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Best practices for short sale escalation

Real estate short sales can be a handful, but knowing the ins and outs of escalation can help any short sale transaction to run more smoothly.



Escalate your short sale

I hardly ever heard the word escalate until 2008 or 2009. When I heard it in the twentieth century, it was usually in reference to an escalator—you know, that thing that takes you from one floor to another at the mall.

In the past several years, escalate has taken on a whole new meaning. Realtors® and short sale processors, when wanting to take their short sale complaints up a notch at the lending institutions, have made calls and written letters of escalation. In fact, several of the lenders now have policies and procedures for the escalation of problems associated with short sales.

When to escalate

There are four main reasons to escalate a short sale. They include:

  1. Bank employee has missed internal deadlines extensively and has not stepped it up when you have reached out to him/her about the missed deadlines.
  2. Bank employee appears to have a lack of familiarity with a pending issue (e.g., doesn’t know the difference between HAFA and a Cooperative Sale, has never heard of a Natural Hazard Zone Disclosure Report).
  3. Bank employee will not allow a specific line item to appear on the final settlement statement.
  4. Foreclosure sale date is around the corner and loss mitigation employees are paying attention to your short sale file.

What is an intelligent escalation?

Just recently, someone told me that they heard about a program whereby anyone can get a response on a problematic short sale within one business day. (Sounds too good to be true, right?) I looked into this further because I wondered what might happen if the agent does not have good cause for escalation. For example, what if the agent was frustrated because she (or he) had not uploaded documents by the deadline and the deal was cancelled? How can you escalate that?

To that question, I received the following response: “That’s when we do what is called in intelligent escalation. We have someone from the lending institution call and educate agents about the short sale process and what is required in order to process the short sale.

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If intelligent escalation is the latest buzz phrase, then intelligent must be tongue-in-cheek because anyone who wants to put their face in front of big wigs but does not have a leg to stand on is not very intelligent.

Best practice: Submit a complete short sale package. Follow up until you are blue in the face. Refer to steps 1-4 above if you think that you might have an issue. If your problem doesn’t fall into one of those four categories, it may just part and parcel of the good old short sale process.

Written By

Melissa Zavala is the Broker/Owner of Broadpoint Properties and Head Honcho of Short Sale Expeditor®, and Chief Executive Officer of Transaction 911. Before landing in real estate, she had careers in education and publishing. Most recently, she has been able to use her teaching and organizational skills while traveling the world over—dispelling myths about the distressed property market, engaging and motivating real estate agents, and sharing her passion for real estate. When she isn’t speaking or writing, Melissa enjoys practicing yoga, walking the dog, and vacationing at beach resorts.

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