Monthly Archives: June 2014

Short Sale Tips: Part 5

(This is the fifth post in a series of blogs discussing the short sale process and tips for navigating it. The previous posts can all be found here)

We’ve finally come to the decision stage of our series on short sales. At this point in our journey we have looked at everything from preparation of your team before you enter into default, all the way up to submitting your short sale package and how to prepare for possible actions by the negotiator before approval or rejection. Now we will look at what to do in in the case of rejection of your short sale, and in the final post look at the acceptance of your short sale.

First, what happens if you have gone through all the work to get to this point and your lender still rejects your short sale? This is always a possibility and with the way the market is trending right now it has become more and more likely. If this happens to you the first thing you must focus on is remaining calm. Hearing that your lender has rejected your short sale can cause a wave of emotions to rise up including anger, frustration, and dread of a possible foreclosure. However, it is important to stay composed and continue to work with the lender.

Once you have composed yourself, you are going to need to find out why the negotiator has rejected your short sale. You and/or your agent need to speak with the negotiator and have them explain why they rejected your short sale offer. There are a wide variety of reasons that a negotiator may reject a short sale:

  • Most lenders require you to be in default on your mortgage to qualify for a short sale. If you have tried to get short sale approval without going into default then your lender may reject your application.
  • The negotiator, after looking at your income and asset information, may decide that you have too many assets and too few liabilities to qualify for a short sale. Lenders are only going to approve short sales for those borrowers who demonstrate clear financial hardship. If they see large liquid cash reserves or a lack of other liabilities the negotiator may decide that you have the money to pay your mortgage but are simply refusing to.
  • The lender may feel that the buyer’s offer is too low to accept.
  • The lender may see a better financial opportunity to foreclose on the property and try to recover value at an auction

Whatever the reason it is not time to give up. First, it may be possible to let the current negotiator close your current file and then re-open the file with another negotiator. Different negotiators may have different opinions on the case and a change could gain you an approval. It may also be that the negotiator doesn’t have the authority to grant approval because of the lender’s internal policies and asking to be referred to a supervisor could help.

If neither of those solutions works then your answer may depend upon the reason for your rejection. If you have yet to enter into default, as is sometimes the case, then it may be that the lender requires a borrower to be in default before a short sale can be approved. Ask your negotiator if this is the case and if so, then not paying your mortgage may get you short sale approval. (Of course before considering such a step you should always consult with experts who can tell you the consequences of such actions) If your application was rejected because the negotiator doesn’t believe that you are suffering a financial hardship then try to find out exactly what aspect of your situation led them to that conclusion. Sometimes a new letter of hardship or a letter from your short sale agent explaining your predicament can sway the decision. If you do have some liquid assets then offering to make a seller’s contribution can also potentially change the decision. If the lender sees that you are willing to contribute and mitigate their loss to a certain degree they may approve the short sale. If your buyer’s offer was too low or the lender believes that they can get a better deal through a foreclosure auction then work with your buyer to try and get a better price, while also trying to convince the bank that they cannot find better value elsewhere. Getting another Broker’s Price Opinion, appraisal opinion, comparable property list and general market assessment may show the lender that there isn’t extra value where they think there is. A savvy agent should be able to help you through this process. The point is that if you have been rejected then you should keep working for approval until every avenue has been exhausted. Usually you will be able to find one option that will reverse a decision from the lender and gain an approval. Next time we will discuss what to do once that approval has been gained.

Short Sale Tips Part 4

So far, we have walked through the short sale process up to the point of sending the short sale package to your lender. (You can read our previous posts here, here and here.) What’s next for you?

If you have sent your short sale package off to the lender then it is now in the hands of the lender’s negotiator. This party is going to review the entirety of the package and determine whether or not you are qualified for a short sale according to the lender’s own policies. Obviously, in dealing with the negotiator you want to always be respectful as you don’t want to upset the person who holds the decision on whether or not to approve your short sale in their hands.

You should be prepared for the possibility of the negotiator countering the buyer’s offer with a higher number. As we have said before, the lender is trying to maximize the value they can recover from the sale, and so if they think they can get more money out of the property they will do everything they can to get it. Sometimes the negotiator will also counter asking that the seller (you) contribute to the sale. This can result from the negotiator reviewing your income and assets and believing that you have liquid assets that can be used to recover what you owe on the mortgage. In either situation you will need a skilled agent (Such as the ones at The Agency Luxury Realty) to communicate and negotiate with the various parties. Including a listing of comparable properties and their values, an appraiser’s report on your property and/or a log of listing price reductions in response to lack of demand over time can occasionally reduce the odds of the negotiator making a counter offer. These documents can show the negotiator that you have been trying to get more value for the home but the demand just isn’t there, and so if they want to recover value and avoid an expensive foreclosure, the buyer’s offer is the best option.

Perhaps the best advice in dealing with the negotiator is to simply be patient. You want to allow a reasonable amount of time to pass for the lender to contact your agent. The negotiators are working on multiple files at the same time so inundating them with calls and messages isn’t going to help your case. Wanting to call and talk to the negotiator is understandable when you are waiting for a response and have heard nothing, but resisting the temptation and being patient will pay off and avoids the possibility of the negotiator feeling like you are harassing him with calls. You have to simply let them do their job. In the meantime prepare yourself for either possibility of acceptance or rejection of the short sale. Each possibility carries different contingencies which will be covered next time.

 

Short Sale Tips: Part 3

834 OceanIn the third post of this series we are going to start looking at what happens once you have had a buyer make an offer on your short sale property. You can read the first two entries in the series here and here.

 

Once you have received and offer on your property your attorney should provide you with a list of documents that are going to be needed from you to be sent to the lender. These documents compose the short seller package and are necessary to obtain short sale approval from the lender. The exact documents that the lender needs can vary but in general you should expect to have to provide

 

  • An executed listing agreement for the short sale property

 

The lenders will want to see when the property was listed, what brokerage listed it and what the commission is. In general if an offer is well below market value and the listing has only been active for a short period of time the lender is not going to accept the offer.

 

  • A fully executed purchase contract

 

Your attorney should look over this to make sure every detail, signature and initialing of every required party is completed. An incomplete contract can hold up a deal.

 

  • A seller’s hardship letter

 

This letter should describe how you came to be in the current position, what options you looked to in order to get out, and why a short sale is the only remaining option. The lenders are going to look at this letter to determine if you really have been pursuing the best options to secure the money that you owe them. You should have your attorney work with you on this document.

 

  • An authorization letter

 

This letter must be signed by you and authorizes the lender to speak with your listing agent. Without this the negotiator cannot contact the listing agent and make a deal.

 

  • Your last two bank statements, W2’s, tax returns, and pay stubs

 

The lenders want to make sure that you are in a financial hardship and cannot pay your mortgage before agreeing to a short sale. If you have large amounts of cash in savings, or earn enough that the lender thinks that you can afford your mortgage then they may reject the short sale. This is becoming more true today as short sales decrease and the market has started to improve.

 

  • Estimated HUD-1.

 

The HUD-1 is essentially an itemized list of closing costs, services and fees. It is a complicated document and is prepared by the settlement agent.

 

You will want to put together and submit the short sale package as quickly as possible to avoid any delays. Once the package has been submitted it usually takes 30-90 days to gain approval, but it can take even longer in certain cases. Ultimately, each lender’s disposition and the workload of your negotiator at the time will affect how long you will have to wait for a decision. Since the timing at that point is out of your hands just focus on controlling what you can and delivering required documents accurately and rapidly. Typically the faster you get your documents out the faster you will hear back from the lender, but of course there are exceptions to every rule.

Compiling and sending out the short sale package can be a complicated and stressful endeavor, but with an experienced team on your side like the team at Weisberg & Associates, Oasis Title and The Agency Luxury Realty, the whole process will be much simpler. If you are planning on listing your home as a short sale then you should contact us to learn how we can help you through the process.

Short Sale Tips: Part 2

In our next post within our series on short sales we’re going to give you a few more tips on what to do if you are facing a short sale as a seller. Last week we explained the importance of working with a company that has vast experience in dealing with short sales, and making sure to hire an attorney who has worked on short sales and can help you navigate the process. This time we will discuss two marketing tips for listing your home and finding a buyer.

To start, if you are still living in the home then make sure you are keeping it up the best possible appearance standards to entice buyers. Most of the homes that go through the short sale process look like “fixer uppers” and if a potential buyer believes that there are going to be a lot of costly repairs associated with buying the home they may not be willing to give an offer. Just by keeping your house looking nice you can give yourself an edge in comparison to other distressed properties and perhaps find a buyer sooner.

Second, make sure that your realtor does their research and provides you with a list of properties that are similar to yours. When you set your listing price you have to understand that the lender has the say in what price they will take in a short sale. Often times if you go too far below market value the lender will reject any offers made at that price and may move ahead on the foreclosure process to recover their assets. A realtor with short sale experience who does adequate market research should be able to help you set a reasonable listing price that is likely to be accepted by the lender. You could also seek the services of a property appraiser to give you an idea of what your home is worth, if you do make sure to get his appraisal to the lender in the short sale package later on. Whatever method you use remember that the lenders are trying to recover as much money as they can and have the final say on whether or not to accept an offer.

Just by following these two simple guidelines you could help yourself out massively in terms of finding a buyer for your property sooner, and getting your lender to accept the short sale offer. In addition, if you have an experienced short sale real estate agent, such as the ones at The Agency Luxury Realty, on your side you will have an advantage over anyone who doesn’t. Next week we will look at what happens once you have received an offer on your short sale property.

 

Short Sale Tips

Today we are starting a new series on the blog designed to give you tips on dealing with short sales. If you are facing or are currently in default of your mortgage then a short sale can be a way to avoid foreclosure and all of its negative impacts. On the other side, a short sale can offer value for a buyer if he or she finds a property where the bank is willing to accept below market value for a home. No matter what side of the short sale you are on though, there are some general principles that you should always follow.

 

First, whether you’re purchasing or selling a short sale, it is in your best interest to consult with a company that has years of experience with short sales. The short sale process is a complex one and you want to go into that process with a team that is not going to be surprised by anything that arises. Because of our vast experience in dealing with short sales we at The Agency Luxury Realty & Weisberg and Associates have the knowledge and ability to get the deal done. We have negotiated and closed short sales with just about every lender you can name and we know which buttons to push with each lender. We would be happy to walk you through the short sale process whether you are buying or selling.

 

Second, you should consult with an experienced attorney that has worked on short sales recently. Short sale policies have changed and are continuing to do so meaning that you need to make sure you get all of the latest and most accurate information before deciding on who will handle your short sale. You need an attorney who keeps abreast on all of the latest short sale regulations so that you can be sure everything will go according to plan. It is also helpful to hire an attorney who is familiar with the area you are located in and has worked extensively with the involved lenders beforehand. This knowledge and experience will give you some leverage in negotiating a deal with your lender.

 

Finally, ask your realtor and/or attorney as many questions as you can think of regarding your situation and short sale inquiry. There is never a dumb question when it comes to short sales and the better educated you are the better deal you will be able to get. If you have brought the right people onto your team then you shouldn’t be intimidated or confused by the process. Instead, ask questions and don’t be ashamed to admit that you don’t know something.

 

Our office has seen just about every scenario when it comes to short sale negotiations. We have received short sale approvals in less than 20 days while some have taken over 20 months. It all depends on each lender’s disposition and how efficiently documents are submitted to and received by the lenders. This wealth of experience acts as an assurance for you that we will get the job done right. In addition, since the team at Weisberg & Associates, Oasis Title Company, and The Agency Luxury Realty all work together, the entirety of your short sale, title and closing needs can be handled in one place by one team. No matter if you are buying or selling, if you are considering doing a deal involving a short sale you should contact us today to get the assistance you need.

 

That’s all for this week, be sure to check back next week as we continue to provide you with short sale tips meant to make your life easier.