Short Sales Simplified
Presented By:
The REO Institute of Colorado
• Masters in Real Estate
• Certified Commercial
Education
• Broker/Owner Browning
Group LLC
• Liquidated 115+M REO
Properties/last 3 years
• 25 years of Commercial Real
Estate Experience
• Commercial Director for CB
NRT-17yrs
• National Trainer/CREOBA
• CEO/The REO Institute of
Colorado
James A. Browning
MRE,CEC,FSP,CREO, SFR,
REO Certified, Short Sale Certified
The Distressed Market,
Short Sales, &
Pre-Approved Pricing
2014, 2015, or Longer
Many banks, lenders, & outsourcers are
looking for solutions to our current market
problems.
Unknown Quantity
REO, Pre-Foreclosure, Foreclosure, and/or
Short Sale
What is the solution?
Pre-Approved Pricing
• Increase residential sales
• Spur recovery
• Complete submission package
The Short Sale Prospect
• Distressed market has the potential of
continuing into 2013-2015
• The Broker with education & training can
succeed.
• Have compassion.
• Ask the right questions.
Property Profile
•
•
•
•
•
•
O&E
Understand the financing on the property.
Additional liens on the home.
NED, NOD, NOI filed?
Sale or Auction date?
Order a payoff- either from the mortgage
company or the foreclosure attorney
(10 days)
UNDERSTANDING THE
SELLER’S FINANCIAL
CONDITION OR STATUS
• Is the Seller in financial distress?
• Request the most recent mortgage
statement.
• What are the other financial
stressors?
Seek Tax/Legal Advice
• Recommend the Seller obtains Tax/Legal
Advise
• You are not the expert!
• Provide the client with a letter stating these
recommendations, and have the Seller
receipt for a copy
Acquisition Indebtedness =
• Is incurred by acquiring a property
• Is secured by the residence
• Is secured by the property resulting from a
refinance, but not to exceed the original
indebtedness
Example:
• A borrower refinances an original note, and
then takes a vacation, or purchases a vehicle
• Answer: This indebtedness is taxable
Negative Credit Reporting
• The Seller’s thought process may only be
survival today
• Armed with knowledge, the Seller can take
steps to improve his/her credit
Credit Basics
•
•
•
•
FICO- 35% is made up of payment history
Negative public record information
Severity of delinquency
How recent is the delinquency, and the
number of items on file
• Number of accounts paid as mutually
agreed upon
Late Payments
• It is possible to negotiate a short sale
without late payments, however it is more
difficult
• Both HAFA and FHA require that the seller
be delinquent, and display a negative cash
flow
Short Sale Listing
Documents
• State or Division required listing contract
• Short Sale Addendum
• Seller Authorization Letter
Approaching the Lender –
What’s Next?
• Is the lender open to a short sale?
• What will the conditions be?
• Fannie Mae or Freddie Mac are more
motivated then private lenders
• Discuss and negotiate what the seller wants
from the lender
LOSS MITIGATION DEPARTMENTS,
WHO?
What department?
Who? What?
Wrong number…
“Who’s on first base?”
Get past the call center!
• Loss Mitigation Department
• Default Managers
• Persistence
• Objective- Where do I need to send the
short sale package?
GETTING ALONG WITH THE LOSS
MITIGATION DEPARTMENT AND
PREPARATION OF THE SUBMISSION
PACKAGE
Submission Package
• One time, with all required docs
• Installments = rejection
• What should be included?
Listing Agreement
•
•
•
•
Listing Agreement
Short Sale Addenda
MLS
Website Advertising, Flyer, and any other
marketing or advertising
MARKETING THE
SHORT SALE LISTING
Accurately Market
• Listing Broker – your responsibility to
accurately represent your listing!
• Continue your education and designations!
Timeframe for Lender’s Response
•
•
•
•
Could be the most frustrating aspect
One week… Six or seven months…
What is the requirement for the lender?
The property may have to be listed for a
period prior to acceptance of short sale
• Your expertise can make the transaction
much smoother!
Problems and Pitfalls
• Loss mitigation departments are overwhelmed
with loan modifications, short sales, &
foreclosures
• Subject to final senior management approval
• Private mortgage insurance
• When your negotiator is no longer employed
there…
Lender Takeovers and Merging
• Reasons – Government influence, cost
cutting, bank failure, contract issues,
etc
• Decisions are now delayed, who has
the file now
• Be prepared to re-submit all docs!
This is everyone’s main concern
What’s the loss and deficiency?
Buyer Cooperation
• Is the Buyer serious?
• Is the Buyer going to be patient?
• Is the Buyer going to complete inspections
and appraisals?
Education
• Laws, programs, & regulations are
changing constantly
• Be familiar with state regulations
• Knowledge, disclosure, compliance
Thank you!
The REO Institute of Colorado
Congratulations on
becoming
Short Sale Certified