Short sales seem to be an unfortunate inevitability in this business. There are a host of reasons not to accept short sale listings and one very compelling reason to do so – to help someone in need get out from under.
About a month ago I was contacted by the daughter of an owner who needed to sell his home as a short sale. After a couple of conversations with her and one with her father, we put the home on the market. You may remember it from a previous post …
The key to the short sale, I explained to the owner, was receiving an offer. Once we had an offer in hand, then we could go to the lender and find out what they’re really willing to take for the home to avoid adding it to their own inventory.
This home went on the market the second week of November. We received a contract yesterday. And this is where the fun begins.
There are a number of pieces of information the lender needs to process a short sale. It’s about the same as trying to qualify for a loan except in the case of a short sale, you’re trying to prove to the lender that you can’t pay the loan any longer:
- Bank statements
- W-2’s or 1099’s
- Tax returns
- Hardship letter
- Financial statement
I also needed the seller to sign a release that will allow to speak with the lender about his loan. That’s about as far as I got here on Day 1 – without that release in the system, there isn’t anything the lender will do with me on the phone.
Today’s also the day I changed the status of the listing in the Arizona Regional MLS to Active With Contingencies – Sellers’ Instructions. It would have been possible for me to have the seller not sign the contract and keep the listing as Active, but having been on the buyers’ side of that equation I’ve got some ethical issues with that practice.
Lastly, I stopped by my favorite title company and had a HUD-1 settlement statement put together to show to the lender. This allows the lender to estimate its net at a glance.
Up next – verifying receipt of the release and moving this show from collections to the loss mitigation department.
[tags]Phoenix real estate, short sales[/tags]