Processing the Short Sale Transaction
If you are one of the brave souls who has never processed, facilitated or negotiated a short sale before, than this post is for you. It takes guts to obtain a short sale listing if you have never taken one before. The good news is that after facilitating a few short sales, you will find that you will have learned more about real estate than you ever thought possible, and much more than you knew before.
After taking the short sale listing and putting your listing on the MLS, you probably received an offer . . . perhaps even a few offers. Now is when you need to start working with your seller’s mortgage lender (or mortgage lenders) in order to get that short sale approved. After all, without short sale approval from your seller’s lien holders, the short sale transaction will not close.
Obtaining short sale approval letters is not rocket science, and there are quite a few details that need to be considered when working short sales. If you have never processed a short sale before, here are a few tips to help you get started.
Get a copy of the seller’s mortgage statement and call the seller’s mortgage lender. Tell the mortgage lender that you are negotiating a short sale for your seller and ask about what the mortgage lender requires for the “short sale package”, where that information should be sent, and by what means (fax, overnight mail, etc).
Generally, most mortgage lenders require the same information for the short sale package. Among other things, this information includes pay stubs, bank statements, tax returns, a hardship letter, and a financial statement. Additionally, the mortgage lender requires an estimated settlement statement (HUD-1) that will show how much the mortgage lender will net from the transaction. Lenders also require an authorization for whoever is doing the negotiating (you) to speak to the bank on behalf of the seller. Traditionally all of this information is faxed to the bank.
After you have prepared your short sale package (one humungous fax) and sent it to the bank (no easy feat), you will need to call the bank and confirm that your information has been received. Follow up at regular intervals, and ask questions about the particular mortgage lender’s short sale process.
Each lending institution has a slightly different process for processing short sales. So, it is important to ask questions and familiarize yourself with the process used by the lenders on your transaction.
Good luck! You are about to embark down a rocky road. You’ll make it to the end of the road, no worse for wear.