Most people are in the dark about the short sale process and what documentation is needed to get one done. In this blog entry, I'm going to tell everyone about the main documents that almost every bank will need to get a short sale approved.
The ABSOLUTE FIRST document that you should always get signed is the Authorization to Release Information Form. Without it, you won't be able to discuss the file with the bank. After that is signed, here are the other nine main documents you will need to get signed:
1. Listing Agreement - They want to see what the commission percentage is and how long the property has been on the market.
2. Signed Contract - Without the contract, the bank won't approve a short sale.
3. Buyer's Proof of Funds - Either a an approval letter or evidence of cash funds to close the deal.
4. Completed Financial Worksheet - List of Seller's monthly income, expenses, assets and liabilities. This worksheet justifies to the lender's auditors why the lender will take less than the payoff amount.
5. A Hardship Letter - The hardship letter is basically the seller explaining to the lender how they got into the foreclosure situation.
6. Estimated HUD-1 - The estimated HUD shows the bank how much they will net at closing.
7. A Brokers Price Opinion or Appraisal - The bank will order this, but you should let them know that you are to be the contact person for the BPO.
8. 2 months of bank statements - To show that the sellers don't have any money to pay the loan.
9. 2 most recent pay stubs for each borrower - Again, to show the lack of funds.
If you let your clients know that these are the things that you'll need from them up front, you increase your chances of getting the short sale approved exponentially. There will be no surprises and they will know that you know how to do your job.
Hope this helps everyone.
Have a truly wonderful day and God Bless!
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