Broker Bryant and I just finished teaching Short Sale Basics: Session 2, part of our 5-session webinar series about short sales. Today we covered qualifying the seller and short sale documents. There was a lot of material, in fact we went over time! Part of our in-depth analysis included dissecting the financial worksheet (one of my favorite things to do). We provided a made-up example and found “errors” for discussion.
Here are a few of the possible mistakes you might find in the financial worksheet:


Numbers don’t add up – that’s right, simple math mistakes adding up income and expenses.
Monthly gross income used, not net income
Annual gross income used, not monthly
Bonuses from last year are included in current year
Current year commission or P&L is based on last tax year, not recent income
Rental income listed when tenant is moving out
Gross rental income is not adjusted for expenses
Listing the same military base housing allowance when it is changing upon relocation
Incorrectly assuming property value when listing assets
Not including current mortgage and associated expenses for short sale property
Not including anticipated rent and expenses upon relocation
Spending money on frivolous items, like tennis lessons, skydiving, vacations, etc.
Not itemizing “miscellaneous" expenses
Finally, when monthly net income is more than monthly expenses- there may not be a hardship at all!

The financial worksheet is one of the most problem-ridden parts of a short sale package. In a questionable hardship case, you can use the financial worksheet as part of your seller pre-qualification.

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