Just over a week ago I received an offer on one of my short sale listings. And that is where the fun began. Because there is nothing on Earth that compares to a short sale from a paperwork/how many trees can we kill point of view.
As of this writing the short-sale package we submitted is close to 130 pages. I am using a third-party company, ShortSalesExpress.com, to handle the negotiations. I fully believe it when the folks at SSE say that the loss mitigation departments don’t want to talk to agents and often unplug their phones and faxes. I’ve even had the off-the-hook fast busy signals on the fax lines to prove it.
A little bit of the paperwork submitted is peculiar to ShortSalesExpress (and I’ve also had to improvise a bit; for instance SSE’s Short Sale Addendum is less comprehensive than the Arizona Association of REALTORS’ version.)
There will be differences in what each particular lender may require before processing a short sale but here are the near-universal basics:
- W-2s or 1099s for the past two years
- Full tax returns for the past two years
- Pay stubs for the last one to two months
- Checking and savings account statements for the last one to two months
- 401(k) statements for the last one to two months
- Borrowers’ financial statement (essentially an asset/liability sheet)
- Hardship letter explaining why the borrower’s requesting the short sale
- Authorization to release information (allowing the folks working on the sellers’ behalf to discuss and negotiate the loan with the lender)
It’s not an insubstantial amount of paperwork to be sure. And if it sounds somewhat like what you would need to apply for a loan, that’s because it is – except the seller in this case is trying to prove they can’t afford the loan, not that they can. Same paperwork, different purpose to the work.
If you’re debating whether to attempt a short sale, you first should talk to an accountant and/or an attorney to make sure you’re aware of any possible consequences. And then you need to start putting together the paperwork, at least everything except for those with timeframes within the last one to two months as you’ll only end up having to update that down the line.
Short sales are not for the faint of heart … the more prepared you are at the outset, the better your chance of success in the end.
[tags]Phoenix real estate, short sales[/tags]