The process in a short sale is quite different than a standard sale between buyer and seller. It can often be a frustrating experience for everyone involved. But banks are doing a better job recently of trying to streamline the process.
Here is typically what the bank will expect from the seller and listing agent to get the ball rolling on a short sale:
Letter of Authorization
The bank will require a letter from the seller stating it is okay to let the listing agent speak on their behalf and represent them in negotiations.
Listing Agreement
A fully executed listing agreement between the seller and listing agent.
Hardship Letter
The seller will have to explain why they are requesting the short sale. Job loss, divorce, or any other factors that express the reasons for you not being able to make the payments.
Purchase Agreement
They want to see an executed contract between buyer and seller contingent upon acceptance of the short sale. Like any seller, they will want to see the buyer is qualified with fico scores, lenders approval, and proof of funds of down payment.
Estimated HUD Net Sheet
The bank will need to know what the bottom line is after expenses from the sale. Usually the escrow company being used will be glad to assist in providing this information.
Sellers Financial Information
It will be like when you originally qualified for the loan to purchase the home. They will want to see bank statements, tax records, investments, paycheck stubs, etc…to help determine your worth for a short sale.
Once all the relative information is gathered, you can submit the package to the bank for approval. It is very important to have everything included in the package when initially being sent to the bank. Each negotiator at the bank has hundreds of files to go through. If your package isn’t complete they will likely just put it to the side and go onto the next file.
After the full package is sent to the bank, you will be assigned a negotiator in the loss mitigation department. Please be aware that it can be 3-4 weeks before your file is even seen. The negotiators job is to now analyze and verify the information provided and to derive a value of the home. A BPO(Brokers Price Opinion) is generally used as the banks guideline. The amount that the buyer and seller agreed upon for the sale of the home must come within a certain percentage of the banks BPO. If it doesn’t, the bank will ask the buyer to make up the difference.
The negotiator then determines the best course of action for the bank. Foreclosure? Short Sale? Selling the loan off for pennies on the dollar? It all comes down to what makes the most financial sense for the bank. This is the time the buyer can expect for the bank to come back and ask for more money. They will also ask the realtors, escrow company, title company, and everyone involved to cut their fees.
If an agreement is reached upon all parties, the file is sent for full approval. As with all the steps in the short sale process you can count on this taking days to weeks to get done. After you hear the good news that short sale has been approved, you get to go back to the starting line and open up escrow!
The best way to navigate the short sale process is to have an experienced realtor with the determination and patience required to get you to the finish line.
Fill out the simple form below to receive a FREE short sale analysis.
Posted In Real Estate News
This entry was posted on Saturday, December 12th, 2009 at 3:31 pm and is filed under Real Estate News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.