Some pre-foreclosure homes represent great listing opportunities for real estate agents, while other foreclosure listings waste an agent's time. Before taking a listing for a property involving a short sale, agents should qualify the seller by evaluating the situation. Below is a useful questionnaire that my company uses.
Short Sale Qualification Questionnaire
A real estate agent should determine if a potential listing might involve a short sale. If it does qualify as a potential short sale, then the agent must also determine if it is worthwhile to take the listing. This Short Sale Qualification Questionnaire will help you determine if the situation constitutes a potential short sale.
Definition of a Short Sale.
A short sale is a transaction in which the owner sells a property for an amount that is less than what is owed on the mortgage loan(s). The lender chooses to either forgive the remaining debt or release the mortgage while still pursuing the owner for the balance of the loan. A seller cannot receive proceeds from a short sale transaction.
Definition of a Potential Short Sale.
A potential short sale is one where the listing agent reasonably believes the purchase price may be insufficient to pay all liens and costs of the sale, and where the seller is unwilling or unable to pay the shortfall at the closing.
Alternatives to a Short Sale.
A short sale may have legal, credit, and/or tax consequences. There are several alternatives to a short sale. These other options include:
- Make payments to reinstate the loan and keep the property.
- Sell the property and bring cash to close escrow.
- Attempt a workout with the lender.
- Offer the lender a deed in lieu of foreclosure.
- Allow the property to go into foreclosure.
- Declare bankruptcy.
Elements of a Successful Short Sale
- The property is worth less than what is owed.
- The seller has a hardship that makes it impractical for the seller to keep the property.
- The seller is cooperative and willing to work with a licensed real estate salesperson and/or buyer.
- The lender is contacted and expresses willingness to consider a short sale.
- A ready, willing, and able buyer can purchase the property in a timely manner.
Qualifying Questions To Ask A Seller:
- Attempts to Sell. Have you attempted to sell the property? Is the property currently on the market? If so, how long?
- Purchase Date. When did you purchase the property? _________
- Purchase Price. What did you pay for the property when you bought it?
- Owner(s). Who is on the title?
- Resident(s). Who is living in the property? __________
- Maintenance. Who maintains the property? ____
- Mortgage(s). Who is on the mortgage? ___
- Lender(s). Who are the lenders?
- Type of Loan(s). What kind of loans do you have? Conventional? FHA? VA? __________________________________________________
- Amount Owed. How much is owed on each loan? ____________________
- Delinquency. Are you behind on your payments, and if so, how many months behind? If you are current on your payments, how long are you able to stay current? ________________________________
- Other Liens/Creditors. Are there any other liens against your property? Who else do you owe money to, and how much?
- Taxes. What are the real estate taxes per year? Do you owe any back taxes? ____________________________________________________
- Hardship. What has caused you to struggle to make your mortgage payments?
- Workout. Have you attempted a loan modification with your lender? If so, what was the result? __________________________________________________________________________________
- Stage of Foreclosure. What type of action has the mortgage lender taken so far? Is there a foreclosure sale date scheduled?
- Lender Correspondence. What lender correspondence have you received? Have they given you a short sale list or packet?
- Income. What is your monthly household income? ________
- Expenses. Besides your mortgage payment, what are your total monthly expenses?
- Documentation. Do you have documentation to show the lender your hardship? This includes the last two years' tax returns, your last two paystubs, and your last two months' bank statements? _____________________________________________________________
- Bankruptcy. Have you considered declaring bankruptcy? ________
- Repairs. What type of repairs or improvements are needed to make the property sellable? __________________________________________________________________
- Contractor Estimates. What estimates have you obtained for repairs to the property? ______________________________________________________________
- Utilities. What utilities are currently turned on at the property? ________________________
- Advisors. Have you spoken with your attorney and accountant regarding your situation? What have they advised you to do?
- Other Information. Is there anything else we need to know regarding your situation? _________________________________________________________________
By Tai DeSa
Significa Corporation, America's Short Sale Solutions Company
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