A Real Estate Agents Guide to Short Sales

RE78R13

Presented by Linda Kody Kody & Company, Inc. 978-686-1954

What is a Short Sale

By definition, a Short Sale is a situation where the Seller owes

more on the house than they can sell it for in today’s market.

The REALTORS® Role

1. Educating our clients & customers to the market

2. Educating our clients & customers to their options.

3. Being a resource in our communities

4. Assisting Buyers & Sellers through the process!

Recognizing the Short Sale candidate

Is there an extreme sense of urgency to sell?

Was the house purchased In the first part of the 2000’s

Is there a hardship: divorce, job loss, illness

Why & Where are they moving? Do a Net Sheet with the CMA

Why do a Short Sale?

Avoid Foreclosure Control the circumstances

Minimize damage to credit report Manage financial life Stop depleting assets Gain the ability to start over!

Qualifying a Short Sale Seller

Are they in default? If yes, how far behind? Is there more than 1 mortgage? Do they have a Home Equity loan? Do they have PMI on their loan? Are they motivated and realistic? Are they facing financial hardship? Do they have other assets? How cooperative will they be?

Sellers must be vested in the process!

Preparing the Seller

Have they spoken to an Attorney and/or Accountant

Explain Alternatives, Options, Resources What are the benefits of the Short Sale

OptionWe Are Not Attorneys or Accountants ! Do

not give Legal or Financial Advise.

Home Owner Options

ForbearanceLoan Modification (HAMP)ReinstatementRefinance (HARP)Bankruptcy Chapter 13Deed in Lieu (DIL)

Non Profit ProgramsHOPELocal Non Profits - CHAPAFederal Debt Relief Act

Preparing the Seller for Short Sale

Advise there is no guarantee What happens to the deficiency?

Non secured loan Federal Debt Relief IRS

Deed in Lieu of Foreclosure Auction Foreclosure Sale

Short Sale Package/Sellers portion

Authorization to release information or POA

All contact information for lenders Who owns the loan? Hardship Letter Financial Statement Supporting information (include bank

statements) Most recent pay stubs 2 years tax returns

Listing a Short Sale

Strategy for Pricing Prepare a property condition report Offer of Compensation in MLS Disclosure of Short Sale Having a Short Sale Addendum

Disclosure Options Authorizations Duties

Presenting an Offer & P&S

Have a complete package Offer/ P&S, proof of funds or pre approval,

copy of Earnest Money, Short sale addendum Addendums: Title V, Lead, Smoke/CO Cert Updated CMA with condition report or repairs Net Sheet, preferably on a HUD 1 (don’t

forget MLC) Sellers paperwork as previously described

Offers & P&S

3rd Party Negotiator Getting to the Authority Outline the story every time. The BPO Agent Keep an eye on the foreclosure sale. Learn the specific lenders requirements &

guidelines Communicate responses quickly. They may

counter an offer. The Deficiency! Get Approval in writing!

Why a Short Sale may be Rejected

Offer is too low. Mortgage Investor is not willing to

participate. Seller has assets or money. The Short Sale package is not

complete. The BPO came in Higher!

A Buyers Guide to Short Sale

Set Realistic Expectations upfront! Give Buyers the facts about Short Sale No Guarantee Constructing Offers Time Issues: for response to their

offer, for closing dates. Home Inspection, Financing, Appraisal What about market changes

Concerns & Challenges

3rd party approval Seller cooperation Seller “abandoning” the property Utilities Expiring Financing Condition Issues How many loans??? Foreclosure Auction

Concerns & Challenges

Where will the Seller go? What about commission? Don’t forget smoke certs, fuel, etc… Closing on time once approved Will the Buyer wait? More than 1 offer How should offers be presented Bankruptcy WISP & the Paperwork

Resources

Know Your Options HomePath- Fannie Mae HomeSteps- Freddie Mac HUD-FHA

Bank Of America Equator

Most large lenders have policies & procedures. Check their websites.

ACRONYMS

HOPE

HAMP Home Affordable Modification HAFA Home Affordable FC Alternative HARP Home Affordable Refinance PMI Private Mortgage Insurance