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The Short Sale Transaction. The Basics to Do a Short Sale!

By
Real Estate Agent with Prudential California Realty

Being involved in the Short Sale industry, I have seen a handful of things happen when dealing with the banks. From time to time, I am able to get in contact with someone who actually cares about what they do and are not just trying to boot you off the phone with no answers to your questions.

In order to keep up with the Short Sale process, you must know a few basic principles of how it works. I will list a few things you need to know in order to close a Short Sale.

1. Complete a package to submit to the bank. (Do Not Piece Meal! Submit Full Package!)

a. I usually send two packages to the bank in the beginning of the process to include the following:

1. Borrower's Letter of Authorization - (if two banks one for each)

2. Financial Worksheet - which has all of their monthly expense info to their income info and so on.

3. 2 months Bank statements - make sure their balances and deposits are low amounts to reflect hardship

4. 2 yrs tax returns with W2's

5. Hardship Letter explaining why they can't make payments

6. Listing Agreement

7. Agency Disclosure

So these should be included in the initial package sent to the bank. After you call the bank and ask for their loss mitigation dept. get the fax number to send the package to. Make sure you document who you spoke to and their operator numbers. After you fax it follow up in three days to make sure they received it.

Next you want to market the property whichever way you can whether it is on the MLS, craigslist, open houses, word of mouth and so on. After you receive an offer on it, have your seller sign it and contact the bank once again to let them know you have an offer. They will instruct you to send the offer in with maybe some other documents including the HUD 1. Document who you spoke to and follow those directions. A few days later follow up to see that they received it.

Next, you want to call everyday to get it assigned to a negotiator. The faster you get it assigned to a negotiator, the sooner you get the deal closed. You want to get it to a negotiator o they can review and hopefully approve the offer. A rule of thumb is that the banks have no issue approving an offer where they will lose 15-20 percent of the original amount owed.

After the offer is approved by the negotiator, go ahead and proceed to close. They will send you the closing instructions and forward them to the title company so they may do what they need to do. 24 hours before closing it will be necessary for the escrow officer to email a copy of the final HUD 1 to the negotiator for approval before they record the deed.

The above mentioned steps are the BASIC steps to closing a short sale. It is time consuming but well worth the headache. After getting the offer accepted by the bank, it is pretty much a downhill road from there.

Good Luck and I wish every Realtor who deals in Shot Sales the best.

If you have any questions or would like me to assist you in doing Short Sales in the California Bay Area please don't hesitate to ask.

MyShortSaleWebsite.

- Georgio -

Jon Zolsky, Daytona Beach, FL
Daytona Condo Realty, 386-405-4408 - Daytona Beach, FL
Buy Daytona condos for heavenly good prices

Thanks for the information. I have 4 in the works right now, and so far, do not know whether we got them or not yet.

May 16, 2008 05:18 PM
Ted Mackel
Keller Williams Realty Simi Valley - Simi Valley, CA
Simi Valley Real Estate Agent

Welcome to Activerain. Congratulations on your first post. That is a great way to start. Make sure to get around and check out other blogs so you can cut the learning curve!

May 16, 2008 06:14 PM
Dorene Shirley
The Mortgage & Property Connection - Campbell, CA
Silicon Valley Real Estate

Welcome to the Rain, make sure that you browse the site and become familiar with everything this site has to offer.  The more you browse the more you will learn.  I have found this site to be really helpful to me.  If you have any questions, please don't hesitate to email me, I will do whatever I can to help.

http://www.Doreneshirley.com

May 17, 2008 12:40 AM
Danny Thornton
R & D Art - Knoxville, TN
WordPress Guru

Welcome to the best network around. It is great to have you hear among us and I wish you much success here.

May 17, 2008 12:57 AM
The Trumm Team Omaha Homes for Sale, Real Estate
Keller Williams Greater Omaha - Omaha, NE

Welcome to ActiveRain!

If you would like a few tips on getting the most out of ActiveRain, please visit my blog Welcome to Active Rain.  It has a few simple steps of what to do now that you have joined.

If you ever have any questions, just let me know.

Troy Trumm

May 17, 2008 05:54 AM
Greg Steffens
Mountain Country Realty - Lake Arrowhead, CA

 Welcome to Active Rain and congrats on your first post.  Be sure to spend some time looking around at what and how others are blogging here.  It is a great education and lots of fun.  Looks like you're off to a great start...keep it up!

 

May 17, 2008 08:49 AM
Cheryl Powell - The Powell Team
Southern Homes of The Carolinas - The Powell Team - Harrisburg, NC
Concord,Harrisburg & Charlotte NC Area Real Estate

Thanks for sharing your short sale experience Georgio!  I currently have 3 short sales listed and one Offer to Purchase in for a buyer on a short sale. Even though they are very time intensive it is the hottest segment of our market in Charlotte right now!  Might as well jump on the train before it passes me by. 

Welcome to the Rain!

May 17, 2008 09:14 AM
Keith Elliott Jr
KEIRE Realty Group - Manassas, VA
Principal Broker/Owner

Hello Georgio,

Welcome to Active Rain and congrats on your first post! The opportunities to learn and network are incredible here. Best of luck to ya!

-Keith

May 17, 2008 03:58 PM
Pam Winterbauer
Pam Winterbauer Real Estate - San Ramon, CA
"Providing Blue Ribbon Service"

Georgio.....you are absolutely right, it is a must to sent a complete package with everything at once.  Every time you resend it goes to the bottom of the pile or to file 13.   Welcome to active rain.

May 20, 2008 02:37 AM