Let’s be honest, most real estate agents have no idea what they are doing in short sale transactions, at all.
Follow the steps below to be ahead of the curve, trust us, we have over 130 short sales in the works right now.
1. Start as early as possible:
a. Most banks have a “10 day” rule that they won’t break for their own family members. What this means is that if they do not have everything that they require for a short sale review 10 days prior to a foreclosure sale date, they will not postpone the foreclosure. So do not leave it to chance, get your docs in ASAP.
2. Submit the correct forms:
a. One of the biggest problems that people run into is losing time because they did not submit the correct forms. If you take into account the 48 hours lenders usually take to upload and review a fax for completeness, you could possibly be faxing in the wrong document and not finding out for two or three days.
b. For the internet savvy, go to your banks website and look for home owners assistance options and inthere you should find the forms you need to submit for a short sale. Everyone else is encouraged to callin to their lender and find out what is needed, and often times they will send you the forms needed atno expense.
3. Submit a complete package:
a. Be as thorough as possible, and know that the more the better. You don’t want to leave any room for them to say you weren’t forthcoming with documents, so they foreclosed.
b. On the same website/phone call one can find out exactly what is needed, but most problems arise because the two most recent consecutive months bank statements and paystubs are not received (or they are missing a page).
4. Make sure that everything is fully executed:
a. If everything is not signed and dated by all the borrowers (everyone that signed for the loan) they will not accept it and send it back to be resigned, costing you valuable time.
5. Work with your second mortgage simultaneously:
a. Almost everyone now-a-days has a second mortgage or Home Equity Line of Credit, and since these types of loans are subordinate to first mortgages they ultimately will settle for much less.
b. The prevailing rate is $3000.00 to the second mortgage.
c. All of this being said, because they have less ability to foreclose, Seconds are often defaulted on first, and end up with collection agencies. These collections agencies make money by taking a percentage of whatever they collect as commission so they are driven to collect the highest they can. They can be difficult to deal with so it is very wise to start working with them ASAP, but always remember if the house forecloses in a short sale they are most likely going to get nothing, SO DON’T LET THEM BULLY YOU!
6. Always ask for relocation assistance:
a. There are Government programs out there that which will guarantee you $3000.00 in relocation assistance, but even if you do not qualify or your lender doesn’t offer those programs, you should always ask for relocation assistance. More often than not you will get it.
7. Follow up with your lender…constantly:
a. Your lender will tell you that you should only follow up every two weeks, or that they will contact you if they need something. DO NOT listen to them. These banks are so backed up that you run the risk of having your file sit around and not be touched. Be persistent and call every 3 to 5 days, if you have a foreclosure sale date coming up call every other day.
8. Be polite:
a. Naturally this comes right after the “call constantly” rule. The negotiators at these banks hear people complain all day long, so be different. Approach them with a more “please help me” attitude than a“you have to help me/entitled” attitude and you will benefit. Remember that if they don’t like you, they may just accidentally forget to work on your file…
9. Open escrow as soon as possible:
a. A lot of buyers back out of short sales when faced with putting down the escrow deposit. As mentioned earlier: you have no time to waste, and a buyer backing out means you have to get reapproved with another buyer. Opening escrow as early as possible forces the buyers to show their true intentions, giving you the most time possible to deal with any issues.
10. Choose an experienced SHORT SALE agent:
a. This may sound like a joke/no-brainer/pitch, but in all honesty if your agent doesn’t know how to doshort sales like the back of his hand you are probably going to lose it to foreclosure.
b. This is not the transaction to give to your relative simply because they are related, wait until you buy your next house, because if/when they fail your relationship will go with it.
For More information visit us at http://www.jhhre.com or call us at 818.246.1099
John is the Vice President here at JohnHart, and as such is responsible for managing and directing the firm towards obtaining its ultimate goals.
He is also one of our main contributors on the Blog. (please see his profile page on the main site for more information.)
