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Short Sale Practice Pearl Zavertnik Real Estate Investor Loss Mitigation Specialist SJREI November 17, 2009 1


Short Sale Process •Realtor Short Sale Vs. Investor Short Sale •HUD-1 Vs. Net Sheet •Success Rate

•What Short Sale is and What it is Not •At the lenders discretion •Not an Entitlement

•Short Sale Documents • • • • • •

Authorization to Release Information Offer/Cover letter Financial worksheet/Bank forms Mortgage statements 2 months pay stubs or Unemployment statements 2 months Checking/Savings

• • • • • • •

401K or other retirement stmts 2 year tax returns Listing agreement CMP/BPO/Repair list Purchase Agreement Proof of Funds HUD1 or Net Sheet 2


Short Sale Practice •

Short Sale Process 1. 2.

Home owner to listing agent Documentation and CMA or BPO 1. 2. 3. 4.

3.

Buyer and selling agent 1. 2.

4. 5. 6.

Financials - summary, income, checking/savings Personal - hardship, tax returns, Property - CMA/BPO, purchase/listing contract, repairs Communication -cover letter/offer letter, contact info, HUD1 Lender selection Exit strategy

Complete package submission Verification of package in the system Follow up and negotiation • • • • •

Purchase price Closing cost Escrow length 2nd payoff Promissory notes

7. Submit supporting documents as necessary 3


Short Sale Practice •

Common Short Sale Mistakes • Top 10 List 1. Inadequate education • • •

Know what ss is - not an entitlement Time frame for the process Deal with the lender as loss mitigation specialist

2. Dealing with Suspects not Prospects • • • •

They have at least the light hardship Overleveraged - not hardship Home owners attitude Ss is not short STAY - ready to move!

3. Lack of Funding •

More down payments, seasoning, first time buyers

4. Not knowing the real value of the property • • •

You are the professionals - know how to do this 10 comps - 2 high and 2 low Apples to apples; bed/bth/sq ft/year/distance 4


Short Sale Practice •

Common Short Sale Mistakes • Top 10 List 5. Unrealistic Offers 6. No Exit Strategy • • •

Resell- flip, retail, assign Equity - reinstate and short 2nd Find buyer instead

7. Not knowing the jr. liens • •

Do your title search Ex: 3rd, 4th + income tax lien

8. Incomplete short sale package •

Each document update will take +2 weeks

9. Not understanding the BPO process •

This is where you justify your price - Be there!

10. Giving up too easy •

Demand new BPO, send local info, etc

5


Short Sale Practice •Changes in Short Sale Processing •Government Mandate •Mandatory loan mod review - MHA program •Pros and Cons

•Lenders and their investors •Being educated •Correcting the original errors

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Short Sale Notes 2