank. This will give you an idea of how long you should wait before calling again to see if a decision has been made.

Good luck and send me an e-mail if you have any questions. We are going to have to get use to these for a while I am afraid but these will be a large part of our income so don't be intimidated by them!

Trevor Windhorst, GRI
Mailto:TrevorW@Windermere.com
http://www.Trevor.MyWindermere.com

Hi Maria, My partner and I buy short sales on a regular basis. If you would like to learn how we

can work together just email me back. We are very successful and help you earn your full commisssion!!

Daryl P.

housematch30@gmail.com

I received my CDPE Certification last week. It's a very good course. Currently I am woriking on a short sale.

I am an agent in the Milwaukee Wisconsin area. I deal with short sales and I too have gotten better at them then a year ago. I just got one of my short sale listings approved by the bank. I found a lot of agents do not know what they are doing with a short sale. I have to explain it to the agents when they call. It is lack of education. I do show my buyers short sales. I explain how it works to them. I also can tell how the agent has the property listed if they understand short sales. It takes doing your homework before you put an offer in. You need to know what it should be priced at so you know that your offer isn't just a waste of time. The bank will look at homes comparable to condition and status. Meaning a foreclosure. They are looking at a 30 day price. So if you are taking buyers out there to them make sure you know what price the home should go for. Have back up to prove your price just in case the agent doesn't know what they are doing.

Good luck to all

Daryl P,

Saw your reply to another REALTOR that you and your partner buy shortsales and foreclosures. I'm interested in finding out how we might work together. I'm a REALTOR in the Albuquerque,NM Metro area and there are plenty of shortsales and foreclosures here. Would love to talk about working with you.

Lynn E. Williams

REALTOR/ePro/Assoc Broker

Keller Williams Realty

6240 Riverside Plaza Dr, Suite 100

Albuquerque,NM 87120

505-977-9733

Lynn@SearchHomesNM.com

www.SearchHOmesNM.com

I also completed the CDPE. I was pleased with the course. I had completed several successful short sales in the past, prior to obtaining the CDPE, but the CDPE gave me a good "package" to submit to the banks. The most difficult part for me is working with agents that don't understand the process and therefore don't educate their buyers on the process and timeframes. The buyers then get frustrated.

Looks like this is the market of the future.

Randy Eagar

Interesting remarks and helps on short sales. I have another question on short sales. There is constant conflict about putting a short sale in pending status when a contract has been accepted by a seller but not ratified by the bank. Many of these contracts fail due to the delays with bank approval. The listing agents want to be able to keep the property active and take back up offers but most MLS require that the property be put in pending status. Trying to find out if some of the multiple listing services have devised a special category for short sales that indicate the property being available for back up offers even if there is a pending sale. The arguement is that the seller is in jeopardy of going to foreclosure when the primary contract fails. These agents are begging for a special status for short sales under these circumstances in order to attract back up offers.