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Short Sales: The Top 10 Issues

Short Sales: The Top 10 Issues. Presented by: Lynn Madison ABR, ABRM, BPOR, GRI, SFR, SRES. Issue 1: Pre-Qualify the Sellers. Are they eligible? They must have a financial hardship Monthly shortfall Are they willing to cooperate? Do you have enough time? Do a lien search.

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Short Sales: The Top 10 Issues

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  1. Short Sales: The Top 10 Issues Presented by: Lynn Madison ABR, ABRM, BPOR, GRI, SFR, SRES

  2. Issue 1: Pre-Qualify the Sellers • Are they eligible? • They must have a financial hardship • Monthly shortfall • Are they willing to cooperate? • Do you have enough time? • Do a lien search

  3. Issue 2: Deficiencies • Are you in a recourse state? • Understand how deficiencies work • Understand federal tax ramifications • Cannot just ‘walk away’

  4. Issue 3: Get Seller Started Early • Authorization to lender • Authorization to disclose short sale in MLS • Fannie/Freddie 710 Form

  5. Issue 4: Be Aware of Fraud • Assignment of contract • Giving power-of-attorney • Intentional damage of property • Creating ‘waste’ • Sellers getting cash from buyers • Short sale ‘flops’

  6. Issue 5: Price it Right • Price at low end of market value • Do not price based on what they owe • Do a CMA with a BPO attitude • Do not underprice • Schedule reductions

  7. Issue 5a: Promote it Properly • MLS – disclose it is a short sale • Say it’s HAFA approved if it is • Do not say ‘as is’ • In agent remarks put – Only one accepted contract will be submitted to the lender • Market it like a normal listing

  8. Issue 6: Prepare the Buyer • Time frames • Elements of a good contract • Must have a reasonable chance of closing • Multiple offers? Can they buy both? • Mortgage approval – proof of funds if cash

  9. Issue 7: Negotiate Best Contract • Price • Earnest Money • Home Inspection • Mortgage Application • Attorney Approval • Ask the right questions • of the listing agent: • Is the short sale • package read for • submission? • What is the seller’s • hardship? • Has the foreclosure • sale been scheduled? • Do you have other • offers?

  10. Issue 8: Submission • Complete short sale package • Lender calls the shots on what and how • Really - it may be the investor not the servicer so don’t assume because BofA or Wells asked for it one way last time that they will this time! • All at one time – not piecemeal

  11. Issue 9: Lender is NOT the Enemy • We are partners • This is not adversarial • Treat them with respect • They DO track you on former transactions • Average large lender negotiator is handling 150 – 175 transactions at a time

  12. Issue 10: Communication • Broker to broker • Broker to lender • Broker to clients • Client to broker • This is the new ‘norm’ • Remember the book • Who Moved My Cheese? • They didn’t move our cheese – somebody ate it! • Do them right – or don’t do them at all

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