Experience
The main members of our team have been negotiating Short Sales since 2005. All of the Short Sale negotiation is done “in-house.” We do not send any of our files to a 3rd party Negotiation Company.
Results
Nearly 65% of our business is currently Short Sales. More than 95% of our Short Sale listings successfully close. While we will never guarantee we can close every Short Sale (and we think you should be really leery of anyone that tells you they can), we strongly believe that if it is a deal that can be done, we will get it done!
Process
Our process is actually pretty simple – it’s sometimes the other Realtors Short Sale processes that are confusing and make no sense (we’re somewhat kidding). Here’s our process…
- Prior to taking a Seller’s Short Sale Listing, we collect the “Seller’s Financial Package” from the Seller which entails all of the information their bank has asked for. At this time the Seller also agrees to cooperate within our system and agrees to the process you will read below.
- The day the home goes in MLS we send the Seller's Authorization Form to the bank. This document allows us to communicate with the bank directly.
- We market the property and price the home at, or slightly below, market value until we get an offer
- We are only looking for ONE contract to send to the bank. We are looking for ONE qualified Buyer with an appropriate offer price that has serious intentions on closing the transaction. If we have this, we will fully execute ONE contract to send to the bank.
- We do not send multiple offers to the bank, most ask that we not submit multiple offers – they take long enough to review one offer, why give them multiple offers to review?!
- Once an offer is received, we present the offer to the Seller for their review. While the Seller's bank is the one that approves the Short Sale, the Seller is still the owner of the home and the decision maker on all offers received. The Seller will fully execute the contract if it meets the criteria mentioned above.
- When a contract is fully executed between Buyer and Seller, the home is changed to ‘pending’ in the MLS.
- Once the contract is fully executed, we submit the fully executed contract, a HUD-1, and all of the Seller’s Financial documents to the bank to begin the 60-80 day Short Sale process (this is the average length of processing time – some are much quicker.)
- The bank then does a valuation (BPO, a broker price opinion done by a contracted real estate agent) on what they feel the home is worth, reviews the offer and all corresponding documentation, and finally issues their decision.
- We issue an Acceptance Letter at the conclusion of the bank’s decision or, in rare circumstances, we go back to the Buyer and tell them why the bank will not accept the offer and give them an opportunity to increase their offer.
Frequently Asked Questions from Realtors
How much is owed against the house?
While this question sounds good and is normally asked very innocently, what is owed against a home is irrelevant. The bank is only concerned with two main things:
(1) Market Value of the Property
(2) Amount of the Offer
Banks do not make their decisions on how much they are losing in a particular Short Sale transaction. When a bank takes a home back through foreclosure, they do not turn around and try to sell that property for the amount they were owed, they simply sell it for what its current market value is or a small discount below current market value. The same is true with Short Sales.
How do you know the bank will accept our offer?
We really don’t know with 100% certainty that the bank will accept your offer. What we do know, is that banks are typically willing to accept an offer that is within 90-95% of current market value. We price all of our listings very appropriately so if your offer is at or very near market value, we feel confident that if it is possible to get the Short Sale approved, we’ll get it done.
How long does the Short Sale process take?
The actual negotiation/approval process can take as little as 2 weeks or as much as 3 months. On average most Short Sales take between 60-70 days from the date the offer is presented to the lender to the date of the Short Sale approval. In most cases, 60-90 phone calls and faxes back and forth between the lender and our team are required. Once a Short Sale approval has been received from the bank, the Buyer should be prepared to close escrow within 21-30 days.
Is there a Foreclosure sale date scheduled?
Foreclosure sale date information is public information and can be found by doing a small amount of research online. We get numerous foreclosure sale dates extended or postponed every month so please don’t ever let a sale date scare you away from one of our listings. With a high amount of certainty we can tell you that the Bank will extend/postpone the sale date as long as needed to review a good Short Sale offer.
Why do you “only” pay 2.5% commission to Buyers Brokers?
Contrary to popular belief, all short sale lenders do not pay 6% commission. While Fannie Mae has acknowledged they will pay 6% commission, there are still many lenders today that will not pay more than 5%. When we only pay 2.5%, it's because we’re simply not willing to do all the work involved in getting a short sale approved, and then only earn 2% or less commission. We will advertise 3% commission on a home if we feel it is possible, but in the end it is always up to the bank and we split that 50/50.
Please also understand, there are many times where the 1st lender may agree to pay a 6% commission, but to get the deal approved with the 2nd lender, we have to use some of the commission to meet their required net.
