Contract agreement, confused??

Hi. I am a getting ready to contact Option One bank for my first go at a short sale. I understand everything that needs to be in the package except the contract? Is this contract between me and the current home owner?

And on the net sheet this is something you give to the bank with your offer at the top then all of the expenses you will incur? I’m not sure what the net sheet is suppose to prove.

Does anyone have any suggestions for me. The current mortgage is 122,000 and the last appraisal she had was 3 years ago for 168,000. I pulled some comps for the area which look good in my favor, the highest sold house just right up the street was 92,000 in the last 6 months. This house is down the street a little and the house values increase significantly but luckily no houses on this side of the street are for sale or have sold recently.

I hope i’m getting myself into something i can handle.

The house needs a new roof and minor repairs after that.

Any help would be great??? I’m just nervous that i wont say or send the right things and hurt myself in the deal.

Good luck with Option One, they are so backed up, its going to take at least 2 months.

To see what a completed HUD-1 for Short Sale looks like go here:

The contract is between you and the homeowner

Thanks for the web site. I’m still confused so i hope you can bare with me. So here is what i have on my list to send in for the short sale:

Hardship letter
Authorization to release form
Financial statement (homeowner)
Last two months pay stubs
Last two years taxes
Last two months bank statements
Estimated Net sheet (not sure what this is?)
Signed sales contract (is this the hud-1??)

Sorry this is my first one and since Option One is so backed up it looks like i need to get the ball rolling.


Option One does require those forms, if the homeowner cannot find those forms, have them sign a paper stating that they cant find those forms.

Estimated Net Sheet is the HUD-1.

Signed sale contract is a purchase agreement, put the price you want to pay. Make sure your contingencies are in there:
“Subject to bank accepting short sale at a price acceptable to buyer”

I am not sure where your getting your funds from, but ask your lender to help you with an HUD-1. If they dont know how to do it, which ever title company those use will know how.

Oh okay. So the sales contract is the contract i write up for the short sale. So if i want to offer Option One 100,000 for the property i write that into a contract with all the applicable contingencies?

You are being a huge help. I just called Option One and they said to send them the authorization form and then give them 48 hours to get that then they would deal with the rest. The guy barely spoke english. ARGGGGG


On the purchase agreement you put the price you want the pay, the homeowner cant sell anyway for less than what they owe, so it puts the sale in the banks hand.

When is the foreclosure date?

There LM Dept is in India, but the negotiators are in the US and you’ll get a contact person from the US also.

If the sale date is soon, dont wait 48 hours after you fax, call them immediatly.

While your visiting the homeowner to get the authorization form, get all the rest of the information to make it easy for the client.

Thank you for being so helpful i really do appreciate it. I spent a lot of money on some classes for foreclosures and they didnt really tell me a lot. So i do appreciate this and your quick responses.

I have gotten everything on the previous list already from the homeowner (bank stuff, job stuff, taxes, hardship letter etc). I just dont have the net sheet or the sales contract. So to verify the net sheet i want to put all of the costs that the bank will incur if they decide to send the house to auction. So basically i want to make it look like they will lose money. And the sales contract is just the contract i make up with my offer price and contingencies. So if she owes 122,000 i should offer that or offer what my highest affordable amount is? I would like to get the house for around 100,000.

I got this homeowner off our lis pendens so she doesnt have an auction date yet. So i think i have time.

Since you have some time, I wouldnt suggest putting your higest offer. Let the bank counter to see what they want. Also schedule a BPO.

The net sheet the bank is going to see, is going to show all your cost and the bank costs when you purchase the home.

If you want the bank to see what costs they might receive if they foreclose on the home, then include that on a sperate paper, along with repairs and pictures of the “distressed home”

Since you have time, I recommend you pick up this book:

Since Short Sales are something pretty new, most classes wont teach you how to do a successful one, but the book by thomaslucier is pretty good.

Just a quick chime in here. Get the telephone and fax number for the U.S. LM and contact them frequently. Dont be a pest but do call them after each fax you send to see if they have recieved it. Then contact them at least twice a week to check on the status and see if they need any additional info from you.

Remember these people are swamped with cases and yours can easily get lost in the pile up. Make sure you stay on there minds.

Thank you both for your info. I’m so glad i found this website. I will definetely by the book. I study on this subject about 6-7 hours a week (reading online, and some books) just to make sure i’m doing everything right. But when it comes to your first one i dont want the bank to know that i’m a newbie because they could use that to their advantage.

Its a little nerve racking on your first one. I just want this first one to go successful because the homeowner is actually my great aunt who recently lost her husband and cant afford the house anymore. She has no interest in staying in the house so i’m just trying to save her credit and walk away with a little cash for me to go into my next home.

Thanks again. If you can think of anything else that would help me I am open for any suggestions.

All good advice.

One other thing… don’t let the Lender know that you are related to the Home Owner. They won’t approve the short sale if the Agreement isn’t “arm’s length”. They fear that some of the proceeds will go back to the H.O. which, in the Lender’s eyes, is forbidden with a short sale discount.

Good luck.

Yes, good point.

Here are forms that WILL come in handy.

I too am working on my first 2 short sales. I have been following along on this post and just wanted to say thanks also…you all provided some great information and we newbies really appreciate it!!

La dreams thanks for the info about not letting them know the h.o is a relative. And thanks blueboxer for those forms. Those were definetely appreciated and let me see examples. I learn best by seeing examples.

Thanks all. Great advice from all of you.

Good luck Lin. Let me know how you do.

How are things going?

Just wanted to give you an updated on my ATTEMPT of a short sale with Option One.

They countered my offer and wanted 90% of FMV for the home. Of course I cant do that

I countered again and showed them what buyers could get for what Option One is asking r. Also included some foreclosured homes in the area and how they’re not selling at all to see if they will accept my new offer.

Good Luck!! Keep us informed. I was in the process of countering on my first “attempt” and the owners up and disappeared. Haven’t returned my calls and I can’t reach them so I guess this one is a bust…But I’m on to my second one…

Estimated Net sheet (not sure what this is?)
Signed sales contract (is this the hud-1??) —NO

For most people, the HUD 1 seems to be the one that no one can understand, or they are not sure what it does. It is simply a “net sheet” showing the lender how much money they will be receiving upon closing. Most people have title companies fill them out.