Short Sales How To

Seattle Short Sales are not different from other Short Sales across the country. One difference we are experience however is that we have higher Short Sale inventory and fewer Bank Owned properties for sale in Seattle on a density basis than other parts of the country. There have been a number of Clients and Friends asking me about the whole Short Sales How To - This is what I tell them: Cool! Your going for it! Here is my Seattle Short Sales How To advice

The SELLER will have to submit:

-Last 2 months of everything
-income statements (paystubs etc)
-Expense statements (all bank and investment statements)
-Last TWO Tax returns (Federal)
-Last two mortgage statements
-Hardship letter explaining to countrywide/BoA the reason the Seller is no longer able to afford the loans and the non-existent possibility they would be able to afford it even under a loan modification. Keep it short, less than one page, google for examples if needed
-Financial worksheet from the Seller showing their budget on a monthly basis

The Seller pretty much has to go through the steps they would do to apply for a loan in the first place, since now they are 'applying' for a Short Sale

In my experience Banks are approving Short Sale NET TO BANK pricing of between 80 and 83% of what is owed on the loans.

YOU as the Short Sale Buyer / Your Agent will have to submit (along w/ everything above from the Seller)
-Completed Purchase and Sale agreement, with a contract agreed to price, and all terms, and closing date (# of days after bank approves the short sale that you will close on the property)
-Copy of your earnest money check (you don't have to open escrow or deposit the check till the bank accepts the short sale though
-'BPO' (Broker Price Opinion) and a CMA.

The Bank will typically... once they receive everything above...(We call all this stuff the Short Sale Packet)
-Acknowledge receipt of the short sale 'packet' within 10 days (bank business days...send everything a couple of times and call after each time to see if the got it)
-Assign a Loss Mitigator to the file Short Sale File w/in the first 15 days
-Loss Mitigator (LM) will order a BPO of their own on the property to help determine value in case of actual foreclosure. They might already have one of these if the auction date is so close ,you say sept 8th?!
-Take a look at the offer from you, what is owed on the mortgage, the sellers 'plea', and the probability of selling the house at auction or after foreclosure for greater than your offer, PLUS look into whether the bank could file a claim on their own loss insurance for the difference between a foreclosure sale price and what the Seller currently owes. If it isn't going to cost a ton of money to fix up the house to put it on the market for a quick foreclosure sale they will probably opt to file the claim and deny the short sale...

HOW LONG DOES IT TAKE?
-Some banks are much better than others, and each file is different because of the difference in timelines for lateness and pending foreclosures of each mortgage.
-Last year only about 20% of Short Sales were actually closing successfully
-This year the banks are much better, but we still don't have stellare results. often teh buyers get cold feet and walk away because they find another hosue they love, or interest rates have gone up in the mean time and the original affordability is impacted adversely.
- I think 45-75 days is probable - but you absolutely MUST have verified continual communication with the Loss Mitigator in the case and you must submit a complete packet all at one time. Otherwise the file will always just sit at the bottom of the LM action pile, these guys/gals are overworked and won't waste their time on anything that is not a complete Short Sale packet.

If you are going to go through with it, I suggest having an inspection done up front if you are going to do an inspection at all. Why wait 45 - 75 days for the bank to approve the Short Sale only to then find something on inspection that is a deal breaker for you. Also you need to realize that the seller is in no condition at this point to address any of the issues that would come up under inspection. If it is a serious safety or code issue then you won't be able to get the financing to go through... good to know ahead of time what your getting into. 400 bucks well spent I say!

Ok, have fun. and I'll send you a BIG BILL for my time:)

Now, here is what typically people say after they hear all this about Short Sales How To:

Eek! Hmmm, that’s an awful lot to get done in not very much time! I’m kind of wondering if a Short Sale is worth it though, the bank is going to know that they can sell the thing once they own it and might be able to file a claim for their loss, and the owner just never hired an agent so it was never on MLS and nobody could get ahold of him. See, that’s the value of real estate agents!

Seattle Short Sales are a Specialty of mine. I work with an exclusive team of Certified Distressed Properties Experts, and I am a Certified REO Property Specialist. I know how to get the deals put together so the banks can approve them!