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Dissecting the Financial Worksheet

Posted by Wendy Rulnick on July 17, 2009 at 10:28am
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 incomeAnnual gross income used, not monthlyBonuses from last year are included in current yearCurrent year commission or P&L is based on last tax year, not recent incomeRental income listed when tenant is moving outGross rental income is not adjusted for expensesListing the same military base housing allowance when it is changing upon relocationIncorrectly assuming property value when listing assetsNot including current mortgage and associated expenses for short sale propertyNot including anticipated rent and expenses upon relocationSpending money on frivolous items, like tennis lessons, skydiving, vacations, etc.Not itemizing “miscellaneous" expensesFinally, 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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