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Tuesday, March 1, 2011

The Short Sale Simplified

Are we complicating these phenomena known as the short sale? Most agents will tell you they don't like short sales because they take too long. In reality, the process has been streamlined by most lenders out of necessity. They simply wouldn't have the time to manage every file without a process. I have personally closed several short sales within 45 days. Not to mention, we have the ability to set the price aggressively for multiple offers and a quick sale. The entire process takes no longer than a traditional sale. Consider the good ole days when you would secure a purchase agreement on a home within 60-90 days along with closing time (up to 45 days); the entire process consumed 90-120 days. Now consider the short sale. With the ability to price a home aggressively, the sale happens more quickly, but the closing process takes a little longer. A contract for purchase is easily secured within 30 days and the process to allow for the mortgage and get approval from the lender 45-90 days. The timeframe is the same, 90-120 days. The second most common objection agents have to pursuing short sales is that they are complicated and so much more work is involved. In reality, there are only 6 items that need to be included in the paperwork that are above and beyond the traditional paperwork and they are items that your seller has to provide; not anything that the agent has to craft (see below). The third most common misperception about the short sale is the negotiation process, because there is no negotiating. The banks all have a set of boundaries dictated by the investor with regard to what warrants an acceptable offer. In most cases the offer price must fall within 80% or more of the appraised value as indicated by the lenders own BPO or appraisal. If the offer is unacceptable, the lender will counter within acceptable range and the buyer has the ability to respond. Communicating the facts is a better description of what it is we do in dealing with the third party lender. Remember, foreclosures are first short sale opportunities before they become foreclosures. This means that 50% of our market is short sales. We should be looking for people who need our help, which is why we subscribe to a publication that supplies us with every notice of foreclosure in all three counties. This provides an unlimited number of leads for all of our agents and we also provide specific coaching and role playing to make agents effective in their dealings with short sale customers. The next time you ask yourself if you really want to do short sale business - you should really be asking if you can afford to ignore 50% of our industry.

If you or someone you know would like to participate in a free workshop or get free coaching on this topic - please make the request here.

Documents required for short sale:

1. Dated, signed listing agreement with commissions listed.

2. Full MLS report from your real estate agent.

3. A seller signed authorization form for the agent and/or attorney to negotiate with the lender on seller’s behalf.

4. Signed, handwritten hardship letter explaining the circumstances.

5. A complete seller financial statement.

6. Two (months) recent bank statements.

7. Two months of pay stubs or written explanation of unemployment. Proof of Social Security or pension if receiving.

8. Dated, signed purchase agreement — the sale contract.

9. Buyer’s fresh proof of funds or preapproval.

10. Three recent, like-kind, comparable sales.

11. Last two years of seller’s tax returns.

12. List of repairs for the residence, if needed.

13. Preliminary HUD1 statement provided by attorney or title.

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