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Short Sales and Approval Letters: Advice for Agents

If you are an agent who is just beginning to work short sales, congratulations! You have joined those forward-thinking individuals who realize that short sales are THE transaction of the next few years.

Well, if you haven't gotten a lien holder approval letter yet (or if you have only gotten a few), I'd like to share a little bit of wisdom:

Obtaining approval letters is stressful. Obtaining approval letters takes time-sometimes so much time that everything else in your schedule goes by the wayside. Sometimes we have to beg, plead, offer our first born in exchange for the approval letter.

Sometimes that letter just comes through the fax machine unannounced.

No matter how you get your approval letter, one thing is for sure: you must check and double check all the details of that letter immediately upon receipt. Never assume that the letter is correct-that it has the correct name or the buyer or the seller, that it has the correct loan number or net amount due lender. You must carefully check all of this before moving forward. These letters frequently contain errors, so your attention to detail is vital at this stage of the game.

Every time-every single time-I receive an approval letter I do a happy dance. I've done a lot of happy dances-over 300 last year. For some reason, I do not heed my own warnings. Then, a little bit later, I sit down and check it out-only to learn of an error or a correction that needs to be made.

Congratulations on any approval letter that you have and/or will receive. But, do not pull out those dancing shoes until you have checked that you have gotten what you need.

Broker, Realtor®
DRE #01324959
Broadpoint Properties, Inc
San Diego County Short Sale Specialists
Short Sale Expeditor®

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Posted by Melissa Zavala Realtor® North San Diego County Homes on 11/08/2009 09:15 AM

Comments (51)

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51 Comments on Short Sales and Approval Letters: Advice for Agents

NOV

Thanks, Mel. It's important info like this that makes AR so valuable to agents. I appreciate your advice!

Congrats on so many approvals, Short Sales can be tough there is no doubt about that.

I cannot imagine being involved in over 300 short sales. I am working on 2 right now and feel so frustrated at times. What is your secret?

Good advice.

Never assume anything is correct (or everyone is going to do their job) and double check everything.

Thanks for sharing and great advice. Wow, 300 happy dances in one year, I'm just getting started and will definitely keep an eye out for any other advice you have to offer.

Great post. I hope I get to do the dance soon.

Hi Melissa,

That's really good advice. Never assume anything in this business. It is all too often that the other agent and in this case the lenders representatives don't do their job correctly if at all. Hearing it from an expert such as yourself is a good reminder for all of us.

Great advice Melissa. And be sure to match the figures up with the prelim HUD and the contract or you may have a surprise when you find out the 5% in closing costs concessions from the seller were reduced to 3%. Not only check and double check but do so BEFORE you telll the buyer side you have an approval. What you may have is a counter offer.

I like Bryant's comments above as well as your post. Check, check, recheck!

Just like every document you have to check and re-check. There is bound to be mistakes.

Yes, and you need to make sure the terms are right. Oklahoma is a judicial state so the elimination of a deficiency judgment is important to look for.

Good reminder. I also send the letter to my seller for their approval, in writing, before I tell the buyer we have approval.

Well like Santa Clause, making a list checking it twice....maybe more.

The numbers are critical...I do a happy dance....then call my title company to verify the approval with the HUD1 before I call the sellers or buyers agent.

Great advice. Thanks for the reminder.

I think short sales are so 2008! The new wave for 2010 and beyond will be REO and HUD deals. While real estate agents will continue to parrot the phrase "banks don't want to own real estate" - the banks will continue to own real estate.

Melissa, Great information for short sale agents and a great reminder to check that all details are correct before going forward. Do not take it for granted!

Hi Melissa,

Good infor for anyone doing these things. I've avoided them as much as I could since the last time we did them (since the 90's) yet now it seems like they've become the norm.

Btw, what I love about thees lettters is that...they're usually subject to the updated HUD, that when the fund really begins.

Such good points you've made. Always something to learn! Like a tell my son "put that in your memory bank"

Melissa... Congratulations on your Short Sale Success rate.. Keep up the great job.

Great and informative Post Melissa.

I must admit that I have been remissed in not paying close attention to the approval letters. Mostly because they go directly to the Title Company, instead of coming directly to me. But this post lets me know to have the title companies forward a copy to me so that I can do my due diligence and double check everything.

Do keep in mind that we live in a very big country and even within counties and cities the demographics can be very different. I know how to do short sales, but refuse to play games with the banks and am doing just fine without them thank you very much. If at some point the lenders that we bailed out become more human and realistic, I may re-enter the fray, but I am making out well without putting up with their ridiculous behavior. The sellers, buyers, nor I deserve the problems the banks create.

Thanks for the reminder! We do need to be very careful not to make errors lest our files end up at the bottom of the pile...

Thanks for the informative post today.

Patricia/Seacoast/ NH

Good reminder to check, double check, and triple check! I have only done a few so I am impressed by your 300. Wow!

Oh Happy Dancer, 300 short sales and you're still sane. This post is a heads-up (once agan) to me as I head into my first short sale, representing the Seller. And thanks to Bryant for pointing out that what we get back might not be an accepted contract, but rather maybe a counter-offer. That thought hadn't occurred to me. Melissa, thanks for pointing out that even an approval letter may be flawed.

300 in one year? How do you attrack so many? Good for you Melissa!

Excellent advice! This is not something I would have considered previously. Thanks!

Good advice Melissa. Three hundred a year? You are my new God! :>)

very good advice -- for this to the letter of the law, er, rules, to make that short sale transaction go more smoothly.

Melissa- 300 is a great number of short sales for just one year especially when they all close! Good for you! We close 100% of our short sales and it takes a full time staff of 4 people here in our company that we own to do make it work.

The learned early on not to do our happy dance when that fax machine rings with the acceptance letter! The first thing we do is call the buyers agent to put them on notice that we need to check the numbers just in case the buyer is ready to walk. Sometimes it is just a matter of a few hours in which a buyers agent just can not get their buyer to hang on.

Then we send the acceptance letter right over to our title company who does our HUDs to make sure they match up.

The reason we let her do this, is because a lot of times if the numbers don't quite match up with what the net to lender is our title officer has some wiggle room with other fees. We always buffer our fees just in case we need to move money around on a HUD. Also, we can see what they are not willing to pay like HOA fees and then start negotiating with the management co. to see if they will reduce some of their fees and legal fees, etc. We can not order our estoppells until the acceptance letter is in- here the estoppel fees are outrageous so no one is going to pay those up front without knowing if they will get reimbursed, so sometimes it is not the lender whose acceptance letter does not work, sometimes it is the hidden fees etc that a seller does not disclose that the HOA is after them for.

When I worked in California many years ago, we got all this from the title companies before we even took a listing. Here it does not work that way. Katerina

You are 1000% right! And usually the errors are on the commission to be paid and the deficiency issue. I wonder why?

Well said. I have pulled those shoes out to early too. Lost buyers waiting for those letters by as short as a few hours

NOV

Good post. Thank goodness our first short sale is going very smooth.

Melissa, thanks for the very good advice. I am shifting to short sales on both the buy and sell side, so I welcome this tyoe of advice from someone more experienced than me.

read the letter and check the details.

i received a copy of an approval from the listing realtor. he stated that it needed to close as the seller had no funds. the letter stated that the lender would absorb the taxes through 10/30/2009. the closing is scheduled for 11/13/2009. the realtor stated he hadn't noticed the difference and it was a problem.

Mastering short sales is in my business plan and I am taking classes, reading blogs and trying to learn everything I can about them. I realize they are here for a while and the smart agents will be able to effectively work them. I want to be one of those effective agents. Thanks for the good advice!

Melissa,

Good advice. You can't help doing the happy dance no matter if it's your first or three hundred and first approval letter.

Hi Melissa: The first thing I do after a snatch a short sale approval letter off the fax, after realizing it's not offering me a $99 trip to Hawaii -- do you get a bunch of those?? -- is pull up the HUD and compare the numbers. I'd say half the time they don't match. I've also noticed that they are getting sneakier regarding the commission. Some of them name a dollar figure and then say it's not to exceed X %, when it's below X %.

Great advice. The first thing I do is make sure the account numbers are all correct and I also check to make sure the terms of the letter reflect the terms of our contract (purchase price, closing cost credit etc) The second thing i do is send the letter over to my escrow person to make sure all the numbers still match up.

It takes patience .... a lot of it!

Melissa - Excellent advice. Check and recheck the figures before you do the dance. Also, congratulations on helping so many homeowners in distress. 300 is certainly impressive!

You could probably teach your own class on short sales after 300 of them! Thanks for the warning.

Great advice from a short sale expert...300 and you still have your sanity...Great work and congrats on feature.

Good point, we have to be thorough!

Thanks for the encouragement!!!

Thanks for the advice, and to others above with their comments and advice. I am currently involved with my first 3 short sales and welcome any advice.

Great Post! We certainly are having our share on the Gulf Coast!

300 approvals! Wow, it takes a lot of patience to deal with 300 lenders and sellers! Kudos to you!

Angie Lowell

Professional Land Title

Alabama Gulf Coast

251-968-2700

Can you make us a video of you doing your happy dance? I think it would be entertaining. Please?

Another thing to watch for is how quickly they need a response or additional info. I've learned not to accept short sale sellers who don't have the tech tools to respond quickly.

Melissa - i must admit i am not involved in this at all, but it sounds like good advice, kind of a "dont count your chickens" thing. i like it. congrats on the feature.

It is true and I think that lenders do this intentionally. The reason that I think this, is that the numbers "errors" are never in the buyers favor. And there are almost always some issue to address in a short sale. Something is never and accident 100% of the time.

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