It is no secret that Short Sales are a pain in the neck to work with and ultimately complete. There are untold stories of buyers who put homes in escrow on a short sale purchase and after signing every disclosure stating that yes they “understand” and will be waiting anywhere between 4 – 8 months to close escrow?
Buyers acknowledge this at time of contract and yet 3 weeks later they grow impatient and begin wondering why they have not closed on their home. Within two months they are seething and frustrated with the whole process. They ask for their earnest deposit back, cancel the sale and all the work and energy put into the deal has gone to waste. As someone who has worked with banks on several short sales I have learned a few secrets to actually getting a deal to go through. As an investor you may be staying away from short sales because of all the horror stories you have heard. I am here to tell you that if you know how to work with lenders you may actually pick up some great deals.
The first thing to do in a short sale is the lender contact step. As an investor get written permission from the borrower to contact their lender. There are various forms available for this, and the lender may have their own required form. However, the main goal is to get the borrower to name you as a person authorized to discuss their situation with the lender. You will be contacting the loss mitigation department or the person named in letters to the homeowner.
This is your most direct contact, thus the most efficient. It would be best if you contact them by phone with the borrower present. That way they can ask the borrower questions if necessary. In this step, you're starting to build a relationship with the loss mitigation group in order to get help through the process, request an outline of what they want and how they will make a decision on a short sale
· Find a contact person at the bank – Find 1 person whom you can use as a consistent contact at the bank or mortgage company. This is usually a person in the loss mitigation department. On your initial contact ask who will be handling your file and ask for someone in authority. Explain to them you are going to do everything you can to make the deal as painless as possible for them and you are willing to submit any and all paperwork needed to help them make a decision. You may have to speak to a few people in the process before settling on 1 contact person.
· Ask specifically and precisely what paperwork is needed to facilitate the short sale and do not veer from this in any way. Ask in which order the paperwork should be in and submit in that order (no exceptions). Once you have submitted the paperwork in perfect order follow up with a phone call to be sure the lender has received it and if everything is in order.
As an investor, you will be putting a huge amount of time and effort into preparing a short sale package and submitting to the lender. You have gathered all types of information and documents, including financial statements, medical bills, divorce decrees, tax returns and more. Don't waste an excellent package with poor lender relations.
Once you get an approval, the statement that they will accept a “short payoff,” act quickly to pull the closing together. Most approvals have a time limit, many only 30 days. If you aren't closed within that time, the deal could be over forever.
Look, it will ber a pain to work with some of the banks out there, especially since many are overwhelmed right now. Spend the time to work exactly the way they want you to and you will likely make some great deals
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