Short sales

Has anyone had good luck with short sales? If so how did you convience the banks to accept your offer(s)?

Pam Schroeder

pschroeder@minnesotahomes.com

Reply

I have successfully done several short sale deals.  Some lenders are easier to communicate with than others but the key I have found is to provide lots of quality documentation as to the real market value of the subject property and the current state of the owner/seller financial position.  Include photos and repair cost estimates (if applicable) and develop a timeline comparative of the proposed short sale vs. foreclosure.  Loan mitigation officers are looking for quality information to support a short sale decision.  There must also be a qualified offer to purchase - otherwise you will never get a decision.

Reply

I just got an accepted short sale approved. I provided  recent comps on the property to justify the lender accepting the short sale. I find you also have to be extremely persistent to getting to a person who will actually look at the file. Good luck!

Joyce

Reply

Patience, keeping detailed notes and then the key for me was the HUD.  It still seems strange that I have a bank asking for a HUD and then me explaining it to them.  We had multiple offers and we created a HUD for each offer.  This gave them an easy benchmark to compare all the offers against.   Some banks will have the seller choose which offer to work, and have the others as backups. 

Reply

I am currently specializing in short sales and have obtained over 40 listings in the past 30 days. I agree with most everything that has been said. Patience is the key. I have teamed up with a fellow agent who does all of the negotiations, leaving me to secure listings, market and sell them. The key is to get an offer, ideally one that is at least 90% of market value. We have found it very helpful to send all of our clients financials together with a HUD when we forward an offer. That way the negotiator has everything they need in front of them.

Sometimes it can be very frustrating as we had one lender turn down two offers because they were too low. When asked what they wanted to net, they said they couldn't tell us. When pushed further, they said they needed to get an offer close the the BPO. Of course, they wouldn't tell us what that was either!!!

Lenders are gearing up departments to deal with short sales and we have seen great strides made in the past month or so. At some point in time, hopefully very soon, they will begin to understand that teamwork with listing realtor is essential. Otherwise, they might as well just foreclose on the home.

Reply

A few things that you need to understand about short sales. First, short sales  are administrative processes. Second, loss mitigation departments were busy before the motgage industry tood a face plant and now they are really over-worked. With that said, you will need to submit an offer along with est HUD1, Sellers Profit and Loss Statement, Last Years Taxes, most recent 1 month bank statements and a Hardship Letter explaining their circumstances. Short Sales are a "hurry up and wait" transaction..so don't be surprised when you send all this information in you don't receive a respone for several weeks, but most likely months. You just need to keep following up to see if it has been assigned to a negotiator. All the big banks will have a BPO or appraisal done on the property. If it is an FHA loan  they will usually take 12% off of what that value comes in at. Howver, I have found that conventional normally will take 3-5% off of what the value comes in at. The thing that works best for me, and I have been working short sales for the last 10 years, is to submit an offer no matter how low to get the process started. Once the bank completes the bpo/appraisal they will most likely reject the offer. Howver, then they will show their hand and then you can market the property at where they need to be. Hope this helps.   

Reply

I have worked on several short sales with much success. First, your client requesting a short sale must be between 30 to 90 days behind in their mortgage payments and have had the subject property listed with a licensed Realtor for a minimum of 30 days. Second, most mortgage companies will require a written contract before they will even consider a short sale. This makes it very hard for the agent because you do not know what sales price the mortgage company will accept. Without naming specific mortgage companies, I have been told by most to start the first 30 days at the fair market value. Following the first 30 days, start dropping the price by $5,000.00 per week or every other week until you get an offer. Once you have an offer submit it to the mortgage company with as much personal back-up information as you can. You must have an offer before the 90 day time frame is up because that is when most mortgage companies start the foreclosure.

NEVER HAVE YOUR SELLING CLIENT SIGN THE OFFER UNTIL THE BANK APPROVES THE SALE PRICE.

With submitting the offer include at least the following personal information:

Reason for the short sale, i.e.: loss of job, unexpected medical bills, change of marital status, death in immediate family etc.

What shape the property is in (with pictures). If the property is in bad shape the mortgage company will frown on the short sale and most times not allow.

Bank statements or financial statements proving very little net worth. If your client has stocks or other sellable assets the mortgage company will require them to be sold, applied to the mortgage and might not allow a short sale.

I hope this will help you if you are going to try doing a short sale. If you do try, try not to get discouraged. Reassure your client this process can take several months. Also, don't let your client get their hopes because this process doesn't work for everyone. Some mortgage companies just will not work with some sellers and I do not know why.  

Reply

Short sales will work if you can convince yurself that the Selelrs really need in a dire financial situation.  The Lender will make a carefull determination if the Sellers have the financial means to make the mortgage by checking bank records and tax returns.  No body gets anythign for nothing.  If the Sellers have no otehr alternatives, neitehr does the Lender and the short sale will work.

Reply

I have done 2 short sales and found the servicer to be very slow in getting back to me.  The problem is the loan servicer apparently has no sense of obligation to protect the lender's money.  Not only that they have thousands of delinquent loans to deal with and not enough servicers. The servicers aren't even owned by the same shareholders many times.  It takes tremendous patience and even that doesn't work if you don't follow it to the end.  One buyer almost lost it at the courthouse steps because the trustee had not notified the courts of our agreement which was totally approved.  I had to call the trustee on the spot.

Reply