What about a Short Sale Package?

By
Real Estate Agent with Excellence in Real Estate Tm @ Allison James Estates & Homes

What about a Short Sale Package?
by John Occhi REALTOR
Realtor Consultant to Foreclosure Investors

Every investor who wants to do short sales as a from of real estate investing knows that one of the very first steps is ordering the Short Sale package direct from the lender. Don't forget, when there is more than one lender, you need to order the short sale package from both lenders.

Each lender has their own formats of how they want the package submitted for their review and ultimate approval. Yes, you will find similarities between various lenders - but you must understand and respect they are individual entities and want things done their way - if you want them to cooperate with you.

It is critical that your package be complete. You will find that time is not your ally and if they have to come back to you for additional information - or worse information that they specifically requested and you failed to provide, then you can consider that to be the kiss of death.

Remember, Time is of the essence!

A universal truth is that most lenders will want many of the same things in their short sale packages for homes in foreclosure that they are considering a short sale alternative to. Several of these items will almost always be:

  • 2 to 3 months of pay stubs

  • 2 to 3 months of bank statements

  • A hardship letter from the homeowner (handwritten is always best)

  • A signed purchase contract with as few contingencies as possible

  • A HUD-1 - or a Net sheet showing the mortgage lender exactly what they should expect to receive

Then there are items you can add to beef up your offer and substantiate your offer so that the bank is more compelled to allow you to purchase this property for less than what is owned on it and even for less than a fair market value. You may consider including the following documents:


  • 1 to 3 estimates by licensed contractors - if the home needs more than a coat of pain and a bag of grass seed.

  • Lots of Photographs to Identify problems with the property

  • A Market Analysis prepared by a REALTOR As to what the home is actually worth - including a minimum of 3 ACTIVE comps and 3 SOLD Comps

  • Your Own BPO if it works for you

  • If the local school district is below the 50th percentile - then send a copy of a schools report

  • You might find out about crimes in the neighborhood. If there has been a particularly gruesome murder or some other violent crime in the area, in the last year, find a newspaper clipping (web based is fine) detailing the event - include a Google Map to show how close to the subject it is

  • Anything that you can document that will detract from the value - whether it is the home, the neighborhood or even the community at large.

If you follow these guidelines, and you submit actual factual information - you should not have a problem working out a fair deal for all of the parties concerned.

Wishing you nothing but the best,

God Bless,

John Occhi, Hemet CA REALTOR
Loss Mitigation Consultant <

Posted by

Until Next Time, Have a Blessed Day,

John Occhi, ePRO & Five Star Certified REO REALTOR®
www.JohnOcchi.Com
Hemet - San Jacinto Valley, CA
The Excellence in Real Estate Team @
Allison James Estates & Homes
2281 W. Esplande Ave, #102-B
Next to "Starbucks"
San Jacinto CA 92582
(951) 654-5550

Excellence in Real Estate,Team Log,John Occhi,www.johnocchi.com,hemet,san jacinto,CA

Allison James Estates and Homes Logo     

 


This blog and the contents written here is the intellectual property of John Occhi, San Jacinto Valley REALTOR® in the South West Riverside County region of the Inland Empire of Southern California.  The views and opinions expressed are just that - views and opinions of John Occhi and those who comment.  Please note that I am not an attorney or a tax professional and any time I discuss either topic, I suggest you consult with the proper professional for relevant assistance.

This blog is part of the ActiveRain Real Estate Network, which is a social network highlighting the best of Web 2.0.  Information is provided with the intent of educating and assisting home owners, home sellers, home buyers and real estate investors with information the can be used to make better real estate decisions.

I am proud to be a full time REALTOR® who is proud to be a contributing member of the ActiveRain community.

Comments (19)

Rosemary Brooks
BMC Real Estate - 209-910-3706 - Stockton, CA
The Mother & Daughter Realty Team

John this is a great piece of work.  Thanks for sharing.  I feel that we need to keep doing posts on short sales since they are the heavy right now and it look like they are here to stay for a while.  Although not new, a large number of us never did short sale transactions until recently and the more we educate each other the better.  Thanks again.

Please check out my posts on short sale as well.  I am sure we can learn from each other.  Keep up the good work.

Jul 09, 2007 09:13 PM
John Occhi
Mason Real Estate - Temecula, CA
SRES,CPRES.ePRO - Temecula-Murrieta CA Real Estate

Thanks for the feedback.  I agree there is a definite need for experience in this field, as there will definitely me more short sales before there are fewer short sales.

I have been gearing up for this and have several more articles already in the works - so please stay tuned.  I'll make a point to see what yo have going on  over at your blog.

Thanks again,

John Occhi, Hemet CA REALTOR
Mission Grove Realty

Jul 10, 2007 02:46 AM
Rita Bradley
Laguna Hills, CA
Valuation Consultant in Orange County California 949-916-3263
This is really interesting John.  Do you ever have situations where there are two lenders and one accepts your offer and the other doesn't?  What do you do in a case like this?
Jul 18, 2007 05:03 AM
Rita Bradley
Laguna Hills, CA
Valuation Consultant in Orange County California 949-916-3263

One more question (forgive me, I'm not a realtor) is the  HUD-1 - or a Net sheet the same as a settlement statement? 

Jul 18, 2007 05:11 AM
Liz and Tim Frangioso
Keller Williams Realty - Chicopee, MA
This is a great checklist.  I am going to use it in training my agents to do short sales.
Jul 27, 2007 11:19 AM
John Occhi
Mason Real Estate - Temecula, CA
SRES,CPRES.ePRO - Temecula-Murrieta CA Real Estate

Rita Bradley - First, the HUD-1 is the net sheet in an acceptable format.

As far as multiple lenders, the first is the major player.  If the house goes into foreclosure then the 2nd and subsequent loans get nothing.  Typically they will get anywhere from $1000 to 10% max.  The 1st won't allow them to take anymore, and they know it.

Hope this helps

John

Jul 27, 2007 01:22 PM
Anonymous
Rita Bradley
Thanks so much for answering my questions John. 
Jul 27, 2007 03:34 PM
#7
John Occhi
Excellence in Real Estate Tm @ Allison James Estates & Homes - San Jacinto, CA
ePRO, Five Star Certified, Riverside Cnty REO Expert, 951.443.6259

I just heard on a conference call this week that at least two lenders are sending out letters to Homeowners as soon as they miss the first payment and explaining what they want the homeowner to know about short sales and suggesting one is in thier future.

Has anyone else heard this or better yet seen a letter?

Thanks again,

John Occhi, Hemet CA REALTOR
Mission Grove Realty

Aug 19, 2007 06:29 AM
Rosemary Brooks
BMC Real Estate - 209-910-3706 - Stockton, CA
The Mother & Daughter Realty Team

John  - I have not ran into one person that said that they have received a letter from the lender informing them about short sales.  Might be where this problem is going.  Lender's asking owners to do a short sale instead of vise versa.  If this were to happen, it would at least make the short sale process easier if the lender wants it - right up front. in the top 20 rank.... Stockton (my area) is 1st and Riverside/San Bernadino is 4th, with Sacramento being 5th.... interesting nationwide ranking. see: The rankings are in from the top 20

Aug 19, 2007 06:45 AM
John Occhi
Excellence in Real Estate Tm @ Allison James Estates & Homes - San Jacinto, CA
ePRO, Five Star Certified, Riverside Cnty REO Expert, 951.443.6259
Rosemary Brooks - Thanks for stopping by "my other blog".  If the lenders started offering short sales up front, my thought is they would offer a certain discount and may eliminate the investor from the market all together.

Also, would we be able to sell to investors without a bond in place?  Perhaps the lender would cover the bond by putting the amount in reserve.   Now there is an idea!
Aug 19, 2007 07:21 AM
Rosemary Brooks
BMC Real Estate - 209-910-3706 - Stockton, CA
The Mother & Daughter Realty Team

John, just a thought.  Hopefully, the lender is not looking to eliminate the real estate agent all together.  Offer it to the owner upfront, no agent needed right? um?

Lender cover the bond..... well, it does sound good. But real??? naw

Aug 19, 2007 09:21 AM
John Occhi
Excellence in Real Estate Tm @ Allison James Estates & Homes - San Jacinto, CA
ePRO, Five Star Certified, Riverside Cnty REO Expert, 951.443.6259
 Rosemary Brooks  - I agree - I can see the lender coming in - maybe even doing a short sale where the buyer is the seller...now that is frightening

Thanks again,

John Occhi, Hemet CA REALTOR
Mission Grove Realty

Aug 19, 2007 10:25 AM
Anonymous
Anonymous

It seem to me that it would be in the best interest of the bank to help facilitate a short sale when necessary (maybe some other type of work out could be offered first?).

John and Rosemary, how often do you end up dealing with the PMI company rather than the lender-or does this ever happen for you?

Aug 19, 2007 01:29 PM
#13
Steve Loraus
Twin Cities Real Estate Group - Saint Louis Park, MN
This is awesome information.  I've got a few short sale listings right now.  I'm just waiting for any offer on them to start short sale process.
Sep 29, 2007 05:59 PM
Dred Porter
Brandon, MS
Magnolia Clipping service is an excellent way to track mentions of particular neigborhoods, whether you check the local tv news for the past 6 years or you need to finds recent and ongoing newspaper clippings about an area, magnolia can help you out. www.magnoliaclips.com
Mar 12, 2008 09:38 AM
Rita Bradley
Laguna Hills, CA
Valuation Consultant in Orange County California 949-916-3263
Wow people are still commenting on your blog John.  Quick question:  When someone turns in a broker package and the banks turns down the offer because it's too low, does the bank ever counter the offer?  
Mar 12, 2008 05:56 PM
Windy Hixson
MOVE HOME REALTY - Riverside, CA
Riverside Ca~h2o Homes Specialist

 

 John,

Hey Riverside County Neighbor, I am a newbie on A/R.  I am happy to see somebody blogging from the I.E.  This is the talk around our water cooler. Some agents(not in our office) are sending GIFTS (bribes) to their L/M rep to put their file on top of the pile of short sales to get approved. Have you heard of this?

P.S. I posed this question in another blog and was ignored, no response to the question. I hope I am not offending anyone with this question. 

Mar 12, 2008 06:41 PM
1~Judi Barrett
Integrity Real Estate Services 118 SE AVE N, Idabel, OK 74745 - Idabel, OK
BS Ed, Integrity Real Estate Services -IDABEL OK

I am bookmarking this one to come back to as I work through a short sale that is currently on my desk.

Apr 21, 2009 04:06 PM
Mike Linkenauger
LinkUp Realty - Jacksonville, FL
Short Sale Realtor - Jacksonville FL

Here is a link to a lender short sale package with this list, including a financial statement that many require:

http://www.short-sale-specialists.com/Short_Sale_Specialist_Network_REALTOR.shtml

Jul 07, 2009 08:46 AM

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