Being involved in the Short Sale industry, I have seen a handful of things happen when dealing with the banks. From time to time, I am able to get in contact with someone who actually cares about what they do and are not just trying to boot you off the phone with no answers to your questions.
In order to keep up with the Short Sale process, you must know a few basic principles of how it works. I will list a few things you need to know in order to close a Short Sale.
1. Complete a package to submit to the bank. (Do Not Piece Meal! Submit Full Package!)
a. I usually send two packages to the bank in the beginning of the process to include the following:
1. Borrower's Letter of Authorization - (if two banks one for each)
2. Financial Worksheet - which has all of their monthly expense info to their income info and so on.
3. 2 months Bank statements - make sure their balances and deposits are low amounts to reflect hardship
4. 2 yrs tax returns with W2's
5. Hardship Letter explaining why they can't make payments
6. Listing Agreement
7. Agency Disclosure
So these should be included in the initial package sent to the bank. After you call the bank and ask for their loss mitigation dept. get the fax number to send the package to. Make sure you document who you spoke to and their operator numbers. After you fax it follow up in three days to make sure they received it.
Next you want to market the property whichever way you can whether it is on the MLS, craigslist, open houses, word of mouth and so on. After you receive an offer on it, have your seller sign it and contact the bank once again to let them know you have an offer. They will instruct you to send the offer in with maybe some other documents including the HUD 1. Document who you spoke to and follow those directions. A few days later follow up to see that they received it.
Next, you want to call everyday to get it assigned to a negotiator. The faster you get it assigned to a negotiator, the sooner you get the deal closed. You want to get it to a negotiator o they can review and hopefully approve the offer. A rule of thumb is that the banks have no issue approving an offer where they will lose 15-20 percent of the original amount owed.
After the offer is approved by the negotiator, go ahead and proceed to close. They will send you the closing instructions and forward them to the title company so they may do what they need to do. 24 hours before closing it will be necessary for the escrow officer to email a copy of the final HUD 1 to the negotiator for approval before they record the deed.
The above mentioned steps are the BASIC steps to closing a short sale. It is time consuming but well worth the headache. After getting the offer accepted by the bank, it is pretty much a downhill road from there.
Good Luck and I wish every Realtor who deals in Shot Sales the best.
If you have any questions or would like me to assist you in doing Short Sales in the California Bay Area please don't hesitate to ask.
- Georgio -