I’m looking to get into short sales and not sure how the whole process works.
Seek out property
Do Due Diligence on the property
Contact Owner for authorization to deal with bank
Contact Loss Mitigation to negotiate price and ask for short sale packet
Obtain payoff (at same time speaking to loss mitigation)
Open title and have HUD prepared
Fill Out short sale packet
Send in short sale packet to bank
Is this essential the order of things with Short Sales? Are double closings required? What will the bank typically accept as payment to me for closing? Let me know what I’ve missed.
Yup, youve the basics. You really wont start negotiating the price until the bank does a BPO(Brokers Price Opinion) of the house. BPO is a critical part of a successful short sale. Showing the BPO guy a list of repairs and lower comps can influence the BPO price.
OK so the bank will make an assement on the value? I have a client that is now 45 days late on the mortgage and wants a short sale. She is backwards on her mortgage. About 25k in the rears - mortgage balance vs. value - not including the lates and fees that will incur; she wants out. Now we can’t do a short sale until after the 90th day, or is it 60 days when it goes into NOD status that we can start? When can we actually start discussing a short sale with the bank? We are going to need to go really low on the price so not sure if we can do a short sale for that reason but anxious to contact the bank to discuss. What you’re input?
Yes, bank will do their own little appraisal on the home. Sometimes they do an interior BPO and sometimes they just do a driveby.
Start discussing the short sale now with the bank. Get everything that the bank requires for the short now (2 years tax returns, 2 months pay stubs, hardship letter, financial worksheet, etc)
Need to go really low on the price? Thats fine, thats what short sales are all about. Prove to the bank that the home needs to be discounted by showing them pics of repairs and getting estimates for those repairs.
Can you get into more specifics about the loan(s). Is there a second? Who is the lender?
great - yes there is a second from gmac for 110k - the first is with Aurora mtg - they owe 345 all together- arears 5k and the home is only worth 329k - the market in this particular area has declined a bit - so after their refi two years ago - the home went backwards - the home is remodeled - with only a few repairs needed - it’s a 1992 - i will meet with the client once i have everything together and do an inspection -
do you ever ask for anything upfront from the client to get all this paperwork together for them, such as a consulatation fee? I don’t like to do this sort of thing but at the same time - I don’t like doing things for free either? They’ve been trying to sell there house for the last year - which isn’t going to happen - they have it on the market with an agent for 3 months - i’m going to find out when their contract ends with the agent - i’m a bit worried about the agent doing something (though she has contacted me to do a short sale) Also, what is the appropriate fee to charge for a short sale? Would it be considered an assignment fee? Do I need her to get a payoff demand? Have my escrow officer start the title and open escrow? SOrry for all the question. Your help is greatly appreciated!!!
You don’t charge the homeowner to do a short sale. Your going to win some and lose some but you get paid on the spread from what the homeowner owes/property value and what you negotiated with the bank. Thats your payday, or when you flip it I should say. Avoid any litigation down the road and don’t even think of charging a homeowner any fee to do a short sale.
So there is no guarantee the short sale will go through. Thats the chance you take. It’ll cost you nothing but some time and long distance phone/fax charges. The upside is you get a property with a ton of equity in it so start plannning your exit strategy… just in case the bank says “yes!”