Once you have an offer on the table, this is where the aspects of the Short Sale really begin. There are a couple of tips here that can help in how this process progresses.
By the way, feel free to see Anatomy of a Short Sale: Part I or Part II.
In the past, properties on the market going through short sale were allowed to sit on the market interminably. Many Phoenix Realtors kept marketing a home despite having one, two, three, and even five (I recall several instances) offers accepted by the homeowners. The Realtors positioned that the properties were not approved for sale by the actual lender(s) involved and so should remain marketed. As a result, it wasn’t unusual that offers would come in later that were conveniently higher than the previous (many Realtors would reveal details of the highest so that subsequent offers were improved on the earlier ones).
Luckily, this process was changed and Realtors are no longer allowed to shop the property indefinitely if there is an offer signed by the owner.
But how does a Realtor deal with the issue that a buyer on the hook now may not be patient to wait for the process to progress?
First, the Realtor can get more than one offer by pricing low enough that interest in the property is piqued.
Second, the seller can also discuss expectations with the buyer’s agent to see if the buyer appears committed to the transaction. Now, many Realtors will not care whether the buyer is committed or not, so long as the process is initiated and they can move the bank along. Even if the offer should fall through, they are hopeful that at least they will have ascertained what the lender is willing to do. In this case, they can then remarket the property at a ‘price approved by the bank!’ Of course, this eats into the timeline that may exist for the distressed property.
The Missing Link to Initiate the Short Sale Process with the Lender(s)
Coming back to the offer, this is often the remaining piece of the puzzle. Once the offer is received with all supporting documentation, then it can be sent off with the other required materials as part of the Short Sale package.
Here is a quick hit list of what should be in the Short Sale package (feel free to use this as a table of contents):
- Authorizations
- Authorization to Release Information
- Authorization to Access Property
- Client Provided Documentation
- Hardship Letter
- Personal Financial Statement
- Tax Returns
- 2008 (if completed) or W-2′s
- 2007
- Deed of Trust
- Pay Stubs
- Bank/Brokerage Statements
- Recent Medical Bills
- Listing Agent Documentation
- Listing Agreement
- Comparative Market Analysis
- Market Snapshot
- MLS Listing Printout & History
- Listing History Summary (optional, but helpful)
- SUPRA Lockbox Activity Report (optional)
- Buyer Offer Documentation
- Residential Purchase Contract
- Offer
- Addendums
- HOA Addendum
- Short Sale Addendum
- As Is Addendum
- Loan Status Report/Proof of Funds
- HUD-1 Settlement Estimate (from your title company)
- “END” Page
Make sure to use a cover page. Also, it may be helpful to have an ‘END’ page just to notify anyone that the document is complete. When you do fax in the Short Sale package, make sure to keep the fax record of the send for your records. As well, plan on engaging the bank to confirm receipt of the package within a couple of days.
You can expect that the Short Sale Package is assigned to a “Negotiator” within several days of receipt. Also, don’t forget that you will be sending this to more lenders if there are any for the property.
More to come in Anatomy of a Short Sale: Part IV.
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