The Package

The technical skill involved in getting a short sale approved by the Seller’s lender starts with knowing which sellers are good candidates for a short sale and which are not. For instance, someone who is simply “upside down” but can otherwise afford to pay the deficiency is not a good candidate. Just because the seller says he cannot afford to pay is not sufficient. The agent will have to look closely at the seller’s complete financial profile (income, assets, liabilities, credit rating). I’ve come across a few short sale listings where the listing agent did not do her homework, and thus is really just wasting everyone’s time. The rest of the technical skill comes from knowing how to assemble and deliver a good “package,” providing all the information that the lender will need to make their decision. Each lender may have a different “punch-list” of documents that they require.

Patience

Patience is not only a virtue but a requirement in a short sale. It is required of everyone: the seller, the buyer, the buyer’s lender, and of course, the agents involved. One deal I did recently took 3 months before getting approval. Keep in mind this was three months of NOT knowing if they would approve the sale. They could have taken all that time and then told us NO. During the wait, it is possible that interest rates rise, making the property less affordable to the buyer. The buyer’s lender will want to “lock-in” an interest rate, but most rate locks expire after 30 days. That’s not likely to be enough time. And it can be awfully frustrating for the seller, who is trying to “do the right thing” and not walk away from the property, and is otherwise trying to move on with his life. All the while, the listing agent is trying to follow up and inquire about the status of the package, only to not have repeated voice messages to the lender left unreturned.

CHECK BACK FOR PART III - Short Sales: Negotiating with the Lender

Written by: Brett Weinstein