Short Sales
A Little About Me My first home was an absolute disaster. I was ignorant and easily taken advantage of in my early twenties. I had a starving Realtor, a bad home inspection,a lousy loan and I chose an area of the northeast that was in serious economic decline. So I understand first hand how difficult it is facing foreclosure. I made it a mission and have represented my clients to the best of my ability. I got to know the safest loans and know which programs were available with grant monies. I kept a close eye on my clients so that when they purchased they were making a good choice.
I have come across many sellers that need what I needed, a trustworthy person to help the safely out of the chaos. I fill this need because I clearly understand the emotions and have a firm hold on the process with the bank.
Of all the homes for sale that are either short sales or foreclosures in Bucks County, almost a full 50% are in the lower half of the county. It is because I live and work in the midst of foreclosures and short sales, I have had to become an expert in the art of negotiating with the lenders. This is how a short sale is handled if you hire a Realtor or negotiator to deal with the lender.
The lenders have varying requirements for "short sales" and may demand that a borrower submit a wide array of documentation, the following steps will give you a pretty good idea of what to expect. It is important to note that s short sale is contingent upon lender approval. What this means is that they can decide not to approve it. Getting the proper Documentation and communication is the key to successful negotiations.
Negotiator and Title Searches Using a reputable negotiator is an absolute necessity. I use a negotiator that is paid out of the proceeds of the sale. They negotiate price terms and handle the flow of paperwork. I work with a title company that monitors the title of the property. These key people I call upon for assistance are a team that has a proven track record of success with short sales. You are not alone when you hire me as your Realtor.
Submit Letter of Authorization Lenders will not disclose any of your personal information without written authorization to do so. When working with a real estate agent, closing agent, Title Company or lawyer, you will receive better cooperation if you write a letter to the lender giving the lender permission to talk with those specific interested parties about your loan. The letter should include the following:
- Property Address
- Loan Reference Number
- Your Name
- The Date
- Your Agent's Name & Contact Information
Call the Lender When you list your home you no longer have to do the communication with the lender. That communication is the Realtors and the negotiators job. It may take a half dozen phone calls before finding the person responsible for handling short sales. We get the supervisor's name who is the individual capable of making a decision. What we requested is the short sale package. This package contains different forms that need to be filled out.
Hardship Letter The sadder, the better. This statement of facts describes how you got into this financial bind and makes a plea to the lender to accept less than full payment. Lenders are not inhumane and can understand if you lost your job, were hospitalized or a truck ran over your entire family, but lenders are not particularly empathetic to situations involving dishonesty or criminal behavior.
Proof of Income and Assets It is best to be truthful and honest about your financial situation and disclose assets. Lenders will want to know if you have savings accounts, money market accounts, stocks or bonds, negotiable instruments, cash or other real estate or anything of tangible value. Lenders are not in the charity business and often require assurance that the debtor cannot pay back any of the debt that it is forgiving.
Preliminary Net Sheet This is an estimated closing statement that shows the sales price you expect to receive and all the costs of sale, unpaid loan balances, outstanding payments due and late fees, including real estate commissions, if any. Your agent or lawyer's title company will be able to prepare this for you. If the bottom line shows cash to the seller, you will probably not need a short sale
Copies of Bank Statements If your bank statements reflect unaccountable deposits, large cash withdrawals or an unusual number of checks, it's probably a good idea to explain each of those line items to the lender. In addition, the lender might want you to account for each and every deposit so it can determine whether deposits will continue.
Comparative Market Analysis and Listing Agreement Your property will have to be listed and have an offer in order to get the negotiations with the lender started. Markets decline and property values fall. If this is part of the reason that you cannot sell your home for enough to pay off the lender, this fact should be substantiated for the lender through a comparative market analysis (CMA) or an appraisal. Your real estate agent can prepare a CMA for you or the lender will hire an appraiser, which will show prices of similar homes:
- Active on the market
- Pending sales
- Solds from the past six months.
- Purchase Agreement & Listing Agreement
When you reach an agreement to sell with a prospective purchaser, the lender will want a copy of the offer, along with a copy of your listing agreement. Be prepared for the lender to renegotiate commissions and to refuse to pay for certain items such as home protection plans or termite inspections.
Lastly the Timeline The total time it takes to get a short sale processed is dependent upon 2 things. How long it takes to get the offer and have the bank review accept the offer. This can be months. In the mean time you have time to plan and make arrangements. Nothing happens overnight but with the right people and persistence we can accomplish this short sale and save your credit record from foreclosure.
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