Some Tips for Surviving Short Sales

I don't consider myself to be an expert, but in the last few months, I've been spending more and more of my days working on short sales.  I find them frustrating on many counts and can only imagine what it must be like for the seller and buyer.   It may take weeks or months before you actually speak with a lender's representative who gives you accurate, useful information - I've gotten conflicting info on several instances with one large bank and some of the misinformation caused a delay of three weeks.  I'm currently working with five banks and each has some requirement that is slightly different from the others that necessitates different  handling.  Here are a few tips for the uninitiated that may be helpful in getting started with short sales. Good luck.

Does anyone else have any tips for short sales that might be helpful?

• Set seller and buyer expectations that it may take a long time to get bank approval, especially if there is more than one lender involved.  I've heard of some short sales that were resolved in two weeks, but think that the norm is 2-4 months, depending on the lender's workload.
• Have the seller sign an authorization letter that lets you and your broker discuss the account on behalf of your seller and fax it to the bank the same day that you sign the listing agreement.  It should be dated and include the lender name, account number, name on the account, property address and last four digits of the seller's social security number.  It can take several days before the lender posts this authorization to the account and they won't discuss it with you until it is posted.
• Ask the lender for a list of documents (and their required format) that will be needed when an offer is submitted. There are some documents that are common between banks, but I have found variation in the following:
• Proof of income (pay stubs vs. bank statements vs. income tax returns)
• Format and contents of the financial worksheet
• Format for the sellers proceeds (one asked for an official HUD-1 form, others were less formal). 

Some banks will send the seller a short sale package that outlines the process and the information needed, but most of the ones I've dealt with are not that organized.

• Have the seller start gathering the information they are responsible for and send to you in advance.  This may save time once an offer is submitted, but keep in mind that some of it might need to be updated if it takes a long time to get an offer. 
• Ask the bank whether they have a BPO (Broker Price Opinion) and if so, what is the amount? If not, when will they get one?  Most banks will ask a 3^rd party for an opinion of fair market value for the property. If it is different from your listing price, you will need justification for the difference, especially if you get an offer that is significantly less than the list price.
• If there are multiple mortgages, submit to the 2^nd lien holder first.  You will need to have a letter from the 2^nd stating the amount that they agree to settle for before the first lien holder will process the offer.
• Put the account number(s) on every page of every document that is submitted to the bank.