The things I find the most help in doing short sales. PERSISTENCE. You have to babysit the L&M people to make sure they are doing their job. Don't ever leave them a msg. You need to hang up and call again.
These banks all have a different procedures on how to handle them so it is a little bit complicated. I have worked with a lot of different banks and some are better than others. When you start a short sale, here are the things I do first.
*Get an authorization to release information signed by the client
*Go over with the client what the bank is going to expect from them. (w2's, bank statements, hardship letter and breakdown of monthly expenses.) I will tell them to get this stuff to me asap.
*Call the bank and get a direct number for the L&M department and get their fax.
*Fax them the authorization to release info
*Follow up in 2 or 3 days to make sure the got the release
*Ask the L&M how the bank handles a short sale and what they need to get the client approved for a short sale.
*Ask them to order an appraisal or BPO ASAP (some banks won't do it until there is an offer)
*Get with the client to make sure they have all the paperwork the bank will require to approve the short
*Fax the info (hardship package) to the bank. Make sure you put the loan number on EVERY paper you fax to the bank
*Order preliminary title work to make sure there are no lien's against the property to keep it from selling. Once you get an offer it is a hurry up and wait game with the bank. Here is how I handle that
*Submit the offer to the bank (don't forget to put the loan number on the offer)
*Submit a estimated closing cost with the offer detailing all the cost the bank will be paying.
*If the appraisal hasn't been ordered make sure they do it now. Follow up daily to make sure they do.
*Follow Up Follow UP Follow Up The bank will probably drag their feet in hopes of getting more than one offer.
Once the bank gets the appraisal back, you should be good to go. The bank is going to look at the appraised value, not what is owed on the house to determine its lose. A lot of banks want to get back 80% of the appraised value NOT the mortgage owed. That 80% has to be their net, including commissions. Now depending how close you are to the Sheriffs sale will determine their motivation. They will take less than the 80% if they do not want the home back.
Another thing you will run into is the bank telling you that they will not pay you a full commission and that you need to take a 1% or 2% or more off. There are 2 ways to handle this. One is when you list the home, list it for 1% higher than you normally do so that when the bank ask you to take less, you already built it in. The other option is to tell them NO. But give them a bit of time before you do so. Tell them you have to speak with the other agent involved or your broker. They might tell you they are rejecting the offer! Tell them that they need to counter the offer first. This way the buyer will offset your commission expense to the bank.
One more issue you will probably run into. The bank is going to negotiate forever and waste a ton of time. THEN when they do decide to approve the offer they will want you to close NOW. This is something you need to make the buyers aware of. Let them know that when the offer is accepted they will have to rush things. If they want to do an inspection, have them do it withing 2 days of acceptance. Let the buyers lender know that they need everything approved but accepted offer and appraisal. When the lender tells you they are willing to take the offer, get the buyers lender to order the appraisal.
Once the bank has approved your offer you need to get a letter from them that states they are approving the short sale and make sure it has the agreed upon net on this letter. They will also have a time line for you to close by on this letter. This will need to go to the title company for closing.
Here are a few miscellaneous things:
*Do Not have the seller sign the purchase agreement until the bank has sent you the letter of acceptance of short sale.
*Make sure you have a contact in the L&M office that is your regular contact
*When everything has been agreed upon between the bank, buyer and seller you need to have the sellers sign a counter offer stating "Closing is subject final approval of final HUD by sellers lender. Sellers lender may terminate contract anytime up to closing"
I am sure there are more things I am forgetting or have not run into in my experiences. This is not a definite manual, every bank has its own procedures and every sale is unique. If you have anything to ad, please do so.