RSM Real Estate Consultants Bronx Real Estate Broker

The Successful Short Sale Process

15 Steps Every Agent Should Know To Have A Successful Short Sale 

by Raysa Santos, Broker

 

  1. Meet with the seller. The purpose of this meeting is to explain the process to him, definitions, the credit and tax consequences of a short sale, and what your role will be in the process. Also, to gather all the necessary details to validate this is a true hardship. Ask the seller about liens & judgments against him, building violations, tenant issues/leases, names on the deed, number of mortgages and home equity lines of credit associated with the property.
  2. Obtain from the seller records of last mortgage statement, bank statements, pay stubs & tax returns. Also, get all correspondence from the bank.
  3. Contact customer service at the bank holding the mortgage (s) and ask to be transferred to the loss and mitigation/short sale department. The purpose of this call is to introduce yourself as the broker who will be handling the short sale and get fax number so the 3rd party authorization letter is sent to them. Also, find out if house is already being considered for foreclosure. If they say yes, get a date. Please keep in mind that every bank has its own way of handling a short sale. Some will collect documentation virtually thru EQUATOR, others expect things be mailed to them and most of them request that all the paperwork be faxed to them.
  4. Prepare a legal size folder for the file. On the inside, write the seller’s name, property address, social security number, date of birth, loan number, and all telephone numbers associated with the seller and the bank. Having all this data in one place is very important for whenever you interact with the bank, they will request some of this information.
  5. Write the 3rd Party authorization letter (see sample) Keep it simple. Fax it to the bank same day the introductory call was made.
  6. List the property in the MLS. Bank will request a copy of the MLS sheet to validate a Realtor is handling the sale.
  7. Prepare a Hardship letter. Keep it true and simple. Make sure hardship (illness, disability, lack of income, divorce or death in the family) is emphasized.
  8. Obtain an offer on the property.
  9. Complete the short sale application and submit to the bank along the requested items (seller’s financials, hardship letter, preliminary HUD-1 form, bank statements, pay stubs, tax returns, etc.) You might need to include the buyer’s information at this time as well.
  10. Assign an attorney to the seller. Ask he runs a partial title search on the person and property to have an idea of what liens and debts are associated with the property. Seller might have ignored some important facts that may impede the closing from taking place.
  11. Follow up a week after submission to make sure everything was received.
  12. Make sure buyer goes thru the loan application process and gives the bank all requested documentation. Once short sale is approved, then an appraisal is ordered.
  13. Once the short sale has been processed and approved, 30-45 days are granted to close the file. Follow up with the buyer’s bank to make sure they get ready for the closing.
  14. Final HUD-1 form has to be prepared and submitted to the short sale bank 48 hours before the closing. Request from the attorneys involved in the transaction to submit all the closing cost expenses (title fees, bank fees, interest calculations, mortgage taxes, etc.)
  15. Attend closing and bring your folder with ALL correspondence between you and the short sale bank. Bring the short sale approval with you as it details the wiring instructions for the bank payoff. You, the broker, are the negotiator and only authorized party to communicate with the short sale negotiator at the bank. Make sure your numbers are accurate in the HUD-1 because if there is a shortage, the broker’s commission will be the piggy bank attorneys will dip into to resolve any money problem. After putting together this deal for the last 3-6 months, you deserve every dollar. Make sure the commission is protected.

 

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