A Checklist for Short Sales

Throwing tantrums won’t get your short sale approved.  But the way you put together the package that goes to the bank could account for 90% of your success.  The following is from my interview with Prudential agent Jeff Simons at our Sales Rally on October 12.

1. What is most important when you take a short sale listing?
A cooperative seller, someone that is truly experiencing a hardship – preferably someone with 1 loan or if with 2 loans the same lender, preferable early in the game and not after the NOD has been filed.

Make sure that you ask your pre-listing questions and do a seller interview prior to your appointment.

Is your property already listed? When did you purchase this home? What was the purchase price, who is on title, What type of loan do you have, How many loans to you have, do you have any other judgments, are you current on your HOA dues, Are you in the process of a loan modification or have a loan modification rejection letter, Have you received any correspondence from your lender, is their a notice of default, do you have a security clearance, are you bonded?

2. How to you put together your short sale package for the bank?
Very Carefully… I believe that how you put your package together determines if you end up in the right stack or in the shredder. I recommend that you include the following:

1. A clearly Written Cover letter of what the client is experiencing, what marketing you have done, how long the property has been on the market, etc.
2. A detailed and padded hud1
3. The listing agreement
4. CMA
5. 1 Months Paycheck Stubs
6. 2 Months Bank Statements (All Pages)
7. 2 Year’s W-2’s & Tax Returns
8. A Detailed Hardship Letter
9. Cash Flow Worksheet ( P & L if possible )
10. A clarification letter for any inconsistencies (missing paycheck stubs, bank statements, lost tax returns, etc…)
11. Statement of Information (For Title – Not for the Lender)
12. Authorization to release and convey
13. A Hold Harmless Agreement (For your Records – Not for the Lender)
14. Purchase Agreement (Fully Executed – non of this multiple contract bs)
15. Addendums, Short Sale Addendum, Addendum to short sale Addendum,
16. Copy of the buyer’s deposit check (which should be in escrow)
17. Buyer’s proof of deposit and funds to close
18. Direct lender approval – no prequal letters
19. First page of their credit report with fico scores
20. 1 Line CMA Report, Trendgraphix and Realty Trac data to show foreclosure inventory in that specific market.

*Add closing cost to your offer… you may need to negotiate those funds later. Add all late payments; add taxes (except for BofA), along with a cost to carry for them to consider waiting longer and going through the foreclosure process.

3. How do you manage the process?
Keep it simple… once the lender has the file, I follow up 2x a week every week. Tuesday and Friday mornings and keep a detailed conversation log of every call, every conversation and who I spoke too…

4. Any negotiating do’s and don’ts

Do preframe every conversation with your clients and with the selling agent. Don’t assume they know the process… you are the pro, let them know what you are doing, and what comes next. They will appreciate the guidance and trust you as a result!

Do submit your very best package, all at one time and make sure that every I is dotted and every T is crossed!

Return phone calls and emails in a timely manner

Remember the negotiator has on average 250 files to work on… they may be overwhelmed. Be patient and persistent.

The negotiator is not the decision maker… they are doing the same thing that you are doing for the borrower, for the investor. It’s kind of like reverse underwriting the file.

Keep a detailed communication log, and refer to it often when you are speaking with the call center. They have detailed conversation logs too…

If you are representing a buyer and the listing agent is not transparent, not willing to communicate or follow up with you… move on! You will loose clients because of them!

If you are working with a big bank (BofA, Wells Fargo, Chase, etc…) work with a direct lender with that company to identify key players that can help you move through challenges or overcome hurdles

Remind your client that they are not the only one in this position, you are here to help them and they need to stay committed to the outcome!

Develop a system to keep everyone in the loop – communication with all parties in the transaction will keep them focused and committed.

It’s not NO, it’s… not now, not under these terms and conditions… its… more money, a financial contribution, a promissory note, etc!

Don’t ever believe that the negotiator is your friend… they have a job to do and they are doing what they need to do for their investors.

Or just use our In-House Short Sale Coordinator.  They only charge 15% and you get to move on to the next deal!