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Confusion About Short Sales

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It can be confusing for everyone when listing a property that is going to require the Seller's lender's approval of the contract.

In Texas, as long as the lender has not foreclosed yet, the property is still owned by the individual owners.  The Listing Agent is representing the Seller and should only be communicating with the Lender at the Sellers instruction. 

Agents have a new Short Sale Addendum promulgated by TREC that needs to be attached to the sales contract.  http://www.trec.state.tx.us/pdf/contracts/45-0.pdf

Once the Buyer and the Seller have signed the contract the property needs to be reported as "pending" to MLS.  The contract can then be submitted to the lender for approval.

The Lender will need the following from the Seller at the time they are considering an offer.  The Listing Agent can save time getting the short sale approved, if they have the following package ready to go the lender with an offer.

 •Ø     A letter authorizing their lender to communicate with you as the listing agent

•Ø     Current pay stubs showing YTD income. (If they are self employed - a copy of last years income tax paperwork) 

•Ø     A copy of their current Bank Statements.  Disclosure of all assets. 

•Ø     A hardship letter, explaining why the need to sell and why they cannot pay the shortage.  They should tell  the lender how they got into this situation and plead with them to accept less than full payment. 

•Ø     A  Comparable Market Analysis (CMA) including actives, pendings and solds from the last six months. 

•Ø     Copies of the Purchase Agreement and Listing Agreement. (Be prepared for the lender to try to re-negotiate the commission)

Russ Ravary ~ Metro Detroit Realtor call (248) 310-6239
Real Estate One - Commerce, MI
Michigan homes for sale ~ yesmyrealtor@gmail.com

Thanks for explaining the many things you need to make a short sale work and get approved by a bank.

Feb 13, 2009 02:14 PM
Fernando Herboso - Associate Broker MD, & VA
Maxus Realty Group of Samson Properties - Clarksburg, MD
301-246-0001 Serving Maryland, DC and Northern VA

good info

Feb 13, 2009 02:21 PM
Ann Heitland
Retired from RE/MAX Peak Properties - Flagstaff, AZ
Retired from Flagstaff Real Estate Sales

Add to the list a settlement statement showing net proceeds to the lender.

Feb 13, 2009 02:24 PM
Everard Korthals
---Preferred Lifestyle Advisors--- - Lancaster, PA
Mountain Realty

Welcome!  If ever you were to have any questions then feel free to contact us and we'll try to help. Please take a look at our blog. for links to valuable information in our blog that you can use to navigate this extensive network.  

There's a lot of information about short sales on this network. Good way to share with your clients. Thanks for the additional points. It's always important for clients to understand what is being asked of them. We look forward to reading more of your blog articles in the near future.

We hope you have a great day, All The Best- 

Sincerely, ( Active Castellum ( Castellum Realty llc - Lancaster PA Real Estate )

Feb 13, 2009 10:01 PM
Yvette Gardner
Keller Williams Realty, Spartanburg, SC - Spartanburg, SC

Welcome to the Active Rain community. This is a great site with lots of information.  Have fun with it and hope to see more of your blogs soon!  We have a team of three outstanding full time agents to assist your buyers and sellers in Spartanburg/Greenville, SC.  Let us know if we can ever help. Again, welcome to AR!!

Feb 13, 2009 10:59 PM
David Painter
Keller Williams Realty - Spartanburg, SC

Good to have you on Active Rain.  This is a good site for gathering information and interesting to see what others are blogging about. Contact us if we can be of service to you. We would be happy to send you a referral or to take good care of any referral you would send to us.

Feb 14, 2009 05:25 AM