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12 things EVERYONE should know about short sales #Realtor #Investor

Posted by Lee Honish on October 1, 2014 at 11:30am

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Banks grant short sales for two reasons: the seller has a hardship, and the seller owes more on the mortgage than the home is worth.

The seller will need to prepare a financial package for submission to the short sale bank. Each bank has its own guidelines, but the basic procedure is similar from bank to bank.

A few examples of a hardship are:
Unemployment / reduced income
Divorce
Medical emergency
Job transfer out of town
Bankruptcy
Death

The seller’s short sale package will most likely consist of:
Letter of authorization, which lets your agent speak to the bank.
HUD-1 or preliminary net sheet
Completed financial statement
Seller’s hardship letter
2 years of tax returns
2 years of W-2s
Recent payroll stubs
Last 2 months of bank statements
Comparative market analysis or list of recent comparable sales

Writing the Short Sale Offer and Submitting to the Bank

Before a buyer writes a short sale offer, a buyer should ask his or her agent for a list of comparable sales.

Banks are not in the business of giving away a home at rock-bottom pricing. The bank will want to receive somewhat close to market value.

The short sale price may have little bearing on market value and may, in fact, be priced below the comparable sales to encourage multiple offers.

After the seller accepts the offer, the listing agent will send the following items to the bank:
Listing agreement
Executed purchase offer
Buyer’s pre-approval or proof of funds letter and copy of earnest money check
Seller’s short sale package.

The Short Sale Process at the Bank

Buyers may wait a very long time to get a response from the bank. It is imperative for the listing agent to regularly call the bank and keep careful notes of the short sale process.

Buyers may get so tired of waiting for short sale approval that they may feel the need to threaten to cancel if they don’t get an answer within a specified time period.

That type of attitude is self-defeating and will not speed up the short sale process. If buyers are the type with little patience, perhaps a short sale is not for them.

Following is a typical short sale process at the bank:
Bank acknowledges receipt of the file.
A negotiator is assigned.
The bank orders a valuation of the property.
The file is sent for review or to the investor.
The bank may then request that all parties sign an Arms-Length Affidavit.
The bank issues a short sale approval letter.

Some short sales get approval in 3 weeks. Others can take as long as 12 months. A typical Short Sale transaction takes 4-6 months to complete.

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Why I want to do Short Sales

Posted by Rick Schwartz on January 6, 2010 at 4:30am
Contest EntryWhen I became a Realtor three years ago, it was after nearly 30 years in a variety of sales and marketing functions.It is my firm conviction that Sales is a noble profession. People often roll their eyes at me when I say that. They are, clearly recalling some experience they have had with a slimy salesperson who was focused only making the sale at all costs with no regard to the needs of the customer.Bad apples exist in all professions. This does not lessen the value of someone who does it right and puts his client's needs first. I've always earned my living by simply trying to do what is right for the customer and expecting that the rewards will come in due course. So far, this has served me well financially - and I've had the pleasure of helping my clients solve one issue or another.This type of practice is personified with laser accuracy in the world of Real Estate. It doesn't matter if they are are buyers or sellers - the clients who hire us are entitled to and should expect nothing less than someone who has the goal of helping them through the muck and mire following a path to the end game that is as direct, concise and graceful as possible.These needs are focused even more sharply in the world of short-sales. The homeowner is not only facing the intrusive process that is inherent in any home sale, they have the added challenge of facing one of the more extreme emotional issues that they will ever go through.They are, in most cases, selling their home - not because they want to - but because they have to. They may have purchased that home with not just all the money they had but with all their hopes and dreams - and now they are faced - sometimes through no fault of their own - with losing it. While this is going on they are also likely facing financial and emotional struggles in other areas of their life.To help some of those folks through the process, helping them carry the load just a bit, and doing what I can to minimize the pain, is the definition of what being in sales is all about.The second reason for wanting to get involved in Short Sales is more mercenary. With ARMs resetting and unemployment still at record highs, my instinct tells me that Short Sales are not going away anytime soon, and, in fact will probably be on the rise. Using the old Wayne Gretzky quote about skating to where the puck is going instead of to where its been, I think that as Realtors, to grow our businesses we have to try and move into the market segments that are coming - not worry about last year's market.
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