First of all, understand the short sales.
A short sale is a transaction that happens when a homeowner is owning more money on his/her home than what it is worth in today’s Real Estate market, and when the bank or the lender is willing to take less than what the homeowner owes.
Most of the time, that bank or lender will be able to collect more money with a short sale than if the homeowner goes into bankruptcy or foreclosure. That’s why they will be listening to short sales under certain circumstances.
For the homeowner, the short sale transaction is a better situation than going bankrupt or foreclosed. They credit will be hurt for 2 or 3 years instead of the 7+ years in a foreclosure situation.
Secondly, here are a list of documents you will need in order to prepare the short sale transaction with the bank representative:
FOR THE REALTOR:
- ~ Signed letter of authorization from seller authorizing you to negotiate with the lender on their behalf.
- ~ Letter of facts about the property. Everything that is wrong with the property and why it is impossible to sell it at a higher price.
- ~ Current Market Analysis. Highlight comparable sales that reflect the lower value.
- ~ Photographs. Remember, the photographs aren’t to highlight a charming house. Photograph evidence of damage, bad location, etc…
- ~ Evidence of all showings and feedback. Explain to lender results and conversations you’ve had while trying to sell the property.
- ~ Copy of listing contract/MLS Listing/MLS history.
- ~ Current “AS IS” CMA.
- ~ Copy of purchase contract if you have one.
- ~ Preliminary HUD
- ~ Make sure the seller has a detailed, tear jerking letter of hardship. See an example here
- ~ Sales and services Quotes
Also, insert copies of the following if any:
1. Code Violations
2. Fines
3. Hearing Information regarding the maintenance of the property
4. Evidence of lawsuits the City is filing against lenders
5. Evidence of pending litigation or changes in the law
6. Insert Tenant / Landlord provisions if it helps your case
7. Evidence of the town / city’s enforcement of fines against other banks
8. Latent Material Defect
9. Sexual offenders and predators
FROM THE SELLER:
-Two years tax returns and W-2’s.
-Three months bank statements.
-Pay stubs for last 30 days.
-Detailed monthly budget.
-All mortgages with account numbers.
-Copy of the deed.
-Copy of the note and/or mortgage
-Pending bankruptcy, or other action/judgment or lis pendens.
-Tear jerking hardship letter. See an example here
Buyers generally get a lot more house for their money in a short sale situation, because these properties are usually very competitively priced in order for the sellers to unload them before they end up in foreclosure. It’s a very good situation for them. The only downside I see is often the multiple offers situation for those short sale properties. But there are a lot of short sale properties available in the Cape Coral Florida market than in other parts of the country, so this area is the place to buy!.
So, if you are thinking of buying a short sale, here are 3 tips:
1 – Find a Realtor with short sales experience. There are many rigorous short sales and foreclosure training programs available to real estate agents, including the Certified Distressed Property Expert (CDPE) and the Short Sales and Foreclosures Resource Certification (SFR). If you wish to purchase a short sale property in Cape Coral, Florida, or anywhere else for that matter, you will greatly increase your chances of getting your deal to closing if your agent is experienced and comfortable with short sales….either through a short sales certification program, or through hard knocks experience in the field.
2 – Get pre-approved. No short sale offer will be considered without a pre-approval or a proof of funds letter. If you have not yet been pre-approved by a local lender and are not sure who to call, your real estate agent is a good source of referrals. The pre-qualification process generally takes less than 30 minutes, and can be done over the phone, however, a pre-approval takes longer but is better than a pre-qualification. Make sure you work with a local lender – today’s wild & woolly finance environment means that you greatly increase your chances of closing a deal if you use a local lender with a good reputation. All short sale offers must be submitted with a pre-approval letter, or with a proof of funds, as bank’s statements, in the case of a cash transaction.
3) Submit your highest and best offer the first time around! Lenders generally do not counteroffer….they will either say “Yes” or “No”. So if you are going to go through the process of waiting 60 days or more to hear back from the lender, you will greatly increase your chances of hearing that “Yes!” if you submit a good, solid offer with no contingencies.
Once you submit an offer that is approved by the seller, the seller has to submit your offer to their lender to see if the lender will accept the offer as well….remember, in a short sale situation the lender is agreeing to accept less than what the homeowner owes on the mortgage…..and the lender is going to do whatever they can to minimize the amount of that loss to their bottom line. Parting with their profits is not something that comes easy to lenders…..so it takes awhile to find out if they are willing to take the level of financial beating that is inherent in the amount you are offering. Sometimes the wait can be up to 90 days….sometimes much more (the amount of the wait often depends upon which lender holds the paper).
Look at the frustrating wait time as the price you pay for getting the chance to get a home you might not otherwise be able to afford.
If you want to receive listing from banks, this program will give tremendous help to get in the game as well.
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Dec 31 2009
