Short sales can be anything but short, most are filled with pitfalls.
When it comes to short sales there are a lot of similarities and most follow a format, yet no two are exactly the same. We’ve been seeing people all over the country who are in arrears in mortgage payments, those who are upside down on their loan, meaning more is owing on the home than current market value. It’s happening in many places and some states are harder hit that others. Namely California, Arizona, Florida and Nevada where record defaults have been recorded.
In addition, the number of strategic defaults have increased, meaning those who remain employed and/or are able to make mortgage payments have decided to forgo home-ownership and bail from a property with a loan balance in excess of the market value. So understanding the numbers are over whelming is understanding pitfall #1. Volume. It’s my belief most lenders did not/do not have the numbers of staff and personnel to handle the work load, which in turn can cause delays.
The overall short sale process does vary from one lender to another, what worked or was acceptable for one lender differed with another. So for too many agents/REALTORS it was like on the job training, learn as you go. Many of the agents were learning the processes right along with the asset managers working for the lenders adding to the length of the process. And while that’s improved greatly with most lenders making things more systematized the processes still have their differences. So pitfall #2 is working with an agent who doesn’t understand the process, systematizing the short sale processes.
When it comes to a short sale a lot is expected of the home owner for short sale approval. Borrowers need to be willing participants, meaning they are required to provide needed documents e.g. tax returns, pay stubs, bank records/etc. And I can tell you first hand it’s not always easy, especially if a seller is going through a divorce or experiencing a job loss to gather this information. Seller delays or worse yet not being properly prepared is pitfall #3.
So now that you understand the most common pitfalls when it comes to short sales, what can you do about it?
- Work with an experienced REALTOR who knows and understands the short sale process. Ask if they have experience working with your specific lender(s).
- Contact your lender and ask how you begin the short sale process.
- Provide written authorization for your REALTOR to negotiate on your behalf with your lender.
- Be ready to work with with an offer the minute you accept one, begin gathering your personal information, copies of tax returns, bank statements & pay stubs.
So now that you’ve finished this class, if you or someone you know needs help with a short sale contact me, your instructor, Lynda@PreferredHomeBrokers. If you’re out of our area I can refer you to a competent, knowledgeable REALTOR in you area.