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Short Sales for buyers ( the abbreviated version)

By Lesley Wilson-VanGoethem

Real Estate Agent with Innovative Realty Solutions Group BK3248318

April 09, 2014 03:47 AM

I find that many of the buyers I work with don't understand the Short Sale Process , or are misinformed of what needs to happen. While it can be a long drawn out and often times a tedious process, it is still very much a part of our daily Real Estate business transactions.

Short sale does NOT mean FAST, the term is used due to the fact the lender is being asked to accept less than what is owed on the property..( come up short)

However, the seller has to have a hardship , not just upside down financially ( owe more than home is valued)...ie: divorce, job loss, death in immediate family,medical issues to name a few

Short sale - Sellers Process

The seller will need to submit info to the bank, seller's short sale package will most likely consist of:

Letter of authorization, which lets Realtor/Atty/3rd party to speak to the bank.
Preliminary net sheet or HUD1
Completed financial statement
Seller's hardship letter ( handwritten letter from seller asking bank to consider SS)
2 years of tax returns
2 years of W-2s
Recent payroll stubs
Last 2-3 months of bank statements
Comparative market analysis or list of recent comparable sales

* AND a written OFFER from buyer w / POF/Preapproval

Hopefully the Sellers agent had the sellers gather /prepare all these documents PRIOR to listing the property.

* Things to remember: Banks/lenders understand the market as well, and if a property is listed for MUCH less than what the comps are, it is to entice and get an offer to submit . The chances that offer gets accepted are NOT in the buyers favor. The Bank/lender will usually counter at a much higher than listed price, only to disappoint the buyer, and waste undue time for all involved

NOW WHAT HAPPENS????

This is a typical short sale process at the bank:

Bank acknowledges receipt of the file. This can take 10 days to a month.
A negotiator is assigned. This can take 30 to 60 days.
At least one BPO is ordered. ( The bank/lender probably will refuse to share the results of the BPO's)
A second negotiator may be assigned. This can take another 30 days.
The file is sent for review , ( sometimes they'll need additional info from buyers lender) This can take 2 weeks to 30 days.
The bank may then request that all parties sign an Arm's-Length Affidavit.
The bank issues a short sale approval letter. ( Most want to close within 30 days of the approval) BUYER NEEDS TO BE READY AND HAVE ALL THEIR DOCUMENTS FOR FINANCING COMPLETED..

While Short sales MAY be good investments, a buyers patience MAY NOT always be rewarded..

** 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, and update the buyers agent often.

** 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. If buyers are the type with little patience, perhaps a short sale is not for them.

** * As a Buyers agent in a Short Sale, Request that you be CC'd on all bank correspondence.