What You Need to Know About Short Sales
Representing A Short Sale
If you’re going to start taking on short sales, it’s important and beneficial to completely understand the process, the lenders, their motives, procedures, and how to handle your seller to get them all the information you need to help them.
1. Are You Experienced in Short Sales?
If you are about to go through a short sale negotiation, there are some tips that will be helpful to you. Stay up to date with current events and news, as things change and lenders change policies and procedures. Some sellers want or need an attorney to be involved in their sale.
2. Get The Lender’s Short Sale Forms Package Right Away
Use a short sale package that is specific to the lender, some forms may seem irrelevant or unimportant, but they’re the forms you and your seller will have to submit. There will be a lot of information to be gathered and entered on these forms. The most important form to get to the lender is an authorization form allowing you to communicate with the lender on your client’s behalf. Make sure you include every person that the bank and seller will be in communication with. Then the hardship letter is also important which explains all the details about why the seller cannot continue to pay their mortgage.
3. Which Lenders Are Involved and How Do They Operate?
If you’re working short sales regularly, a file of lenders you may encounter would be beneficial. It should include all the information you can gather on how they process a short sale, the time line involved, and the percentage that actually make it to closing if you can find that out.
4. Always Be On Top of The Time Line
Always be aware of where your seller is in the process. Make sure that you are aware of all communications from the lender. Also know all deadlines that are communicated to your seller from the lender.
5. What Type of Loans Are Involved?
What type of loan and/or loans are against the property? Is it VA, FHA, Conventional, USDA, or something else will make a difference in the lender’s response to offers. Some loan types give them more flexibility, and some are more limiting on how the lender can negotiate an offer.
6. Work With Your Seller – Know About ALL Loans and Liens
Keep asking your seller for all documents and mortgage information, new documents they receive from their lender and every payment they make.
7. Don’t Submit Outrageous Offers
While you’re out waiting for a buyer to make an offer on your client’s home, it’s not wise to take any offer and submit it to the bank. Lenders act differently when it comes to negotiations. A ridiculously low offer can often result in a flat rejection, not a counter offer.