Home : Blogs : Kenzie Kipper : Kenzie's Blog

Short Sale Discussion

As an expert on short sales in Washington, I have helped counsel many buyers and sellers through the process and have had many common asked questions about how it works. If you have further questions, please feel free to add them and I would be happy to answer.

Q: What is a short sale?

A. With real estate prices currently at the 2005 level, many homeowners find themselves needing to sell and owe more than they can sell for. If they have the money to pay the bank for the loss, they will not be considered for a short sale with debt forgiveness. Many sellers can no longer make their payments due to loss their job, recent divorce, failure of business or were a victim of the sub-prime market and need to sell. There is a possibility these distressed homeowners may qualify for debt forgiveness, but need to prove they do not have the money or will not have the money in the future to pay back the debt. The home is listed without any conversation with the lender and a short sale packed including the seller’s financials and hardship letter is prepared. Upon receipt of an offer, the seller signs off on terms, although most terms are not official without lender’s approval. The status becomes “Pending BU Requested” as the lender requires the listing agent to submit all offers until approval. The packet is submitted and is in line for the lender to review. This timeframe roughly takes between one and three months to get a response. The bank orders a BPO, which values the home and is assigned a negotiator to work with the investors and buyer to come to terms. Once the lender approves a price, they send an approval letter with an end date to close by. With Form 22SS, the timeframe for the inspection and financing contingencies begin upon lender approval although can be done prior.

Q: When does the bank become involved?

A: The bank does not talk to the seller or listing agent until there is an offer in hand. The listing price may be far less than the bank is willing to receive initially which commonly confuses the buyer. Once they have an offer, the BPO is done which in turn values the property for the bank. The BPO is current market value done by a local agent. Many times the first buyer walks away as they are not interested in paying the BPO amount. The longer the home sits on the market and the closer the foreclosure date, the lower the price the bank will accept. It is the BUYER'S agent's job to research the seller's financial situation to determine the likelihood of the bank accepting their desired price. I always sit my clients down and explain each scenario and set their expectations correctly so there is no last minute confusion. It is important to understand that the lender will always negotiate, so it is imperative to start your offer below what your walk away price is, similar to any negotiation. Currently, lenders are starting to realize they will make more money on a short sale than if they move forward to foreclosure. Banks have so many foreclosures on their books that they are more inclined to work with interested buyers before they foreclose.

Q: Do most short sale require the buyer to skip an inspection?

A: It is highly recommended to get an inspection on any home, especially a short sale as many times homeowners in distressed situations do not care for the home as they should. The inspection can be done upon mutual acceptance with the seller to avoid waiting up to three months for lender approval OR can be done upon lender's approval after waiting to avoid paying the $400-$500 inspection cost. The issue is when you find items that need repair. If the seller is in a distressed situation where they need debt forgiveness, the seller is not in a position to make repairs. It is possible to renegotiate with the bank, although sometimes they will not re-negotiate. Either way, the inspection is mainly for the buyer's information to know what condition the home is they are buying and what items will need to be addressed in the future.

Q: I did some Googling and read that only 10% of the short sales come to sale and the rest become bank owned. So sounds like a very depressing success ratio.

A: The statistics you read may look depressing, but want to remind you the buyer is unique for a short sale transaction... they are looking into other options while waiting on the lender response, and also looking for an extremely aggressive price. The amount of offers submitted and sales that occur are skewed because many buyers walk away if they find a home they like better, or if they do not get the price they want. I have sold many short sales as they are the majority of the market and have had a much higher success rate.

Posted by Kenzie Kipper on 03/11/2009 07:38 PM

Comments (97)

Short Sale Discussion in the ActiveRain Channel

short sale, preforeclosure, inspection

Generate short URL

This post has been included in Washington Real Estate News

97 Comments on Short Sale Discussion

MAR

2009

Good info. I've been writing about this issue for quite a while at Is Your Lender A Patriot Or Terrorist?, Is Your Lender A Patriot Or Terrorist? Part 2 and Negotiating With Your Home Loan Lender to Modify Your Loan. Morgana covered it in Blame Greedy Home Loan Lenders For Frightening Recession and Just Do The Required Home Loan Modification.

For years, Freddie Mac , Fannie Mae, HUD and the VA have had Foreclosure Mitigation Standards in place that REQUIRE Note Modifications. The home loan lenders are in an illegal, immoral, greedy, and unethical frenetic feeding frenzy to foreclose in VIOLATION of EXISTING rules and laws ALREADY IN PLACE FOR SEVERAL YEARS, requiring them NOT to foreclose. Loan modifications have been required since summer 2005 according to the Freddie Mac, Fannie Mae and HUD websites.

Note Modifications/Foreclosure Mitigation are REQUIRED by Freddie Mac. http://www.freddiemac.com/singlefamily/news/newsletter/2007/05/loan_modi..., REQUIRED by Fannie Mae http://www.loss-mitigation-training.com/Learn-Loss -Mitigation, REQUIRED by FHA http://portal.hud.gov/portal/page?_pageid=33,71734&_dad=portal&_schema=P... and REQUIRED by VA http://loanworkout.org/2007/10/fha-va-and-rural-mortgage-modification-in....

Here's what Redwood Credit Union (RCU) in Northern California is doing to serve their community. On their own RCU called their member's lenders trying to get those lenders to do the required home loan modifications. When the lenders chose to be domestic terrorists, RCU bought their member's homes on the steps of the courthouse during the foreclosure sale. To save their member's homes, RCU had already negotiated a new loan with their member, allowing their members to stay in their homes.

Why is it you think the lenders aren't doing the required loan modifications? If they'll approve a short sale thean why NOT the REQUIRED loan modification?

HUD is so frustrated with the lenders that are failing to do the required loan modifications that HUD instituted a three times the loan amount foreclosed on penalty to the lender that goes through with these illegal foreclosures.

My husband and I have credit scores approaching 800. My husband bought our condo 2 years ago with 20% down. There have been no late payments or missed payments.

We met a year ago, married 6 months ago, and are now expecting a baby. We need a bigger place. The only problem is that now we are 13K underwater on our place. We are trying to pay off 29K in credit card debt, contribute to retirement, save for baby, and pay all bills. We found a home we love and the mortgage would be less than our current mortgage, condo fee, and storage fees.

Should we short sale our condo? Will our credit be ruined so that we cannot buy the other home?

Thanks

Suzanne

UM, are you saying you don't involve the banks until a written offer because I get my price from the bank when I list it. I have found that hey will list for the average of 3 seperate CMA or one if their is also an appraisal regardless of what the seller owes. I also do all the seller paperwork upfront, hardship letter, bank statements, pay stubs etc.

Good post... I want to learn as much as I can about short sales, so this is good info

Kenzie - Great synopsis of Short Sales ! There is a lot of misconception out there in terms of what a short sale is and how to go about them. It has provided a nice opportunity for us to build a little niche in Philadelphia in terms of helping sellers in the last couple years by doing short sales. Most Realtors in our area are not very familiar with them. Currently we are marketing a couple of short sale listings and only see this area growing larger in the future. Is great that you are on top of it as well ! ~ Chris

Suzanne,

Now is a great time to buy, even if you have a home to sell. In buying a more expensive property, you tend to save more on the purchase than lose on the sale. The question is, what are your options...

If you can rent your home out, I would suggest doing so, although it sounds like the rent payment will not cover your mortgage enough for you to save and pay a new mortgage.

In order to be considered for a short sale, you would need to be late on a payment. You will also be required to repay the loss over a short amount of time (some have been 100 months) and you would be required to sign an unsecured note at the time of closing for this repayment.

As this will effect your credit, I would recommend contacting a lawyer or a HUD approved counseling agency on wsba.org to see what option is best for you.

Hope this helps...

Kenzie

One thing to point on is there are home warranties a buyer could just go with in place of an inspection... I remind them of that option.

Thanks Chris! We see the same thing in Washington where many agents are not familiar with short sales causing much confusion and misrepresentation. I educated my entire office and have helped many agents through transactions as I feel it is imperative to understand a process if leading a client through the process.

Charles,

Some banks are willing to discuss a list price, but I have found most do not. As for preparing all of the documentation, I compile it all at the listing of the home. This way, buyers do not have to wait for an unprepared agent to compile the information.

Thanks for the input!

Kenzie

Craig B,

I appreciate your input! Thanks for supporting this with your information :)

Chuck,

Good idea... I just would hate the buyer to purchase the home to find out after the fact there is substantial work to be done that is not covered in a warranty.

Kenzie

Thank you for your thoughtful definitions and explanations . . . am looking into short sales too at this time.

Kenzie: Good information here. Charles... I too have experienced where the bank will not give a price they are willing to accept until we have an offer.

I am likewise working with many short sales and the process is ALWAYS frustrating for the buyer. But I try and advise that if they can hang in there then it can be worth it...I don't usually recommend doing the inspection before the lender approves the offer, though.

Thanks for your insight!

Very helpful blog Kenzie... I recently took an update on the short sale but it is helpful to read about it as a refresher. Thanks...

Great info about short sales.. .

Kenzie nice post on short sales although I am not sure your advice to Suzanne is accurate. While she would need to be behind in her payments she would also need to qualify. The fact that she has negative equity does not make her eligible. She still would need to have a legitimate hardship and in this case it sounds like she is able to make her payments.

You also mention that she will be required to repay the loss. In many short sales this is not the case. In fact the last 4 I have done the sellers debt has been completely wiped out.

I think we all need to remember two things: 1. Every state is different. 2. Each bank is going to be different as far as their rules, guidelines and procedures go on how they are going to handle a short sale. I have been doing short sales for years...before it was so fashionable/plentiful. We have done it both ways. BPO's were done first and then listed the home for that price and also of course, by way of submitting everything at the time of an offer. You need to ask lots of questions on how the bank you are going to be dealing with handles their short sales. Obviously, write everything down. For instance; what is the time period a listing has to be listed before you can submit a contract for a short sale. Some require the property to be on the market 60 days....Some have no requirement. We are finding some do not even require that a case has be filed yet (a lis pendens) before we start the process. Some times it is like pulling teeth to get to right person who has the information you seek. Persistence does pay off.

I just got my first short sale listing under contract, so I am still learning. Great information. Thanks for sharing

Kenzie: Thank you. It's funny you should blog about this. Just today I got a call from an acquaintance who wanted a pre-approval letter for a short-sale he was going to try and buy. I've heard that 1/3 of the transactions in our state are short sales or foreclosures. All the more reason to learn the ins-and-outs of the how they work. Thanks again!

Kenzie- great post. I recently had a client who's husband died and she wanted to short sell. I referred it to one of my wonderful referral partner agents. This agent has never worked on a short sale and I did not have a lot of information to share with her. She is well on her way learning from the school of experience. However I usually find referrals for my agents throughout the year and as more of these are short sale situations I now have at least a summary of what is likely to transpire during the process. I did see a comment from an agent in FL stating that he knows the list price from the bank prior to the listing by providing an average of 3 CMA's. IF this is true it could help streamline the process and perhaps reduce the attrition rate on short sales.

I originate loans in Washington and have a lot of clients thorughout the state but most of them are in King county. I will keep your info handy. The agents I usually refer my clients to prefer to handle the Southern parts of King county from Renton on down. Thanks again!

Good info - I have my buyers get insepctions out of the way so that we do not waste time. . .

Great info here. Very helpfull.

I agree with Kimberly every bank is different on how they want this done. What I did find works well if you are on the listing side is.. call the bank and ask them for thier short sale package.

Congratulations on being featured!!

Thank you for sharing your knowledge and what you have learned in the process. It seems we are all seeing more of these and it's good information. Thank you again.

I too find that banks want to see an offer before they will review a short sale package.

Hi Kenzie -- Wow, 10%, banks should take heed from this. Great detailed post, very informative, thank you.

Is it true that sellers have to pay a capital gains tax on short sales? In other words they must pay tax on the differance between the sales price and the actual original mortgage.

If thi is true why are seller's rushing for a short sale?

We have very few short sales in our community in Key Biscayne Florida.

Good post on short sales. I like it, it's geared more toward consumers than agents but some agents are still learning this as well. I don't know about the success rate. That seems pretty low in my experience.

I absolutely agree that a good percentage of short sales actually close. I don't know where the 10% came from, but it sounds far lower than believable.

Great comments, and in our area, our local board, is trying to get a credited class, that will count on our hours, as way too many different procedures. Buyers think they are wanting a short sale, or even a forclosure, until they see how long it takes, and so many different attitudes with banks, and makes it difficult to get the deals worked out, while keeping the buyer interested.

MAR

2009

Hi Kenzie,

Congrats on your featured post. In this market, I think agents are really missing out if they don't take the time to learn short sales. We also work with a negotiator who helps us leverage our time. They also offer excellent training for agents. You can look up Matt Side at Alliance Short Sales on AR if you want more info.

Corey and Erika

Hi Kenzie - for the last many months, I think just over half my inspections are short sales or foreclosures. I do not know the break down for them, but it is probably half and half.

I should also point out that home inspections find many, many things that are not covered by home warranties! I recommend not going into a home purchase with your eyes wide shut...

Thanks for the post and great info - we are actually bringing in an attorney at the start to help with the negotiations with the bank.

Good stuff. That 10% closing rate is old and unsourced. 19 out of 20 of my short sale listings close with full commission. It is all about how you do it.

Jeff, I take issue with your advice to the home seller that she'll be required the payback of the banks loss. That is the antithesis of a short sale- in a short sale the debt is discharged with no post closing obligation.

The biggest problems with these lenders are when they decide after making you wait forever for an answer to deny the short sale even after getting a contract...then they end up taking the property to foreclosure....repackage it...put it back on the market later and maybe end up selling it for way less than they would have gotten with the contract they had before it went into foreclosure. On top of everything else...they end up losing more money and more time paying attorney which can cost them thousands and thousands of dollars. I'm wondering who the financial geniuses are making those decisions. And this has nothing to do with whether or not the seller should be relieved based on their hardship. It shouldn't matter because if the seller just lets it go no matter what...the lender losses in the end and ends up recooping much less...just don't understand what they could possibly be thinking...also the investors aren't looking a t a clear picture as well.

I wonder how many Realtors that do short sales have been through a formal training session. Not to diminish ones expertise, but there are many responses here that are totally inaccurate and they are being posted as fact, which leads me to believe they have represented a client with the same propaganda. The above response saying a short sale leaves the seller with no post closing obligation, well, that's debatable. The final negotiation between the seller and the servicer can certainly lead to a payback of some type, not always the case, but they have the right to do so.

Kinzie - great blog entry! I'm glad I stumbled across your post!

I am both a licensed Real Estate Agent, and an investor. I've been working short sales with others who were the investor, as the LA, but only recently made the decision to get involved in the process as the investor -- i.e. helping the homeowner to avoid the foreclosure by making an offer to purchase the home, and by seeking a new buyer who will purchase the home long before the foreclosure takes place.

One of the common traits of a pre-foreclosure client is they will be in denial for a goodly portion of the time they are falling behind in payments. Rather than taking charge and dealing with the problem head on, they just continue to deny that it's really happening, to them! OMG! There is a reason the house is going into foreclosure and they have to admit that they are a variable in the equation.

You quoted a statistic -- the 10% success rate -- which may or may not still be accurate, I don't know. Here's another I've heard recently which is surprising -- 50% of homeowners whose house goes to sheriff's sale, have NEVER contacted their lender directly during the entire process, not even once!

Nor have they contacted a consumer credit counseling agency, or an attorney. Many don't even contact their lawyer to "file a delay of sale" because of the hardship the foreclosure will cause them. It's ludicrous, but those are the signs of a borrower in denial.

Here's another. When I present my paperwork I use in the process to the homeowner, which shows them clearly how the process is going to work, they often say, "I want to run this by my attorney". I used to say, "no problem", that's fine. In the future, I'm going to try to really ferret out what their issue is with the paperwork -- their "objection" to simply sitting down and reading the docs themselves -- because once they contact their attorney they discover the attorney is nearly as confused about the process as they are!

The attorney I had on the phone yesterday didn't even know what a BPO is. How are these "legal eagles" really supposed to help them when they often don't understand the basics?

Here are a couple critical basics they often don't understand: 1) that you have to have an offer in hand before you can ever petition the lender to compromise the debt, 2) that one of the investors goals is to keep more liens off the house while the potential transaction moves forward, 3) and three, any investor who starts this process will definitely try to get a complete settlement of the debt, if at all possible, completely eliminating fears of any deficiency judgments. How one structures a deal to prevent these things can be a little complicated, to both the homeowner and the attorney they respect, whom they insist needs to approve everything they do all of a sudden.

I'm going to start asking them, "Well, did you have your attorney present, or even ask them to review your mortgage, prior to your signing on the dotted line?". Now that they are 3 months behind on payments, suddenly their attorney is called in to save them?

Working short sales is not for whimps. I've been beating that through my thick skull for nearly a year now, and thank God, I think some of that truth is finally starting to sink in.

That's why I believe 90-98% of Realtors should focus on finding the retail buyer and leave the SS negotiating up to an investor. That's probably why your 10% figure is not that far off the mark; a lot of Realtors aren't really ready for the fight. I'm ashamed to say, I used to be one of them!

All my personal and business best to you. Great post!

I agree with Kimberly as well. I hate short sales, but they are the bulk of our market. I had five ratified contracts, all short sales. One was approved by the bank in two weeks. Three others have not been approved after eight weeks. One is only in its second week.

Pray for me an my buyes. Please.

Short sales in our market are becoming more and more frequent--thanks for the informing post! One question I had ---when you receive multiple offers on a short sale, what is the procedure you use? I have been trained that I take the highest and best offer and submit that to the lender, and other offers are back-ups to that offer. They are submitted to the owner but not to the lender until the first contract fails for some reason--reason being a fully executed contract is a contract....even though sales price has to be approved. What do you think?

Great post, Kenzie. Very well put. I wish the part about the BPO being ordered by the bank being done by a local agent were always true, but sometimes we have some really strange ones around here.

Thanks for the post. In current market conditions we need as much information as possible. In this area we don't have as many of these offerings and are just getting up to speed on this.

Kenzie, good job summarizing short sales. Here is a piece of information that I make sure my Realtor partners understand when it comes to short sale debt. Thanks to the Mortgage Forgiveness Act of 2007, the tax burden for qualifying canceled mortgage debt (as high as 35%) for primary residences only has been temporarily waived until the end of 2009. I also recommend speaking with a CPA for further verification.

What does a short sale do to a seller's credit? I have heard many different stories but does anyone know what the actual short sale does to the seller's credit? Not the late payments and all of that, JUST the short sale...

Great short sale primer - as morre of these co9me on the market, more folks are asking about them.

Bill,

Suzanne would need to prove she cannot repay the money in order to be considered for debt forgiveness. Although banks are becoming increasingly understanding and more cases are getting debt forgiveness, it is by no means guaranteed. The listing agent is the most important role in this scenario as it is her job to negotiate this with the lender. I have seen far too many agents who do not fully understand the process misrepresent their clients and stick them with $40,000+ in repayment loans.

I think it is best for her to contact an attorney as she is in a situation where she has negative equity, which you are correct, does not necessarily qualify her for a short sale.

I have worked with many relocation clients, many coming from states where drops have been much more significant than Seattle and they were told from a lawyer that a short sale was an option and they were able to purchase a home as well.

Each scenario is unique which is why it is important to get legal advice.

I appreciate your advice :)

Kenzie

Kimberly,

Thank you for your insight. My husband's parents just moved back from California, and their agent told them all short sales get debt forgiveness. I am not certain this is correct, but they seemed to believe their state was handled differently, which I would not be surprised to know.

Also, it is so imperative to feel out each bank as you mentioned.

Thanks for your support :)

Kenzie

Good post about short sales -- the stat that only about 10% of them close and the rest foreclose seems about right for our area.

Paul and others in Seattle looking to learn more,

I would highly recommend taking a short sale class. Although have not heard great thing about every class, if you are in the Seattle area, Jillyane Schlicke teaches courses at SKAR which everyone agrees are the best ones in town.

As short sales are dramatically increasing with overwhelming liability, it is so important to stay knowledgeable when representing a distressed homeowner and being able to determine who qualifies.

Thanks!

Kenzie

Nevin,

I would love to help your clients through this process. Also, I have in the past sat down with lenders to help them understand what to expect on their end.

Pretty much, lenders need to understand that the short sale approval could happen any time and I have seen them ask to close within one week! Although it is not common, some lenders require a very short turnaround.

Also, obviously the buyer would want to hold off on the appraisal until the approval to not have to spend unnecessary money.

Thanks for your support :)

Kenzie

Kenzie-

Great post. I have been overwhelmed with a couple of short sale situations. I have a cash client that is looking for a short sale situation but does not want to deal with the elongated time and hassles so I've been setting up appointments asking if the bank will accept a full price offer with no contingencies but I guess I should ask if they have at least submitted their financials and a hardship letter.

Brian,

You should look for properties that are Pending BU Requested or homes that have had it listed in the property history. Usually these homes have begun conversation with the bank. If a buyer was lost, many times the agent has an idea of what the lender wants.

Thanks!

Kenzie

Brian and Vickie,

I agree, I was shocked to see the 10% success rate. My client found it in google... I have also had a much higher success rate. :)

Kenzie

Jay,

I completely agree! I find deferred maintenance is very common in many distressed homes. I almost expect to see it and disclose this to all of my clients. Home warranties are great, but inspections are extremely important. I would think any agent recommending a warranty in lieu of an inspection could have increased liability on their hands.

Thanks!

Kenzie

Neal,

Isn't it frustrating how the bank thinks?!?! It seems so obvious to give a short sale more attention than they do. It costs the bank roughly $55,000 to foreclose and put the home back on the market. They need to realize we are helping them sell their home at a higher price than if it is bank owned.

Thanks for your input :)

Kenzie

Mike,

You are correct. If the seller can pay the monty back, they have to. The bank is not going to take the loss if it can be repaid. Even if it is not possible to be repaid at closing, they will make the seller sign an unsecured note at the time of closing to repay this amount.

Kenzie

Andrew,

Thank you for adding to my information! I appreciate your feedback. I think the lesson to be learned on this is any buyer or seller looking to be involved in a short sale transaction need to find someone who has been formally trained on the issue. Also, we as agents need to have a good lawyer and or counselor list to help point the buyer in the right direction should they need legal advice.

Kenzie

Brian,

One more thing... offering full price for a short sale listing is not always in your buyer's best interest. It is our job to negotiate the best price for our clients, even if they do not see a need. Obviously if they do not want you to, you have to appreciate their wishes, but as lenders are facing a foreclosure if the short sale does not go through, they will be accepting much less than owed either way.

Kenzie

Good post Kenzie. I think if you have some idea how deal with a short sale the success rate will be much, much better then 10%. There was one I had "given" to me (quite the gift) where the seller had a 1st, a $100,000 second, a Fed tax lien, a county tax lien...not surprisingly it didn't close, it made more sense for the lender to foreclose and wipe out the 2nd. On the other hand if the seller has only a 1st and they're 10% upside down I would say the chance of success would probably be about 90%. Research and preparation are key.

Kenzie: I like your name. :)

I don't work short sales but this is the first time I have seen a percentage associated with them in terms of close ratio at 10%. It doesn't look like I am missing out on much.

This is in response to Andrew's comment - I've been running into a lot of short sales with an investor (or negotiator) involved. I don't know if Andrew does this exactly the same way, but around here the investor requires the owner to sign over the title BEFORE the lender has even agreed to a short sale, even tho the investor's closing on the house is contingent to the lender agreeing. That's why the sellers want their attorney to look at the paperwork. ANd while I've had many discussions with these investors and the agents who use them, buyers still have a problem because most of the lenders don't like the double closing (the investor wants to close on the same day as the new buyer).

So . . . agents are taking short sale listings, but then the investor gets involved, which makes things much easier for the listing agent (because the listing agent doesn't want to do all the extra work required). The investor has to make a profit, so the house is put on the market at a higher price than it could have been without the investor's involvement.

So you've lost the buyers on two counts - the fact that their lender considers the transaction 'illegal' (which is what a lender I highly recommend to all my buyers called them), and the fact that they're higher priced than other, similar short sales.

Now, the listing agent's job is to find a buyer, but to avoid doing all the work themselves the listing agent gets someone involved who causes buyers to look elsewhere. How is that a picture of the listing agent looking out for their client?

BTW - I've closed all the short sale listings I've taken. I just refuse to take so many that I can't do my job.

Love the post. Many things were mentioned here about short sales, what would you all consider a viable learning/informational source? Does one exist?

I have been successfully handling short sales and I have a couple of comments on your post. The first is I never have a seller sign off on a contract until the lender responds. This way I don't have an accepted offer and I can continue to market the property as Active. This is key as the lenders generally talke so long to respond that the first offer has already purchased something else by the time the response come in. Secondly, a lender only wants one offer at a time otherwise they start the ENTIRE process over again. I hold all other offers in a file until I get a response from the lender and if the lender wants me to counter the original offer I counter everybody. I haven't done the Google search, but it sounds very low. I would have to go back to check, but I would guess my success rate is around 90%.

This is great informatio. I am very interested in short sales but no many in our area yet. Fergie

As a buyer agent what questions should I ask the LA about a short sale property before I write an offer for my buyer?

Great info! I am shocked at the 10% rate but at the same time these lenders also decided 100% state income loans for a 500 mid fico borrower were a great idea! I read that countrywide is currently working on over 900,000 short sales with under 100 employees to work on them so it sounds like the process will continue to drag along. I have been hearing about people doing short sales for a fee that they charge to the lender. These people are not realtors or attorneys and I am not sure if you have heard of this. I tried to read all the comments so if you already mentioned this I apologize. Thanks again for the info!

Great info, Kenzie....very helpful!

I have mostly stayed away from the Short Sales, for various reasons....please correct me if I am wrong, but I understand that here in Texas the lender can "change their mind" about the terms right up to the time of funding!

I was also told that, as part of one of the various bail-outs/stimulus, etc. programs in late 2008, the owner who ends up w/a deficiency when they sell will NOT receive a 1099, as used to be the case.

I also hear that Fannie Mae is trying to make it so that the commissions do not change at the 11th hour, once a contract is in place......don't think that's definite yet, but I've heard talk of it.

Thanks - keep up the good work!

Edith

Wow! What a range of information on this topic. Where I practice real estate almost all the deals I'm invovled with right now are either short sales or REOs, and we have very few of these in our area. I find that my buyers are looking for bargains and this is where they're at. My experience to date has only involved 2 bank owned sales where I represented the buyer and 1 sucessful short sale with 2 pending. In this area we highly advise the seller or listing agent to hire an Intermediary to qualify the seller for a short sale, explain the process and do all of the negotiations with the lender, communicating directly with the listing agent and sometimes directly with the buyers agent. In this area the lender is paying 1% of the sale price for this service, but it is so worth it for everyone involved. I'm told as a buyer agent that I can also add this as a special provision on my offer. I haven't tried this yet, but with 1 of my pending deals that isn't using one I am so tempted!!! Typically the 1st offer on a short sale (in our area) can and does take up to 90 days to get responded to. If the lender has lost a buyer after this long time period and another comes along shortly after for a similar price they will move that offer into acceptance very quickly and you could actually close in 2-4 weeks times from the date of acceptance. I would never advice a buyer to have a home inspection prior to an acceptance unless you are pretty certain they would be securing the property. The intermediary person can usually be a good judge of where the lender is at and can offer good advice. If the seller has a 1st and 2nd mortgage, the 1st mortgage is typically forgiven, but the 2nd mortgage will want some money back w/ 0% interest over the next 10 years of any where from $50 or more to satisfy at least $5k going towards that debt. As for the tax issues, I would highly recommend contacting an Accountant as these things are changing all the time along with our lending practices. For those of you that are not involved in these, you might want to make a point to get educated, we are going to see a lot more of these before they get fewer over the next year or so. Look at how many jobs are still being lost. These people haven't even started defaulting on their mortgages. I heard today at our Board Breakfast meeting that when a home is foreclosed on it costs the lender on average $59k to perform. Lenders are also accepting up to 82% of the BPO value on these properties, so it's worth negotiating further than the asking price. You will have to be careful with just how much municipal lien debt is on the property in addition to mortgage debt as I believe with the municipal liens the buyer will need to pay this along with any late condo fees if it's a condo. Once the bank takes ownership that debt is wiped out and transferred without this. Also, make sure your buyers are purchasing howe owner title insurance on these properties.

Selling these bargains can be addicting, but very depressing! At what point will the line be drawn on people needing to leave their homes??? It's very sad out there : (

Thanks for posting this!

Pretty basic stuff, but it needs to be drilled into the heads of the public:)

Some good info. There is always something new to learn about short sales. One thing I've found that is critical that has been commented on above is the seller qualification. They not only have to have a real herdship, but it needs to be bad enough to make the bank realize that if they don't do the short sale they are going to get it in the form of a foreclosure. The less severe hardships tend to be better candidates for loan modifications. As a real estate agent I believe I have an ethical obligation to each potential client to be able to run numbers that will let them know which way they can likely go. Many people really don't want to sell there house & rent for 2 years or more. Granted it is better than getting foreclosed on, but if they are able to do a loan modification & want to stay, that's the best route.

Then the question is, how can they do that & get honest real help that will really get them out of trouble. Most people I have talked to that have tried it themselves have not had much success. The government bailout Hope for homeowners etc. so far have had very minimal success & very few have gotten anything. Even some loan modification companies don't seem to be doing much of a job, while others are getting much better results. I spent several months checking quite a few of these loan mod companies out as an option for some of these people I keep running into. Man what a difference between the different ones. What I finally decided were several key things that were a must for them to offer were these. 1. 100% money back guarantee if they don't get the owner a significant reduction in payment. 2. Have to have lawyer negotiated results, not just a lawyer on retainer. 3. Needs to have a very high success percentage at 90% or higher backed by volume. 4. Should have a solid bricks & mortar operation with adequate staff to effectively handle the volume. Its easy to have a pretty "storefront" website & a less than stellar success rate due to inadequate staff.

I think that there is a real need for short sales & for agents who learn how to do them right. At the same time I believe there is a real need for agents to learn all they can about loan modifications so we don't find ourselves displacing people that could have been saved. Both short sales & foreclosures contribute to this housing crisis through increased #s of distressed property sales on the market & increased downward pressure on prices. Every homeowner that can be saved can not only help that homeowner but also contribute a little to the overall recovery.

Please feel free to e-mail me if you would like to talk about what I've found in my loan mod company search. I think a lot of people could be very thankfull we did our homework. CraigsHouseDeals@yahoo.com

A SHORT SALE IS ANYTHING BUT SHORT

I am guessing that those of you who have been involved in short sales may have had similar experiences as mine. I live in Las Vegas, and though it has not gone undisputed, Las Vegas is certainly running neck and neck with Fort Myers, Phoenix and a couple of other cities for clinching the title in the heavy weight division of Foreclosure Capitals. The banks own nearly 85% of the homes in our city. A lot of these homes were investor owned until the bubble burst and equity took a hike. Hardly anyone has equity now a days. If you bought a house thirty years ago, never refinanced it and payed it off, you have equity, otherwise you probably own a liability. If you bought a house in this century and didn't put a ton of money down chances are you are upside down. People that bought homes in 2003 and 2004 that were valued at for $400,000 are now living in homes that are worth less than half of that. Most people aren't stupid and they start thinking, how long is it going to take me to recover that money that I lost on this place? Ten years, twenty years? They're sick about paying a mortgage on a house based on a value that is twice as much as it is really worth. I get lots of calls from folks asking me, how do I get out of this mess? They don't want to just walk away from the house and lose their credit - they want to negotiate with the bank and maybe do a Loan Modification or even a Short-Sale. Here's the first problem - If you and your family are working hard, making a decent living and paying all your bills, which includes your mortgage, the bank does not want to hear from you about loan modification or about short sales. If you never had a late payment and your credit is strong the bank will give you sound advice by telling you if you can no longer afford your home you should sell it and buy a house you can afford. After you tell them you can't sell your house for half of what it's worth the bank will say that you will just have to make up the difference somehow, and how you do it is not their problem - after all you are the one that asked them for the loan - they didn't come after you - or maybe they did, but that doesn't matter now. How unfortunate and sick is it when you get caught in a situation of being a good hard working citizen, pay your bills on time, and those actions you performed in good faith and honesty have placed you in the worst possible category to be when it comes to wresting your way out of a home that has become a liability and a bad real estate investment. Now we move to the next problem. Let's say you want to move and you'll worry about the other house later - you just want to get into a home about the same size you are living in now for half the money, but you don't have a ton of money and your credit is not quite good enough to buy another home while you still own the one you are living in. What do you do? What happens even if you do have some money and your credit is strong enough to qualify you for two homes - the bank usually will not lend you money for a home that has less value than the original value of the home you are currently living in? The bank wants you to move up not down. Even in the best of times they frown upon those who want to downsize to a smaller home. You think about this for awhile and decide you are no longer willing to throw good money after bad by paying on a rotten investment. You want out of the house. If your credit has to take a hit so be it. If you have to rent for awhile, well their are plenty of rental properties out there for the taking. You stop paying for a couple of months. For the first 60 days the bank starts sending you threatening letters. They will foreclose - you will be naked in the street - you will be tarred and feathered for not meeting your obligations - so you better bring your loan back to current status if you know what's good for you. Then, when you get closer to 90 days deliquent all of a sudden the bank turns from Methuselah into a Dutch Uncle. You start getting letters from them asking how they can help - what can they do? After they ratted you out to the credit bureaus for late payments and destroyed your credit to the point where you can't get enough financing to buy a Yugo, they want to be your friend. You call the Loss Mitigation Department and they give you some options. You decide you want to do a short-sale and cut your losses. The bank will ask your or your broker for all types of documents like bank statement, tax returns, hardship letters, purchase agreements, listing agreements, listing broker - it just goes on and on. You send them all that stuff. You wait a while and then you call them to find out if they received everything. After they finally figure out who you are they tell you that it takes several weeks for the package of documents to get into the system, so you wait some more. You call again, say in about three weeks from the first phone call - again they tell you the same thing - it has not gotten into the system yet, but when it does it will be forwarded to a representative. For months you keep on calling and you get the same answers. Then one day you receive piece of registered mail. The envelope is thick and it has the name of your mortgage servicing company on it. You open the letter and inside is a Notice of Default or an Intent to Foreclose. You get sick inside. You blame you spouse for talking you into this horrible mess. It would have been better to have just kept on making payments, at least we would still have a roof over our heads. Now what's going to happen? The car is just not big enough to hold two kids and the dog. You call the loan company and they put you on hold for an hour and then you get disconnected. Finally you get through. You ask for the person that you dealt with last time but nobody knows who that person is or where to find them. You tell your story about how you sent in all the proper documents and have been waiting patiently for them to be processed. They put you back on hold for another hour and then they come back. The person on the line tells you that you were missing one document and they canceled your file. You ask what document and they tell you. You tell them you sent that document and become infuriated when they tell you they didn't receive it. You ask them why they hadn't contacted you and they say they did try to contact you but they were unsuccessful. You want to know what to do now. The person on the other end tells you there is nothing you can do. You ask to speak with a supervisor and they put you back on hold. The sun is starting to go down when the supervisor gets on the phone. He listens to your sad story and tries to act sympathetic. First he tells you there is nothing he can do. You keep on telling your story about how you sent in all the necessary documents and how you have been following up with phone calls on a regular basis. Your wife is standing behind you biting her nails and telling you all kinds of things you should be saying that your not saying. He checks the records in his data base and finds out you are telling the truth. Finally he takes pity on you and tells you to submit another package. You are shocked he is asking you to do this - you ask him why he can't use the original package and he tells you he can't use it because your file has been closed and a new one has to be opened. Don't you know a new file requires new documents. You franticly pick through your papers until you retrieve all of your documents and send them out once again. The process starts all over again. You call - they tell you it will take several weeks to get in the system. Now your wise to them and are no longer satisfied with that answer - right away you ask for a supervisor. The supervisor tells you he will put a rush on your file and make sure that one of the representatives receives it. Still you wait. The average short sale takes five to six months to consummate. That kind of time-line works against you in this market. After you have finally found a buyer and submitted the Purchase Agreement six months go by and the house is no longer worth what it once was. It has to be reappraised. The mortgage company does another appraisal but the bank that your buyer is using has their own appraisal on the property that is less then your lenders. The buyer starts getting nervous about over paying and tells you if he doesn't get a price reduction he is walking.

I have been down this road several times. Any company that tells you they can do a fast and easy short sale for you because they know the ropes is lying. It is a long, tedious and frustrating process without any guarantee that you will be able to sell the house in the end. It is hard to name and or identify the best actions that should be taken when you are upside down on a home. I don't claim to know what the best moves are, but I can tell you the best scenario. If you are a married couple and one of you bought the home in severality - in other words just one of you shows up on title, and the spouse who is not on title is credit worthy, he or she can purchase the next house without being affected by the Short-Sale or Loan Modification on the original house. If you fall into that category then you should hop in the car or go online and take your pick of the the foreclosed properties you have been seeing and hearing about. There are tons of them and you can wind up with one hell of a deal. If you don't fall into this scernario there are other ways around the problem - each case is pretty much situational. If you are a broker - agent - or homeowner and are not familiar with this process give me a call and I will do anything I can to help. I have negotiated with several banks on Loan Modification and Short Sale and I know the drill. It does not make it any easier - I do not have the magic potion to get it done, but I do understand what happens when you get involved with banks and what the pitfalls are. I can be reached at robsellsvegas@cox.net or at 702-279-8025. I will be happy to speak with the bank on your behalf. Respectfully - Rob Basichis

Kenzie,

Thanks for the post. This is a very timely issue. I have just listed a short sale today and we will see how it goes.

have a great day--linda

Joetta,

As a private real esate investor who specializes in the aquisition, negotiation and disposition of short sales and who works closely with Realtors, I beg to differ with quite a few of your statements. I believe it is very important to note that just because someone says they are an investor does not necessarily qualify them in the art of the short sale.

All lenders, as well as all investors are not the same. Although, in general short sales require the same docs, they too are each a horse of a different color depending on all parties involved. In my case; sellers, agents, lenders, end buyers and of course myself.

"the investor requires the owner to sign over the title BEFORE the lender has even agreed to a short sale..." This is appears to be an attempt to take the property subject to the existing financing which is not necessary for a short sale. It only complicates the process as pointed out in your post.

"buyers still have a problem because most of the lenders don't like the double closing (the investor wants to close on the same day as the new buyer)." The only time a lender has a problem with a double closing is when the investor is trying to use the end buyer's funds to fund the A to B transaction. Again not necessary with all the transactional funding available. The lender could care less about whether they close on the same day.

"The investor has to make a profit, so the house is put on the market at a higher price than it could have been without the investor's involvement." We as ethical and honest investors expect to get paid for the good work that we do. When negotiated correctly the house is able to be listed for a quick 60-90 day sale based on the Realtors professional opinion as to what the current market value is. This price is usally about 10-15% below market value.

"So you've lost the buyers on two counts - the fact that their lender considers the transaction 'illegal' (which is what a lender I highly recommend to all my buyers called them), and the fact that they're higher priced than other, similar short sales." We have buyers running to our homes that we have listed because we price them for a quick sale. Listing agents get full commissions, sometimes twice if they are involved in the A to B and the B to C transaction. There is nothing illegal about a double closing. If that's their opinion then I suggest you start highly recommending someone else to your buyers. They will cost you closings which will affect your bottom line.

With all due respect,

Ricky

http://www.linkedin.com/in/rickygibson

The only thing certain about short sales is that every transaction is different... That's all I've got to say about that.

And the biggest question before hiring a REALTOR when it comes to short sales... How many have they actually closed?

MAR

2009

Kenzie, this is valuable information. Short sales can be frustrating for buyers because the process varies from transaction to transaction and bank to bank. I created a posting this week in an effort to share information about each our experiences with different banks:

http://activerain.com/blogsview/978570/Short-Sale-InformationWant-to-Share

I hope this helps any agents or buyers who are contemplating a short sale.

I have noticed a lot of varying opinions, which may be due to the local market, but some seems inaccurate. I am surprised in this long discussion, and even several mentions about getting knowledgeable to help your clients, no mention was made about formal educational offerings. Here are two that I know of that might be helpful:

The ABR elective course (open to non-ABR's too) : Foreclosure Prevention and Opportunities for Buyer-Clients

And the course that RE/MAX's Founder, Dave Liniger highly recommends: Certified Distressed Property Expert -- For more information, contact the Distressed Property Institute at 800.482.0335 or at distressedpropertyinstitute.com.

Great Info, Thanks..I have done a few Short Sales successfully. We are presenting the bank the contract of sale before bank looks in it, this is what the banks are asking.

When the house is Sold, the seller is not paying back to the bank any amount is lost. They get 1099 form of the amount and seller can bring to the Accountant to Zero out the "profit" and "Tax" at the time of yearly taxes are done (which is actually is a big loss for seller).

It is a long process, so much involved, I enjoy helping people in the need. I am currenly doing a short sale where the seller is in Jail. I will let you when the sale is done.

Great post I re-blogged it.Welcome to AR and I look forward to reading more from you!

Suzanne;

Have you talked to your lender regarding loan modification? Perhaps a lower payment could allow you to hold on to this investment by renting it. Seek legal counsel from an attorney who specializes in mitigation for advice, It would be advisable to have him/her review your loan documents.

My broker is a major broker 2300 agents and they have chosen not to get involved with the "investors" that have the homeowners sign over their homes FIRST. the legal department has deemed it unethical. Mainly, because the "Investor" that now holds the deed as a "trustee" has to have represented to the bank that he actually has a buyer for the property. (maybe himself) but he has no intentions of actually buying the property. He then takes his acceptance letter and tries to sell the property real quick. (which, I'm not sure "real quick" exists too much in this market.) (KS & MO)

So, there is a question as to whether these "we buy ugly houses" guys and the "STOP Foreclosure" guys aka "Investors" are committing fraud by misrepresenting to the banks. Anyway, that's what my broker says, So, we are not allowed to list the homes. I have many investor clients & could have listed at least 40 homes in the last month. Not all my investor clients are these guys but I've been approached a bazillion times to list these homes. But, there's that legal question looming.

Hey, if this is not totally on spot for this thread I would love for anyone to start a thread on it. I would appreciate any feedback on what you think of this issue.

I mean technically these are not short-sales to US the buyer's agent because the "Investor" does all the negotiating with the bank. When we produce the buyer, we just have to be ready to simultaneously close when the bank accepts the Investor's side. (then the 2nd closing is between the investor and my buyer)

Oh, one more thing. If the Investor guy doesn't know what he's doing then you're really at his mercy. So, if he can't make the deal work then do we get paid our commission, anyway? (Because we did supply the ready-willing-able buyer.) PLEASE comment or start a new thread. This is a very popular thing right now and if for no other reason I would like to absorb other pros opinions maybe to give me a good argument for legal dept.

Thanks so much!

I am currently working on 2 short sales. One is with Countrywide Mortgage, going on 10 months. The other is with National City, going on 4 months. The 3 month rule does apply to every bank. Your buyers better be prepared to play the waiting game.

Chuck said that the buyer should just go with a home warranty in place of an inspection. I wouldn't recommend it. I have had too many buyers lose out because the home inspection company said that the defect was a pre-existing condition and therefore was not covered.

Patti

In the past, a homeowner who received debt forgiveness from a lender
received a 1099 the next tax season because the IRS sees debt
forgiveness as a taxable event. However, there was federal
legislation that passed in 2007 waiving this for the homeowner. There
are some special provisions for example, owner occupied residence,
etc. Here is the IRS website link:

http://www.irs.gov/individuals/article/0,,id=179414,00.html

There was also some confusion a few months ago that our state
department of revenue was going to try and collect excise tax on short
sale debt forgiveness but the state backed down:

http://www.raincityguide.com/2009/01/10/is-excise-tax-payable-on-short-sale-debt-forgiveness/

Mary,

Not all investors are ethical and operate in integrity. If you have some investors that you have worked with in the past and you know them to be above board, then by all means refer the short sale candidates to them for negotiation with the lender. Afterwards you can agree to list the house for them for the B to C transaction.

This is great information about short sales. I believe that the reason why so few sell is because buyers become impatient and move on, instead of waiting. I have one buyer side short sale completed and one that is close to approval....the later taking 3 1/2 mos so far and will probably take another month and a half. It's a 3 month time period for short sales and then it usually goes back to the bank.

Great post, Kenzie. The one truth about short sales is that there will always be a certain amount of unpredictability. A lot of the information on the Internet about short sales is incorrect and it causes a lot of confusion. The average loss mitigator has 300 active short sale files, and they want to spend the smallest amount of time possible on each file. One thing that loss mitigators hate (and it apparently happens all too often) is incomplete short sale packages.

In my opinion, no matter how much formal training you have on short sales, there's no real substitute for actual experience. Knowing how to do a short sale (from the classroom) is very different than actually going through one.

Also, for those agents who are negotiating their own short sales or outsourcing the negotiation to a short sale negotiation service--Be careful! Real estate agents and brokers are allowed to engage in the limited practice of law by completing blanks in pre-printed forms and negotiating a sale price for a property on behalf of the client. In Washington State, the Supreme Court definition of the practice of law includes "negotiation of legal rights or responsibilities on behalf of another entity or person(s)". Short sales would fall under that description. There's nothing written in our state laws that I'm aware of which specifically allows real estate agents to negotiate the legal rights and responsibilities on behalf of a seller relating to their mortgage (i.e. short sales). While real estate agents generally don't get in legal trouble by negotiating short sales, a seller that didn't like the outcome of a short sale negotiation could sue the brokerage claiming that the agent was acting outside their capacity as an agent. I know this may vary from state to state, but I tend to be cautious so things don't come back to bite me later.

I use an attorney to negotiate my short sales, and I make it clear to the buyer's agent that the short sale is being professionally negotiated by an attorney.

Good post Kenzie, I think Short sales would not have as bad a reputation if more agents were like you :)

addressing the "legality" of negotiating short sales. No one has ever said a real estate agent has to have an attorney negotiate them. So??? Do we or don't we?

So, if real estate agents cannot "legally" do it then joe blow investor CAN????

I wouldn't dream of adding another layer to the already complicated process of a short sale. (before I was a realtor I negotiated bazillion dollar deals regularly so I've always felt comfortable at the table and successful at it.

So, of course, if it's not legal I would not go against that. But, shouldn't somebody have figured this out a long time ago?

Nice post Kenzie. Thanks for the information but to me Short Sales are very time consuming and frustrating. I'm still learning from AR and post like yours. Looking for motivation to deal with Short Sales.

Has anyone ever tried to stipulate the listing agent only submit one offer at a time?

I read at... oh, maybe it was NAR that this is what you should put in your offer.

God only knows that would be a dream come true. Well, I guess if the bank had a decent turn-around time. But, how many times have you been almost all the way to the end and the listing agent dumps a better offer on top of yours and then just like that. after months of &*%&* POOF you're out.

Well, if you don't do short sales... and you're use to absolutely lovely regular resale deals. I get the whole concept of submitting multiple offers. I totally agree that is a great way for the seller to get the best deal. A week out of your life and it's over. No big deal. But, to be put through the ringer for months, hangin by the string. You're finally coming to acceptance. It's right there and BAM you're out! That's just not right! It's not right for the banks side either. Why don't they understand the longer they string these out the more money they lose? Why? Well, a little mellowdrama here but I'm tellin' ya. They have to get their strategy correct or their going to lose their *^*.

I don't know what warranty company you all have access to but we have 4 that we offer and none of them cover anything of MAJOR value in a home. I would never recommend to my buyer to replace an inspection with a warranty.

I would love to know the protocol for sending offers into the Lender over the course of a month's time or so. Does the Lender look at the 1st offer only, or do they look at all offers? I'm getting mixed feedback on this one. My 1st short sale told me the Lender was only looking at the 1st offer, even if the 2nd 1 was higher. Although when it was higher, he told me so and we increased our offer and they accepted it. Does it matter if only 1 offer of say 2 or more were signed by the Seller first when it comes to the bank considering more than 1 offer.

Help... I'm confused by this process. Maybe it varies from lender to lender as well. I would think they would go back to the 1st offer or both to see what their highest offer would be, then decide.

Thanks -

Mary,

I tend to be very risk-averse. That's why I have my short sales negotiated by an attorney. I think an investor runs a much higher risk of getting sued than a real estate agent, and I know investors that have been sued. In each case, they were negotiating their own short sale.

With that said, there seems to be an unwritten assumption (at least in Washington State) that it's okay for a real estate agent to negotiate a short sale as part of the transaction they're facilitating, so a real estate agent won't go to short sale jail for negotiating a short sale. Negotiating your own short sale is probably better than outsourcing it to a short sale negotiation company that's not attorney-driven. I heard of a broker that got sued by a seller after the agent outsourced the short sale negotiation to an investor and the seller wasn't happy with the results. The investor was apparently named in the lawsuit, but the broker was the primary defendent.

Also, this is really not new information. It's just new to most real estate agents. After all, most agents had never heard of a short sale a couple years ago.

MAR

2009

Very good post. I also need to become more knowledgable about short sales since they will become more prevalent in the future

MAR

2009

I work short sales here in the Atlanta Area and have found that most banks doesn't even consider a "shor sale" a "short sale" until you have an offer. I collect all docs from the homeowner upfront. I date the listing agreement about 5 days out to make sure I have everything I need. I review all docs to make sure we actually have a hardship. The homeowner will tell me one thing, but the docs will provide me with the correct information.

The reason I start collecting docs upfront was because it is very frustrating when I receive an offer and need to submit the package and ithe seller is taking days to provide what I need. This prolong the process for everyone.

I make my initial contact with the bank after I list the property and fax in the authorization. At that time, I ask for their short sale package or what I need to submit with the offer. I build my case when I list the property, so when the offer comes in, all I have to do is print the package, update cma and compile a HUD 1. Sometimes, I have to get updated docs from the seller if the check stubs and bank statement are outdated.

I always negiotiate that the bank relieve my seller from any deficiency because if I do not, the bank may go after the seller later. I always make sure the approval states that the seller will NOT owe any thing more than what the bank accepted as a short sale payoff. Some instances the bank will ask for a promissory note from the seller.

I see a questtion about multiple offer...when I get mutiple offers, I advise both agents that I have multiple offers annd to submit their highest and best offer. Once I receive the higest offer, my seller sign off on it and we forward it to the bank. The seller only ACCEPT one offer at a time. I always inform the other selling brokers that I have an offer that has been submitted, but ihas not been accepted by the BANK.

Good Luck Short Selling!

APR

2009

Most importantly for all real estate associates, the sellers will still own their homes until t(time) = 0. Short sales or no short sales, the seller has to be willing to sign off for a short sale and provide the necessary documents. Even if the home is in foreclosure, the seller still owns his/her home until t=0.

david

Leave a response…

Name:

Email:
(optional)

Comment:

What does the graphic say?

Kenzie Kipper

Kirkland, WA

More about me…

Keller Williams Realty - Bellevue

Cell Phone: (425) 765-4432

Email Me

Links

Archives

Find WA real estate agents and Kirkland real estate on ActiveRain.

Disclaimer: ActiveRain Corp. does not necessarily endorse the real estate agents, loan officers and brokers listed on this site. These real estate profiles, blogs and blog entries are provided here as a courtesy to our visitors to help them make an informed decision when buying or selling a house. ActiveRain Corp. takes no responsibility for the content in these profiles, that are written by the members of this community.