Hurdles In Short Sale Transactions

Are you an agent looking to do a short sale or in the middle of one now? Or are you a seller looking to do a short sale on your property? No matter the case the short sale process can be done although difficult at times but it can also go as smooth as to be expected when the proper steps are taken.

At times with short sales it feels like you have hit a brick wall and there is simply no way through, they are not always the fastest and frustration can set in but don't let it; they do close.

Tips to a smoother short sale transaction:

• Be prepared - call ahead of time and ask the bank what exactly they require of you, when they want it and where to send it. Banks frown upon getting the wrong things at the wrong time on these type of files and it will hold you up.
• Sign and date everything - sounds simple but most things sent to a bank require a signature and to be dated and if it's not there many times they simply push the file aside until "you" call them.
• Accept a "reasonable" price, short sales are not always likely to look at the real "low-ball" offer
• Keep a file log of all your calls, conversations, e-mails and faxes so you have quick record especially if your talking with the bank and trying to get a point across that so and so was done on a specific date
• Send 3 or 4 comparable properties along with your offer and package. The banks are not from this area and do not know the market here although they will have an appraisal done you should send your own homework.
• Know when to back off and know when to push. Just like the Kenny Rogers song where he says "know when to hold em & know when to fold em" take the same advice to the world of foreclosures. There are times when you need to ask for someone else or a manager and at times go above that person to get something done - you just need too. Here are two cases to prove my point, I will summarize them a bit:

I had a deal with Indy Mac last year, it was my listing and my buyer. The file was 100% complete and the bank did their appraisal and I even had a negotiator. The deal strung out for 3 months and the buyer was loosing patience. The buyer wanted to cancel the deal, during this whole time I had countless phone calls, conversations and e-mails into the bank, I was simply told over and over it was in review. Every agent I asked said to just let the deal go, I am too stubborn to do that so I looked for another avenue to help the seller as well as the buyer get this deal done.

I searched the internet reading forms and articles all over the place by typing in keywords about short sales and Indy Mac specifically. Eventually I came across an e-mail to more or less the VP of the loss mitigation department at Indy Mac that was in a press release article (an e-mail they won't just give out if you call the bank so we dubbed it the "bat line"). I e-mailed him direct and pleaded my case, 2 hours later out of the blue the negotiator I have been speaking with for 2 plus months sent me an approval and we closed in a week. Coincidence?? You be the judge.

I had another one actually that was approved yesterday. This property had 3 loans on it. The first bank approved in 30 days, the 3rd bank approved in 35 days and the 2nd bank after 60 days and a closing set for next week had not signed off yet. I kept on the 2nd as hard as one could and kept getting the reply "it's in review". Finally I remembered I had a past client that works at this specific bank, although not in the short sale department yet she is a higher up person at the bank. I e-mailed her where I was at with everything, she made contact with the short sale department and they told her they were reviewing it as well but oddly enough I had an approval less that 2 hours later.

My Dad always said "It's not what you know, it's who you know". I am sure we have all heard that saying before but it holds true in so many arenas of life and business.

My point to those stories are two fold:

1. The agent you choose is crucial. Most will not work that hard or spend the time to go over and above people to get the deal done, they will simply take answers from whoever answers the phone at the bank and that may not do it. Sometimes a little push is in order so choose the right agent willing to take the time to ensure the deal closes.
2. Be prepared, know how it's going to go and success can happen. Short sales do not have the low success rates many agents say, they just have not been doing them the right way.

As stated above make sure you ask the bank what they require, here are a few more items to add to your check list. If you're listed with an agent already pass this checklist on:

• Right after listing the property send a letter of authorization to the bank. This is a letter that allows your agent to speak with the bank on your behalf. The letter must be dated, reference the loan number as well as the property address and your full name. All documents must be signed, dated and on this letter include the last 4 of your social security number.
• After property is on the market (or at same time) and after the bank has its authorization to speak to your agent have your agent call and ask what if anything the bank wants from you at this time. Some banks do want specific items up front but most don't want anything until you have an offer in hand. I find short sales works best when you do what that specific bank wants not just guess.
• When a offer comes in you will be asked for items like this:

1. 2 years tax returns
2. 1-2 months pay stubs
3. Profit & Loss statement
4. HUD 1 (your agent can help with this - its the form you will sign at closing showing how all the monies break down)
5. Hardship letter (states why you can not afford the home, short paragraph to explain your situation)

At the time of listing you should prepare these items so your ready to go when an offer comes in. Once you receive that offer call the bank again and tell them you have an offer. Ask again at this time where to fax it to, what they want to see in this package and who to put it attention to. Many banks will have their own short sale package they want filled out, another good reason why you or your agent need to call ahead of time.

For more information on short sales please visit our foreclosure / short sale blog for more posts. If you or anyone you know needs help with a short sale please contact me here or call 612-282-7653 anytime.