The short sale process is complex to say the least and involves many parties who all must agree to take a loss on the outstanding debt. Investors, additional lien holders, mortgage insurance primary lien holders all must agree. That is what I am learning is the big rub. These lead to a longer time line than a traditional home sale for sure. I have learned from others some key factors that you can use to influence and help minimize delays.
As we have always done, set appropriate expectations with sellers, buyers and buyers agents so that they can understand the complexity and resulting lenght of time a short sale can take.
Have the homeowner call the short sale customer service or support team to start the process and register you to act on their behalf. Prepare the homeowner to the documents that will be required and ask them to get them in advance. This will without question include complete financial hardship documentation, all sources of income, assets and liabilities. To best make this work, this information should be updated during the process should there be any changes. Tell the homeowner to be very upfront and honest. It is to their best interest.
Make sure you have it properly listed in the MLS and keep details of your marketing as you move toward the offer and your effort to close this deal. It's been recommended that you should put a price on the property and as you lower the price, run ads, have open houses, have potential buyers come through keep track of the numbers. Keep track of the number of agents who preview or show the property too.
What you are accomplishing is to establish fair market value so get it done. By doing this you stand a better chance of the investor agreeing with the sale. If you don't then you will likely get a rejection.
Make sure your HUD-1 is complete and valid for at least 60 days. Lien holders won't tell you but your statement should be slightly on the high side to cover changes in other terms and conditions. Remember the lien holder/investor is going to approve a bottom line amount. If you are wrong on the HUD-1 statement and the costs are higher, then guess who will be looked to to make the difference? You, the other agent or the buyer. Certainly not the lien holder. They are already taking a loss.
When you get the offer you will want to provide the lien holder with all these details right from the beginning. You need to make your case strongly as to what you did and how you went about it to get an offer and what the results were in that effort. It will make a difference.
Review all documents and document images for accuracy and clarity prior to submitting them or loading them to the Internet. Make sure they are all FULLY executed. Include all supporting documentation.
Make sure you do your tasks in a timely manor. Missing dates is a killer and will set you back weeks if not stop the deal. I think contacting the lien holder either by telephone call or through their Internet system every week is necessary and appropriate. If you are not getting progress you should ask to move it up to a team leader or supervisor. Just keep after them.
Start to work immediatley on outside liens. The sooner the better. It appears that the first lien holder will offer a very small amount to clear the lien, but that is about all.
I have heard some say they kept the process going even when the buyer canceled. I don't recommend this. You will risk your license and the lien holder automatically start the entire process over again. There is no replacing a buyer with another. Changing terms midstream will also cause you to go back to square one. Wait for the appropriate time to do negotiating.
If the homeowner files bankruptcy or gets divorced, your dead again. Start over.
When you finally get the approval letter, be very conscience of the expiration date. My only other thing learned the hard way to this moment! Don't let the appraiser go to the property without you there to help them understand that specific property and the market conditions effecting this property right there, right that very minute. They are not submitting such information effectively to the lien holder in my opinion. They will hopefully appreciate your insight.
Oh yea, if you need to go above your negotiator, ask first if this is a delegated or non-delegated transaction. That will make a difference on your time frame to when you will get the approval letter. Delegated is the bank is dealing on behalf of some other investor. Non-delegated is the bank is the lien holder.
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