Most lenders require that the home be listed before they will consider a short sale. They want to be sure the home has been exposed to buyers and an attempt has been made to obtain a contract at today’s market value.

It is important for the borrower to work with a Realtor who is experienced in short sales.  This is a complicated process and the successful completion of it requires patience, skill, and expertise.

Here are few things the Realtor must know how to get accomplished:

• Establish contact with the lender’s loss mitigation department. Contact the loss mitigation department, rather than the collection or customer service departments, which are only interested in collecting payments.
• Obtain a signed authorization from the seller that allows the Realtor to speak with the lender in their behalf. Include their social security number and date of birth because this information is often needed to verify the account.
• Obtain mortgage information from the seller.  Name of lender, loan numbers, and phone numbers.
• Order a title search on the property to research liens and judgments. All of these are expenses in the sale and will appear on the HUD-1 settlement statement.
• Order payoffs so that you know the exact numbers for the settlement statement.
• Order a status letter from the Home Owner Association because many times there are back HOA fees.
• Order a short sale package from the lender.  Some provide them, some don’t. If the lender does not have their own package the Realtor must create one of their own.
• Assist the borrower in compiling the documentation needed for the lender.
• Assist the buyer in obtaining a mortgage pre-approval and counsel the buyer regarding the short sale process.
• Provide access for the BPO or appraisal.  Provide comps if needed.
• Assist the seller/buyer in obtaining repair estimates.
• Negotiate, negotiate, and negotiate.  Negotiation skills are a must.
• Stay in touch with the lender throughout the process.

Do lenders approve all short sales? No, but they do NOT want to take the property back through foreclosure. It is often necessary to remind the loss mitigator that the goal is to sell the home and avoid foreclosure. For this reason your Realtor should be a skilled negotiator

How long will a short sale take? Short sales can be very time consuming and require patience from everyone involved: seller, buyers, Realtor, and lender. Most lenders won’t even look at your package until you have an offer. Then they want the whole package sent at one time. Approval may take two weeks to two months. Some short sales may take as long as 3-4 months from beginning to end.

The Lender has the final say. Remember, the lender is the one who approves the short sale 100% of the time. Therefore, your proposal must make sense to the lender. Your Realtor’s job is to convince them that the buyer’s offer is better than taking the property through foreclosure. If there is more than one lender, your Realtor will have to negotiate with each of them separately.

(Copyright © 2007 By Dan Forbes, All Rights Reserved. This material is excerpted from Everything You Need to Know About Short Sales, by Dan Forbes)