Short Sale Series: #4 Working with the Seller: Prep Work

Short Sale Process working with the Seller Prep work

  Continuing information from Short Sale Series #3.

This is usually a very hard time in the seller's life.  They never expected to be in a situation like this.  They need to understand that you are there to help them, but that they will also have to cooperate.

Make sure the seller has a hardship that can be documented.

Make sure the seller has no assets, unless he/she is willing to pay all or part of the short back to the lender with an unsecured line of credit. (This negates negative credit and legal issues.)

Make sure the seller is aware there are no guarantees that this process will be accepted by the lender and that it most likely will be a long process, many times up to 90 days.

Make sure that your seller understands that they will be 1099'd at the end of the process, but that they also might be eligible for a Tax Discharge. They should contact their accountant or tax attorney to help them to understand the repercussions.

Make sure you have all of the documentation that is mentioned in Short Sale Series #2: Items Required by Lenders, that needs to be completed by the seller. This will help you to proceed faster. (If the seller is unwilling to provide you with the necessary documentation, you will be wasting your time.)

Get permission to contact the lender upfront, so that they can speak to you.

Send in the permission letter immediately and follow up to get the actual short sale package required by the lender.  (Read it) If there is something that your client can't or won't do, find out if it could be accepted with out it. (example: some lenders state that they require the seller to sign an unsecured line of credit, some seller(s) can't or won't sign one. Find out if the lender will approve without it, many do depending on the circumstances.) Determine if you should go forward.

Order a listing pre-lim to see if there are any other items, such as taxes, HOA, etc encumbering the property.  This will be important when you are completing the estimated net sheet.

Don't forget to also keep aware of the date of sale. Have the homeowner ask for an extension if you need one, telling them it is for sale now.

Watch the showings. If there are not any, then you will need to lower the price. If there are no offers you will need to lower the price.  Stay tuned for the next steps, once you have an offer.

Take Care, Stay Safe and Remember to Make Decisions with Knowledge!

Diana 909-945-5763