When someone requests a short sale - I follow up with a letter like this to get started. . .

By
Real Estate Broker/Owner with NoVa Brokers LLC 0225 094634 VA/ 643686 MD

AFTER SPEAKING TO A POTENTIAL SHORT SALE SELLER . . . I usually follow up with a letter that I found helps reiterate our conversation to make sure that we are all on the same page and have the same goal in mind.  Also, to make sure in writing I state that they should contact a tax professional regarding the 1099 issue.  This letter helps because then the seller, if serious about pursuing the short sale then, he will have a list of documents I will need to review and prepare to be one step further.  This isn't used for all of my clients, but the basic content is here and it is very helpful in preparing for a short sale.  I hope you find it helpful also.

SHORT SALE LETTER TEMPLATE 

Dear (SELLER):

            I am glad you called me earlier because maybe we can resolve this issue together.  I am a licensed real estate agent for __________.   After I looked up your property on the MLS I find that your property may be a candidate for a short sale.

I will need the following information from you before I can make a decision on whether or not your short sale will be considered by your mortgage company:

•1.      I need a letter from you "HARDSHIP LETTER" stating what has changed since the purchase of your house that has left you unable to pay the mortgage.

•2.      Tax Returns for last two years

•3.      Last 4 paycheck stubs (or if self employed) last 2 bank statements from your company.

•4.      Last 3 Bank statements for you personally.

•5.      Settlement package from purchase of home (to review your situation when you purchased).

•6.      Last mortgage statement ( date) for all mortgages on property.

•7.      Form - (I have) authorizing me to speak to your lender. (Third Party Authorization)

 After you have gathered the above information, I can meet you at your convenience.

After our meeting . . .

•1.      I will contact the bank to see if they are interested in working out the terms of the loan or a short-sale.

•2.      I will list your home on the market (at market value). We will have a listing agreement that I will have you sign. (Bank will ask for a copy of the listing agreement)  We can also list it byappointment only, no sign, etc. to keep it somewhat private if you wish, but we could get more potential buyers with signage and be more flexible with the showings.

•3.      Forms - (Mortgage company will send you via facsimile through me, after I speak to them) asking for a financial analysis of your entire situation including all expenses, including bills you have and income to see if you qualify.  They may require other things depending on the company.  Each lender has their own rules.

•4.      We will accept a contract.

•5.      We will submit contract to the Bank for their approval.

•6.      The Buyer must have a pre-approval letter from the mortgage lender he/she will be using, disclosing that he/she can afford to purchase this house and move forward in the purchase of the home and can close within 30 days of the contract.

•7.      The Buyer will move forward in the purchase as we await for approval.

•8.      Once the mortgage company gives us an approval will set new closing date.

•9.      Move forward with closing w/title company.

•10.  Shortage will be recorded with the bank and the bank may or may not come after you with a confessed judgment or form 1099 to you at the end of the year.  This could cause great hardship to you in the future.  You should discuss the form 1099 issue with a tax professional.  There may be other steps depending on the company we are dealing with. But as we move along in the process, we will handle it.

         Let me know if you want to proceed and we will set up an appointment to go over everything.  You can reach me at ________.

 

                                                                              Sincerely,

 

 

 

 

 

 

 

http://www.stellabarbour.com/default.asp

 

Posted by

FOR ALL YOUR REAL ESTATE NEEDS

 

STELLA BARBOUR

NoVa Brokers LLC

1483 Chain Bridge Road Suite 103

McLean, Virginia 22101

571-814-3002 OFFICE

703-999-6104 CELL

571-281-2866 FAX

www.novabrokersllc.com

stellabarbour@yahoo.com

Licensed in Virginia & Maryland

 http://www.novabrokersllc.com/

 

 

 

Comments (21)

» Bill Burress Nationwide Mortgage Originator
» Bill Burress Nationwide Mortgage Originator - Fort Myers, FL

Stella:

I like your letter.  Good post.

Oct 20, 2007 07:21 AM
Roberta LaRocca
Simply Vegas Real Estate - Las Vegas, NV
REALTOR®, Broker, Salesperson, NV. Lic BS.507
Stella, Very nice letter. It makes everything very clear for the seller.
Oct 20, 2007 07:25 AM
Stella Barbour
NoVa Brokers LLC - Vienna, VA
Principal Broker, Serving Virginia and Maryland
Sam, Lois, Bill, & Roberta - Thanks for visiting and thanks for the comments.
Oct 21, 2007 04:44 AM
Lynn Pineda
eXp Realty - Boca Raton, FL
Real Estate Promises delivered in SE Florida

Stella, what a good idea for follow up with short sale prospects.  Thanks for sharing.

Oct 21, 2007 11:05 AM
Stella Barbour
NoVa Brokers LLC - Vienna, VA
Principal Broker, Serving Virginia and Maryland
Lynn - I hope you find it useful.  I have.
Oct 22, 2007 12:58 AM
Mike Norvell Sr
Morris Williams Realty - Leesburg, FL
Norvell Consulting Group
Great letter Stella, and how nice to finally know someone from Leesburg, Va. I am from Leeburg, Fl. I do think your Leesburg is the more famous...Best wishes, and nice post....Mike Norvell Sr   Leesburg, FL 34788
Oct 22, 2007 01:09 AM
Stella Barbour
NoVa Brokers LLC - Vienna, VA
Principal Broker, Serving Virginia and Maryland
Mike - Thanks for the compliment.  I think Leesburg, Fl might be nice right now.  I am still such a fan of Florida.
Oct 22, 2007 01:20 AM
Cynthia Tilghman, Realtor® Onslow County NC Home Specialist
Kingsbridge Realty, Inc - Hubert, NC
Hi Stella,
A good way to help the seller understand what is involved and get them busy gathering the information needed.
Oct 25, 2007 01:37 AM
Stella Barbour
NoVa Brokers LLC - Vienna, VA
Principal Broker, Serving Virginia and Maryland

Cynthia - Thanks for the comment.  It does help me get them motivated and realizing time is not on our side.

Oct 25, 2007 02:00 AM
J Perrin Cornell
Coldwell Banker Cascade Real Estate - Wenatchee, WA
Broker, ABR, VAMRES

Good post. however, since many if not all people in short sale situations are soooo often in some level of denial. I am curious once the letter is sent how many get back to you? But to get the job done you need that information at a minimum. The bank is not going to roll over just because a home owner says they can't make the payment or have a bad loan arrangement. There is also the issue of 2nd mortgages... how do you handle them?

 

Finally, i usually do not do short sales... the rewards are too small (other than the personal issue of helping someone) and then the bank comes back and says ok we will approve but we will only allow a 1% commission.... which frequently happens.

Oct 25, 2007 02:07 AM
Stella Barbour
NoVa Brokers LLC - Vienna, VA
Principal Broker, Serving Virginia and Maryland

Perrin - I have not received any less than 2.5% commission with short sales. So not sure of the 1%.  Has not happened yet. After the letter goes out, they call me and ask when they can bring everything.  I tell them how important it is to get things too me quickly.  I have only had one client that decided to ignore my letter and decide to foreclose instead.  I work with the second mortgage after I work with the first mortgage.  The second mortgage will take 10% of what is owed on most occasions  (the ones I have worked with) so if I can get the first mortgage to agree to giving them that then I am in business.  I also am a bankruptcy consultant so if all fails, I file Bankruptcy to try to keep the homeowners in their homes a little longer if they wish.  Short sales are not for everyone.  If it is not going to benefit them or help them in anyway, I don't try to sell them on that.  I only work with people that have a true hardship.  Homeowners dealing with job loss, family member illness, things like that.  Others that are looking to benefit in someway or just want to get rid of their property because they want to and not need to, I don't take those clients. People that work with me are people that really need someone to help them. 

Oct 25, 2007 02:17 AM
Jeff Payne
The Payne Group at Keller Williams Success Realty - Panama City, FL
Panama City Real Estate
Most lenders start the negotiation at 5% as I have never heard of the 1%. Could be a realtor urban legend.
Oct 27, 2007 12:16 PM
Stella Barbour
NoVa Brokers LLC - Vienna, VA
Principal Broker, Serving Virginia and Maryland
Jeff - I have not heard of the 1% yet either.  I guess maybe that does occur in some areas.
Oct 27, 2007 02:12 PM
Jeff Payne
The Payne Group at Keller Williams Success Realty - Panama City, FL
Panama City Real Estate
 I saw two that a friend did, he had both sides and got 7%.
Oct 28, 2007 11:30 AM
Stella Barbour
NoVa Brokers LLC - Vienna, VA
Principal Broker, Serving Virginia and Maryland

Jeff - I haven't gotten 7% yet for both sides.  The most I received was 5%.  The least I have received is 2.5%. (That was for one side)

Oct 29, 2007 12:51 AM
Renee L. Norton
Birmingham, AL
Nice post.  Your letter provides a good checklist for the client. It should weed out anyone who is not motivated.
Nov 29, 2007 12:06 PM
Stella Barbour
NoVa Brokers LLC - Vienna, VA
Principal Broker, Serving Virginia and Maryland
Renee - Thanks for stopping by.  My letter has helped me.  I notice people bring all the documents at one time since I have started doing the letter
Nov 29, 2007 01:11 PM
Natalie Langford
Realty Negotiations - Winchester, VA
Winchester, VA Real Estate
I don't know that I will ever touch short sales from a listing point of view.  However, I've bookmarked this!  Thanks for the resource.
Dec 10, 2007 12:00 AM
Stella Barbour
NoVa Brokers LLC - Vienna, VA
Principal Broker, Serving Virginia and Maryland

Natalie -You never know.  I started to do short sales because of people I knew for a long time only wanting me to help them, and we did the learning together as we went along.  

 

David - Thanks for your comment.  I hope it will help. 

Dec 10, 2007 12:45 PM
David Dee
RMX REALTY - Alhambra, CA
Real Estate - San Gabriel Valley (L.A.) & N. Orang

Stella,

Nice piece of letter here. You've stated that the 2nd will usually take 10% of the loan amount. What happens in a situation where the 1st/2nd is with the same bank? What percentage of the 1st would the bank take a cut of based on your experience in dealing with them?

If the owner has 2 bank accounts with different banks and only inform the agent helping them that they only have 1 bank account, would the bank find out of the other bank account through a SSN check?

You have some great posts Stella.  

 

Dec 11, 2007 04:27 PM