how to do a short sale

Each mortgage company has their own set of processes through which they decide whether or not to accept a short sale, and while there are many similarities, each has its own requirements for approval.

As a third party mediator, we have a distinct advantage in negotiating with your mortgage company. Here is how it works:

First you will need to list your home. Easy enough, then fill out the brief application forms that we will provide to you. Once all of the forms are completed we will fax them to the mortgage company to let them know that we are working on your behalf.

Then the lender will issue a “workout package”. This is the lenders list of instructions and requirements for considering a short sale.

Some of the things they will likely require are:

1. Financial Application – fill out a form the bank supplies.
2. Hardship letter.
3. Last 2 paystubs for all borrowers (including L&I and unemployment benefit.).
4. Last 2 years tax returns.
5. Last 2 bank statements.
6. Last 6 months of Profit and Loss statement (if self employed)
7. Third Party Authorization which allows someone other than the borrower to obtain your personal information.

Here is the scenario: The purchaser claims to be a cash buyer, but refuses to show proof of funds. Not good.

They also want an incredible amount of detailed information on the property to “evaluate” whether or not to go forward. Most agents will err on the side of giving the buyer a chance to purchase, because we want to make a sale. But be careful! Why?

Because as real estate agents we cannot disclose certain things to buyers without getting the permission in writing from the seller. The existing loan balance on the house, for example, is none of the buyer’s business. Just try calling a bank sometime and ask them to give you the balance owed by the borrower. The bank will tell you to pound sand. You should give any buyer who calls you out of the blue the same cold shoulder.

Especially when the purchaser hasn’t provided any proof of their ability to perform.

These types of buyers will often try various ways to get around you, using a different email address or name, for example, but usually the more you investigate,the more you’ll find that your initial instincts are correct.

The buyers are either flakes or have their own team of “negotiators” to do the workout instead of you.
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Granted, some of these buyers are probably well-meaning people who trying to follow some Internet guru who works out of Kentucky or are following ideas that might have worked back in 1972. But at worst, they may be con artists looking to get the seller to sign a power of attorney which allows them to collect any and all rent, and/or kick the owner out of his own property.

I mean there are lots of strange things that happen and perhaps some unusual scenario where it might be OK for a buyer to be an authorized 3rd party to negotiate with the seller’s lender, but it’s pretty rare. In that case, it should be done over extremely controlled circumstances and after enormous due diligence. The buyer might be a licensee with experience, an attorney with expertise in workouts, or some other credible scenario where checks and balances exist. Permission to do so should not be granted lightly. In this case, where the buyer is shady, vague, and evasive, it should be avoided at all costs.



Example:

Poem
I gave up my home
Trying to do a short sale
All was for nothing.
Wish that loan rep was in jail!

Haiku
Mystery bank lady
working on my short sale
Never calls me back.

Haiku#2
Faxing the same things
Offer,prequal and HUD-1
lousy short sale game

Haiku#3
Another two months
It will be a short sale year
I still hope for “yes”