Download Short Sale Package Guide

SHORT SALE “Secrets” Package
To Be Successful at Short Sales your package must contain all of the following:
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Contact the loss mitigation department – speak only with a supervisor
Cover Letter
Authorization to Release Information
o Borrowers Auth
o Power of Attorney
o Registration Form
o Request for Notice
Sellers Hardship Letter
o Example Letters
Seller’s Financial information – most banks have a form for this however I use a standard form initially with
all sellers
o Financial Worksheet
Supporting Financial Information:
o 2 years w2’s
o 2 months pay stubs
o 2 months bank statements
Supporting Hardship info – for example HOA liens, medical statements, disability statements
o If applies
Repair Estimate for the property – if you can develop a relationship with a contractor for this it adds
credibility
o Contractors Bid
Comps for the property
o AVM from First American or Fidelity SiteX
o CMA
Contract
o Sales Contract
o Addendum
Escrow and Title
o Prelim
County Tax Bill & HOA & Insurance
o Delinquent Assessment Amount
o HOA
o Insurance
Net Sheet o HUD-1
Additional supporting information:
o The first mortgage holder may ask for a payoff amount from the 2nd
o The second mortgage holder may ask for a payoff amount from the 1st
Loss Mitigation
Contact the number on the notice from the monthly statement or delinquent notice. Ask for Loss Mitigation contact
information. When you get someone on the line ask immediately to speak with a supervisor or decision maker.
1st call - Once there - Let them know you have a Power of Attorney and an authorization to be included on the
account in question. Ask for not the standard fax number but the rapid fax or personal fax on their desk. Ask them
for turn times and when to follow up next. Be specific – it adds creditability out the gates and call them back at that
exact time and keep calling until you get them.
2nd Call – Let them know you represent the seller and have an offer from a buyer you wish to present. At the time of
presenting you have full disclosures on your client that demonstrates their inability to become current and remain
current, have a reasonable offer (all cash offer are best ;) on the property that is in escrow ( don’t BLURT out any
figure over the phone ), and want to know if there is any specific required items or documents needed in order for this
to get a priority decision. Request those items to be faxed over if company specific.
ASK FOR TURN TIMES to be checked in and if mailed or Fedex – what address do I send this so that it gains your
attention! Ask for turn times on decisions.
3rd Call – Follow up to make sure it was properly received – all pages – Ask for turn times on the decision.
4th Call – Follow up on that day decision is supposed to be rendered if you have not been contact prior to this time
frame.
Cover Letter
The cover letter should be clear and concise giving the needed information to the bank. The information that I include
is an overview of the homeowner’s situation, what they owe on the property, what it is really worth and mention the
amount of the needed repairs. I also state what my offer to the bank is. I conclude my cover letter with all of my
contact information and state that I hope we can work together to resolve this issue for the homeowner.
Authorization to Release Information
I have a standard Authorization form that I use and in most cases this works fine. There are a few banks that require
their own form for this. GMAC will require that you use their form and it must be signed and notarized and the original
must be sent back in.
I enclosed the standard Borrowers Authorization. This is used to order payoff information and open a prelim as if we
are doing a refinance. Before contracts are written and signed you need to know all items effecting or encumbering
the subject property.
Power of Attorney: In some cases with non-traditional banks, you need to get a power of attorney. This allows the
Listing agent or firm to act on behalf of the client with the bank to negotiate the process without asking the borrower in
every instance.
Registration Form. This allows a transparent – at a glance look at who is involved in the transaction. My TC does
this anyway, so I just send it in with that.
Listing Status Hotline: Some work on email, some make phone calls (some none of the above ;) – but regardless I
love using this system because it’s PRO.
Seller’s Hardship Letter
I typically ask my sellers to make this at least a page long. The goal of this letter is to simply have the homeowner
explain their situation to the bank. This will include key items such as job loss, medical issues, divorce, health issues,
etc. If the seller is considering bankruptcy you can have them include that, however it shouldn’t be used as the big
scare tactic for the bank to act faster. Its best used as a feather in the cap that you can pull out in a stalemate where
you have no more options to pursue.
Seller’s Financial Information
The bank really wants to know what the inflow is and outflow that the seller has each month and what other expenses
and assets do they have. I have two standard forms that I have my seller’s fill out, personal information and financial
information.
I enclosed a Generic Financial Statement that should be completed by the borrower.
In most cases these forms will work, however there are times that the bank will request that the homeowner complete
the standard forms that they issue.
Supporting Financial Information
These items are typically the same required by a borrower when applying for a loan:
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2 years w2’s
2 months pay stubs
2 months bank statements
I always tell my sellers that in order for the bank to evaluate considering taking less than what is owed on their
property they need provide the same type of information they did when they applied for a loan, however they are now
showing they can’t do this financially at this time.
Supporting Hardship Info
In order to paint the full picture to the bank of the homeowner’s situation it can help to provide additional documents
showing the hardship. This can include medical bills, accident reports, layoff notice, etc.
Repair Estimate for the Property
providing the bank with a detailed repair estimate from a reputable contractor will assist greatly in getting your short
sale accepted. The bank doesn’t want to own property and especially not property that needs a complete overhaul.
Showing this by presenting what needs to be done and the cost is very helpful.
Get a Contractor on the Team – Francisco is our resident General Contractor licensed and bonded. This is a top line
expense that can be deducted from the market value of the property.
Comps For The Property
You definitely want to do your homework and provide the bank with at least 3 to 5 comps of properties in the area that
have sold in the last 9 months, preferably the last 3 months. In doing this you want to try to get as close to the subject
property that you can and ensure that you provide the lowest comps that you can. I have found that it is also helpful
to be able to show the number of days on market and any and all down payment assistance or seller concessions
given in the sale.
First American – AVM or Fidelity – SiteX – account required
Comparative Market Analysis
Independent Property Management Company for Rent Survey – The property must cash flow from day 1!
Contract
Standard CAR form or Generic written with all contingencies in place
Short Sale Addendum must be used
Escrow and Title
Opening Escrow and Title adds creditability to the short sell process. It also allows you gain a prelim on the subject
property to see all items that could cloud title, add additional costs to the transaction, and speed up the closing of the
subject property once the bank has agreed to your terms.
County Tax Bill, HOA, and Renter’s Insurance
Knowing the tax bill and deducting that as a top line expense is a way to lower the purchase price \ offer to the bank
you are negating with. Pull the tax bill online, verify all delinquent tax’s shown in the prelim with the Title Officer, or, if
you have to, visit the county tax assessor’s office to get the entire tax bill.
If the property is part of an HOA, find out if they are current on the monthly dues. Again this is another top line
expense item that lowers your purchase price \ offer to the bank. A way to further negotiate the purchase price \ offer
to the bank lower is to include 1 year’s worth of HOA dues in the contract like you do with Insurance.
Last, get insurance policy quotes up front that has all of the features and covers everything and a bare bones quote
policy. This is another tool to use when negotiating with the banks to lower your purchase price \ offer.
Net Sheet | Estimated HUD
Banks want to see how much money they are going to net with your offer. Providing a Net Sheet or Est. HUD with
your offer will provide the bank with the numbers they need to see – what will we get. It’s the most important piece of
your package so make sure its perfect and encourages all the expenses you have drummed up.
Additional Information
Typically if a bank requires additional information they will let you know what it is. The most common that I have seen
so far is the request for the payoff amounts from the other lien or mortgage holders on the property.
Conclusion
In conclusion your goal is to paint the worse possible picture of not only the homeowner’s situation and the condition
of the property, but give accurate independent information about the local real estate market conditions to include
pre-foreclosure, NOD, foreclosure and REO listings.
Advanced: If you want to go a step beyond most short sell packages you can show accurate Renters information
which further details a potential buyer that is a professional, perhaps an investor, and this is a business transaction
that will close if the well thought out offer is accepted. Not every bank is going to see the transaction as you see it but
if they don’t accept on the first round, with the information you provided they would give you a second or third round.
With the items you presented in your short sell package allows you and your client to know the bottom line, mid line
and I still got a good line to win every time that allows your Short Sale Listings/Offers to close every time.