As a Realtor
Why a Seller Might Want to Accept a Second Short Sale Offer as Back-Up?
The seller wants the bank to accept the short sale.
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Banks usually accept short sale
offers that are near market value.
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1-800-328-2008
As a Realtor
Why a Seller Might Want to Accept a Second Short Sale Offer as Back-Up?
The reasons to accept a second short sale offer in back-up and to submit that
offer are:




The second buyer is mightwww.Mckissock.com
be more qualified to buy than the first buyer.
The first buyer might not be 100% committed to buying the short sale.
The first buyer's price might be too low.
The seller might not have to make a seller contribution with a higher sales
price.
 The seller might reduce the deficiency, if the 2nd offer price is higher.
 The seller's tax liability could be reduced with a higher offer.
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As a Realtor
What is a Short Sale Addendum?
You want to use a short sale addendum with your offer to purchase, Many
state REALTOR® associations endorse the short sale addendum but not all of
them do. If not create your own.
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Release of funds, Repairs, Able to submit other offers, the seller's bank may
demand to see all the offers , extra costs not outlined, the Seller can accept
higher offer, seek legal advice
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1-800-328-2008
As an Investor who found a short sale.
Execute a Purchase and Sale Immediately list these properties for sale on the
Multiple Listing Service to attract a buyer while you are working the short sale.
You make an offer to the bankwww.Mckissock.com
as THE BUYER. Your offer must be 10% to 20%
less than what a retail customer is willing to pay.
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As a Realtor Investor
If you do not get an end buyer, you won’t be able to finalize your offer to
purchase from the bank. You will lose the short sale.
The time to locate a buyer that converts to a cash closing takes about 90 days.
You want to identify the downsides
of each deal.
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Then only if the seller is motivated and easy to work with do you start working
with them.
You could find a financial partner
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1-800-328-2008
As a Realtor Investor
Know your product and exit strategy
An investor won’t buy a $3 million dollar luxury home as it won’t provide
positive cash flow if leased.
You can’t sell a $73,000 fixer upper
to an end user as there is no bank
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financing
All opportunities you are reviewing are calculated by L.T.V. (loan to value). If
you find a short sale property that is worth $200,000 your goal is to purchase
at 50% L.T.V. or half the value. If the lender’s loan is 200K, it will have to forgive
half it’s balance.
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1-800-328-2008
Feedback Question 15.
The seller of the property agreed to a commission
of 6% to be split with the two agents in the
transaction. When the transaction closed the
Buyers agent only received 2% commission. Who
should she seek damages from?
A
Her Broker
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B
Seller
C
The bank
D
Sellers agent
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1-800-328-2008
Feedback Question 15.
The seller of the property agreed to a commission
of 6% to be split with the two agents in the
transaction. When the transaction closed the
Buyers agent only received 2% commission. Who
should she seek damages from?
A
Her Broker
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B
Seller
C
The bank
D
Sellers agent
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1-800-328-2008
As a Realtor Investor
Mail
Mortgage
Brokers
Divorces
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LEAD
GENERATION
Lis
Pendens
Other
Realtors
Expired
MLS
www.McKissock.com
We Buy
Houses
sign
1-800-328-2008
As a Realtor Investor
The most common default list is called a Notice of Default List.
Because the lenders have already filed a foreclosure notice – Lis Pendens- at
the courthouse, this information is in public records.
You could find this information
by going to the courthouse. 50% feel it is a
www.Mckissock.com
better use of time to buy the default list from a list company. 50% feel the
data is freshest if they retrieve it themselves
Review properties by the price. More expensive properties usually mean
more profit and less risk.
There is also a Pre-N.O.D. A very large list because so many people are 30, 60,
or 90 days behind on payments. They have not received a foreclosure notice
yet.
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1-800-328-2008
As a Realtor Investor
If you have access to MLS search terms, first
look where the term short sale appears. It
might be under "status modifier" or it might
be contained in the marketing comments.
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Look for the following terms:
 Subject to bank approval.
 Pre-foreclosure
 Give the bank time to respond.
 Preapproved by bank.
 Notice of Default
 Possible auction
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1-800-328-2008
As a Realtor Investor
As an investor you are looking
for attractive properties that
families want to live in.
Esp. those over leveraged with
multiple mortgages.
Fixer upper houses that we will
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resell to an investor.
Usually the homeowner must
be in default a minimum of 60
days (two payments) to be
able to begin the negotiations
with the bank.
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1-800-328-2008
As a Realtor Investor
Many times you can negotiate
large discounts on the second
mortgage.
Then bring the first mortgage
out of foreclosure.
Then rent the property.
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NEVER lease the property back
to the homeowner.
Never lease back to the current
owner as the court system
would be extremely lenient
with him
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1-800-328-2008
Feedback Question 16.
Generally a homeowner needs to be ________
days in arrears before negotiations with the
banks can begin.
A
45
B
90
C
60
D
120
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www.Mckissock.com
1-800-328-2008
Feedback Question 16.
Generally a homeowner needs to be ________
days in arrears before negotiations with the
banks can begin.
A
45
B
90
C
60
D
120
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www.Mckissock.com
1-800-328-2008
As a Realtor
Before you take the listing or work with Buyers its important to know
why Buyers might not want to buy a Short Sale:
Some of the reasons why Buyers might not want to buy a Short Sale:
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Seller Paid Too Much.
The home sold for $450,000 a few years ago and is now for sale at
$325,000. The Buyer imagines they are getting $125,000 of equity. It
usually means the current owner paid too much and there is no equity in
the house
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1-800-328-2008
As a Realtor
Some of the reasons why Buyers might not want to buy a Short Sale:
Seller Borrowed Too Much.
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Banks over lent money in on 1st, 2nd mortgages and HELOC’s over the last
several years.
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1-800-328-2008
As a Realtor
Some of the reasons why Buyers might not want to buy a Short Sale:
Length of Time to Close.
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It could take anywhere from two weeks to two months to get a response
on a purchase offer from a lender. In addition, if two lenders are involved
because there are two loans secured to the property, it could take longer
to negotiate with the second lender.
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1-800-328-2008
As a Realtor
Some of the reasons why Buyers might not want to buy a Short Sale:
Lenders Can Change Conditions.
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Some lenders reserve the right to renegotiate the terms of the short sale
at the last minute. If the market changes, new laws pass or new
information crosses the lender's desk, the lender can attempt to change
the terms of the contract. Lenders generally have lawyers at their
disposal, and ordinary buyers do not.
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1-800-328-2008
As a Realtor
Some of the reasons why Buyers might not want to buy a Short Sale:
Lenders Discount Commission.
Usually only lenders who have sold loans to Fannie Mae or Freddie Mac
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are paying traditional real estate
commissions to real estate agents. The
others usually want a discount. The agents end up doing two to three
times the work of a conventional transaction – for less than usual
commission.
If the Seller agreed to pay your agent a certain percentage under a buyer
broker agreement, you/ your Broker could be liable for the difference
between what the lender will pay and what your contract stipulates, if
the Buyers agent refuses to waive the difference.
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1-800-328-2008
As a Realtor
Some of the reasons why Buyers might not want to buy a Short Sale:
Higher Buyer Closing Costs.
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Lenders rarely will pay for any extras, like a seller would be willing to do,
if you/ your Buyer wants any of those extras, you will pay for them
yourself. Lenders might refuse to pay for standard seller closing costs
such as transfer taxes, etc. Specific inspections you will probably pay outof-pocket.
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1-800-328-2008
As a Realtor
Some of the reasons why Buyers might not want to buy a Short Sale:
Lose Control of Transaction.
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If you need to close escrow by a specific date it will be difficult. A short
sale closing process takes an indefinite amount of time. The seller's
lender takes whatever time he wants. If you/ the Buyer are trying to
close escrow at the sale of your current home, it might not happen.
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1-800-328-2008
Poll Question 17.
Barbara Ann was acting as a Realtor
Investor. She knew she was getting the
short sale property far below market and
she planned to rent it. She had been
working with the owner and they wanted
to rent the home instead of moving. This
would be smart move for Investor Realtor
Barbara Ann as she wouldn’t have to make
any repairs, clean up or have thewww.Mckissock.com
property
vacant.
A
TRUE
B
FALSE
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1-800-328-2008
Poll Question 17.
Barbara Ann was acting as a Realtor
Investor. She knew she was getting the
short sale property far below market and
she planned to rent it. She had been
working with the owner and they wanted
to rent the home instead of moving. This
would be smart move for Investor Realtor
Barbara Ann as she wouldn’t have to make
any repairs, clean up or have thewww.Mckissock.com
property
vacant.
A
TRUE
B
FALSE
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1-800-328-2008
As a Realtor
Some of the reasons why Buyers might not want to buy a Short Sale:
Little Seller Motivation.
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When the seller discovers that the short sale effect on credit is close to
that of a foreclosure, the seller often stops cooperating. Although sellers
may qualify to buy another home in 2 years after a short sale versus 5
(with restrictions) on a foreclosure, some have no intention of ever
buying another home again.
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1-800-328-2008
As a Realtor
Some of the reasons why Buyers might not want to buy a Short Sale:
Excessive Repairs.
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Your end buyer will not be able to get a lender to loan on any property
when the repairs exceed 5% of the appraisal.
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1-800-328-2008
As a Realtor & Investor
DEALS YOU DON’T WANT
 The seller will not sign all the
documents you present.
 The loan requires a short sale to create
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equity and the seller/debtor wants cash
 Spouse involved but not willing to sign
disclosure package
 Seller is angry or not trusting
 House requires many repairs and you
plan to sell it to a person who wants to
live in it
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1-800-328-2008
Feedback Question 18.
Short sales sound like a great opportunity.
However many homeowners stop taking care of
the house perhaps months before the
foreclosure starts. If the repairs exceed the
appraisal by _____ percent the bank generally
won’t lend on them.
A
2
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B
10
C
5
D
20
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1-800-328-2008
Feedback Question 18.
Short sales sound like a great opportunity.
However many homeowners stop taking care of
the house perhaps months before the
foreclosure starts. If the repairs exceed the
appraisal by _____ percent the bank generally
won’t lend on them.
A
2
www.Mckissock.com
B
10
C
5
D
20
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1-800-328-2008
As a Realtor & Investor
DEALS YOU DON’T WANT
 The interior B.P.O. is complete, came in
way to high, and you have no compelling
reason to convince the lender to do
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another one
 Seller is currently in Chapter 13, 7, or 11
business bankruptcy
 Seller demands their attorney be
involved through every detail
 The subject property is below the
median price range and you want to sell
it to an end user
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1-800-328-2008
As a Realtor & Investor
DEALS YOU DON’T WANT
 Short Sale is in a townhouse or
condominium
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 You determine there is no
way to
generate a 10% or greater margin
 The mortgage is with an undesirable
lender known for time-consuming
challenges
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1-800-328-2008
As a Realtor & Investor
SHORT SALE HOME RUNS
 A single family house $200,000 above
your median (most common price)
range
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 A property that needs minimal repairs
that will garner a low Brokers Price
Opinion
 A property with a mortgage that has
seasoned a minimum of 12 months
since it was written
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1-800-328-2008
As a Realtor & Investor
SHORT SALE HOME RUNS
 The same property with multiple
mortgages and preferably a 30% second
or third mortgage combination
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 These subordinating mortgages
(seconds, thirds, etc.) are institutional
and not privately held
 Seasoned neighborhood without new
construction near or around your
prospective short sale deal
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1-800-328-2008
As a Realtor & Investor
SHORT SALE HOME RUNS
 Any property that is superior to
competitive listings in the eyes of a
buyer, i.e. bigger lot, in law apt., bigger
rooms, garage great room,
views, pool,
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square footage, building materials and
upgrades such as crown moldings,
granite, etc.
 A property with an appealing location Downtown, lakefront, high-rise,
riverfront
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1-800-328-2008
Feedback Question 19.
When a Realtor Investor is considering a Great
Opportunity which of the items below would
NOT be a great thing.
A
B
C
A single family house $200,000 above
your median (most common price) range
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A property in a new neighborhood, that
attracts lots of buyers
A property with a mortgage that has
seasoned a minimum of 12 months since
it was written
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1-800-328-2008
Feedback Question 19.
When a Realtor Investor is considering a Great
Opportunity which of the items below would
NOT be a great thing.
A
B
C
A single family house $200,000 above
your median (most common price) range
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A property in a new neighborhood, that
attracts lots of buyers
A property with a mortgage that has
seasoned a minimum of 12 months since
it was written
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1-800-328-2008
CHAPTER 3
DEALING WITH
THE
HOMEOWNER
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As a Realtor
www.McKissock.com
As a Investor
1-800-328-2008
As a Realtor & Investor
At the onset dealing with people in Short
Sale situations is usually trouble.
Many are in denial or many
are just begging
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for any kind of hope or lifeline they can get.
Not the time for any false hope, by the time
they contact you or you find them it is
nearly always too late
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1-800-328-2008
As a Realtor & Investor
Lenders seldom modify the loan on
property for the homeowner. They could
offer a mortgage work out plan called a
forbearance of mortgage modification.
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The owner has to prove income
etc..
85% of these fail.
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1-800-328-2008
As a Realtor & Investor
The Owner doesn’t realize that once he
stopped paying his mortgage many costs
and fees were added to the past due
amount. $1000’s of dollars in late fees,
penalties and legal fees have www.Mckissock.com
all been
added to the 3 missing payments.
At 3 months they seldom will find the
funds to pay it back.
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1-800-328-2008
Poll Question 20.
Generally if a homeowner starts the short
sale before 3 months he can avoid late fees,
attorney fees, bank fees.
A
TRUE
B
FALSE
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1-800-328-2008
Poll Question 20.
Generally if a homeowner starts the short
sale before 3 months he can avoid late fees,
attorney fees, bank fees.
A
TRUE
B
FALSE
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1-800-328-2008
As a Realtor
At this point many owners expect some money for their house. You
have to tell them it is illegal for them to receive a penny.
Why should a home owner walk away with nothing?
 Closure
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 Dignity “Yes, I sold my house”, not “I lost my house to
foreclosure”.
 Possibly a smaller loan deficiency sale. As mentioned previously;
Deficiency refers to the loss or deficient amount owed that is
incurred once the house goes to fore-closure and gets resold as a
bank-owned
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1-800-328-2008
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1-800-328-2008
As a Realtor
As previously discussed, as a Realtor attempting to get the listing you
will have three choices:
 Take the listing – Negotiate with the bank
 Take the listing – The Owner negotiates with the bank
 Offer a list of Short Salewww.Mckissock.com
experts to the Owner
Some states require or expect the Listing agent to be the negotiator
with the bank. With sole compensation being the commission.
The Seller might also expect the Listing Agent to be the guide through
the forest- With sole compensation being the commission.
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1-800-328-2008
As a Realtor
Another alternative would be the Listing Agent submits a list of
known 3rd parties who provide usually highly skilled negotiation
services for the Seller with the lender.
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Occasionally the Seller will handle the Doc Package, Lender etc
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1-800-328-2008
As a Realtor
As previously discussed, the Listing
Agent has much liability.
It is imperative the agent follow
State and Federal laws to the letter.
 Identify contingent statuswww.Mckissock.com
(when
it is approved by the Lender)
 Short Sale Addendum
 MLS disclaimers
Many more
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1-800-328-2008
As a Realtor Investor
At the introduction process you
will disclose to the seller that
your intentions are to create a
discount so you can quickly
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resell the property for a profit.
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1-800-328-2008
Feedback Question 21.
Fannie Mae has stated that they will lend to
a homeowner with in 2 years on a
foreclosure situation and 7 years on a short
sale situation
A
TRUE
B
FALSE
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www.Mckissock.com
1-800-328-2008
Feedback Question 21.
Fannie Mae has stated that they will lend to
a homeowner with in 2 years on a
foreclosure situation and 7 years on a short
sale situation
A
TRUE
B
FALSE
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www.Mckissock.com
1-800-328-2008
As a Realtor
Inform the Owner if you can’t find a buyer
to sell the property, it will probably go to
foreclosure and the seller will lose the
house.
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Once the owner completely understands
the severity of the situation you need to
share the upcoming challenges.
They must be willing to comply with the
requests for documentation you will need.
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1-800-328-2008
Many owners are despondent and don’t
want to cooperate.
As a Realtor
Some of the paperwork will need to be
signed more than once.
There is a long timeline to close.
At the closing you must completely
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disclose the final negotiated loan
balances to the homeowner. The
homeowner has to sign off.
If the owner moved out of state, you
send the proper documentation down to
a notary where he now lives and gets the
homeowner to sign the documents.
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1-800-328-2008
As a Realtor Investor
Before you spend serious time on a short
sale property perhaps a quick title search
at the courthouse.
In some states you can request an O & E,
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which stands for Owner and
Encumbrances.
A formal title search will ultimately be
done.
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1-800-328-2008
As a Realtor Investor
You must have a P&S agreement and
all other docs before you do any
work on the sellers behalf. You
must let the seller know there is no
guarantee as to the outcome.
Because you make no guarantees
you must have sellers sign extensive
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disclosures.
Your work should net the lender
more than if the property were to go
to foreclosure and become an REO
Real Estate Owned. An REO
property is now in full repossession
by the lender.
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1-800-328-2008
As a Realtor Investor
 You will have the Seller sign a Purchase and Sale Agreement naming
you as the Buyer
 You will get a listing agreement
 Appropriate Short Sale Addendum
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 Many investors have specialized documents due to the exit strategy as
well as hold harmless clauses.
 Your paperwork needs to be recorded on the title with the city to
ensure no other investors get involved.
 You need to drop the price on MLS by X amount every 2 weeks. Good
for you and the bank likes to see it.
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1-800-328-2008
Feedback Question 22.
Investor Realtor Gissele has found a short sale
opportunity. She informed the seller that she
was doing this make a profit. As a Realtor she
was hesitant to sign a Purchase & Sale
agreement naming herself as Buyer. Gisele was
smart to do this because:
A
She wants to sell it to someone else
B
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She doesn’t want the bank to know she is
an Investor Realtor
C
She doesn’t want the buyer to know she
is going to make money on the house.
D
Investor Realtor Giselle was in error and
should sign the P&S agreement
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1-800-328-2008
Feedback Question 22.
Investor Realtor Gissele has found a short sale
opportunity. She informed the seller that she
was doing this make a profit. As a Realtor she
was hesitant to sign a Purchase & Sale
agreement naming herself as Buyer. Gisele was
smart to do this because:
A
She wants to sell it to someone else
B
www.Mckissock.com
She doesn’t want the bank to know she is
an Investor Realtor
C
She doesn’t want the buyer to know she
is going to make money on the house.
D
Investor Realtor Giselle was in error and
should sign the P&S agreement
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1-800-328-2008
CHAPTER 4
THE SHORT SALE
DOCUMENT
PACKAGE
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As a Realtor
www.McKissock.com
As a Investor
1-800-328-2008
As a Realtor & Investor
SELLERS & BUYERS AGENT
The area of negotiations is where all the
profits lie. Your challenge is to get the
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lender to take the least amount
of money
possible.
As a Listing Agent your only fiduciary
responsibility would be to try to decrease
the deficiency
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1-800-328-2008
Collecting the
short sale
package determine
strategy
Contacting the
collections
department
Step 1
Step 3
File
assignment
period
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Step 2
Actual
mitigation
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Step 4
Pre-mitigation
Step 5
The closing
Step 6
Step 7
Fighting for
equity (profit)
1-800-328-2008
As a Realtor
 Listing agreement
 Executed purchase offer
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 Buyer's pre-approval letter
and copy of earnest money check
 Seller's short sale package
 If the package is incomplete, the short sale process will be
delayed. In this event, the bank might even shred the package.
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1-800-328-2008
As a Realtor
THE PLAYERS
Collection Department
www.Mckissock.com
Does not process short sales. This department provides necessary
supporting documentation information, needed to close your short sale.
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1-800-328-2008
Feedback Question 23.
As a listing agent your fiduciary
responsibility is to guide and assist the
seller in all the processes necessary to
execute the short sale.
A
TRUE
B
FALSE
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www.Mckissock.com
1-800-328-2008
Feedback Question 23.
As a listing agent your fiduciary
responsibility is to guide and assist the
seller in all the processes necessary to
execute the short sale.
A
TRUE
B
FALSE
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www.Mckissock.com
1-800-328-2008
As a Realtor
THE PLAYERS
Loss Mitigation Department
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It’s the Loss Mitigators in this department that actually process the file.
You will be speaking to upper level management such as team leaders,
supervisors, and managers as you encounter impasse areas during your
short sale.
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1-800-328-2008
As a Realtor
THE PLAYERS
Delegated Authority
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All lenders have a predetermined amount they will accept as a discount.
It’s always a percentage of the broker’s price opinion and generally
ranges from 60 - 92%. So because FHA has a delegated authority of 82%
of a B.P.O. on a deal that has a $100,000 B.P.O., for example, they would
accept $82,000 as a short sale even if the existing loan balance was
100% of the B.P.O. or $100,000!
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As a Realtor
It is ill-prudent to submit a short sale package and start making offers. In
today’s world of Loss Mitigation, it takes a minimum of 30 days for the
package you submit to even be assigned to a mitigator. Occasionally
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there are exceptions. Some banks may have a mitigator assigned in as
little as five business days, not 30.
If they have a B.P.O. and your offer is too low the mitigator will turn
down your offer. Usually the mitigator doesn’t even bother to tell you
your offer was declined.
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As a Realtor Investor
DOCUMENT PACKAGE
The lender needs the Debtor’s
financials to determine if they
are
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eligible for a short sale. Another
component of the short sale package
is the supporting documentation that
explains why the lender should
consider this house as a bank asset
that has lost significant value
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Feedback Question 24.
Realtor Investor Jim turned in a short sale
package to the Loss Mit department. Jim
was confident the offer and package was all
in order. To his surprise the bank had done
a BPO the previous week. Should Jim have
expected this?
A
YES
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B
NO
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1-800-328-2008
Feedback Question 24.
Realtor Investor Jim turned in a short sale
package to the Loss Mit department. Jim
was confident the offer and package was all
in order. To his surprise the bank had done
a BPO the previous week. Should Jim have
expected this?
A
YES
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B
NO
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As a Realtor Investor
THE FILE ASSIGNMENT PERIOD.
The file assignment period is the number of
days it takes for the Document package to be
assigned to a loss mitigator. The amount of
www.Mckissock.com
time varies. It can be 3 days, or it can be 30 to
60 days. You will need this time as this is when
the property is placed on MLS, and reducing
the price every 2 weeks to find a buyer.
Nearly always the file must be 60 to 90 days
in arrears, and moved from Active Collections
to Loss Mitigation before it is even considered
for a short sale.
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1-800-328-2008
As a Realtor Investor
THE FILE ASSIGNMENT PERIOD.
The file assignment period is the number of
days it takes for the Document package to be
assigned to a loss mitigator. The amount of
www.Mckissock.com
time varies. It can be 3 days, or it can be 30 to
60 days. You will need this time as this is when
the property is placed on MLS, and reducing
the price every 2 weeks to find a buyer.
Nearly always the file must be 60 to 90 days
in arrears, and moved from Active Collections
to Loss Mitigation before it is even considered
for a short sale.
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As a Realtor for Buyer / Seller
SECRETS TO GET YOUR OFFER ACCEPTED
Make a Short Sale Offer With a Strong
Earnest Money Deposit
Many first-time home buyerswww.Mckissock.com
put down an
earnest money deposit of $1,000, but an
amount between 1% and 3% of the sales price
shows serious commitment. The minimum
down payment for FHA loans is 3.5% of the
purchase price, and the earnest money is part
of that down payment.
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As a Realtor for Buyer / Seller
SECRETS TO GET YOUR OFFER ACCEPTED
The Bank needs a Reasonable Amount of
Time for Short Sale Approval
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Although it is possible to receive
short sale
approval within 3 to 4 weeks, many banks
take at least 6 to 8 weeks. It could take longer
depending on your margin, the BPO or the
lender. You or your buyer needs to agree to
wait 120 days. And they need to act
immediately should approval happen earlier.
NOTE: If you ask for approval in 30 days, your
offer could get tossed out the window.
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As a Realtor for Buyer / Seller
SECRETS TO GET YOUR OFFER ACCEPTED
Let the Seller/ Lender Know You Will Wait
For Short Sale Approval
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The biggest problem short sale
listing agents
face is the fact that buyers will walk away.
Some buyers write offers on dozens of homes,
hoping to take the first offer that is accepted.
those homes. No short sale listing agent
wants to work on a transaction for several
months only to realize the buyer whose offer
was accepted has disappeared.
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Poll Question 25.
The Minimum amount down for an FHA loan is:
A
5%
B
3%
C
7%
D
3.5%
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1-800-328-2008
Poll Question 25.
The Minimum amount down for an FHA loan is:
A
5%
B
3%
C
7%
D
3.5%
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1-800-328-2008
As a Realtor for Buyer / Seller
SECRETS TO GET YOUR OFFER ACCEPTED
Agree to Pay a Seller Fee
Another mistake some buyers make is to ask
the seller to pay fees that arewww.Mckissock.com
usually paid for
by the buyer. If there are certain closing costs
that the seller typically pays, the bank will
most likely pay those fees. However, if you
agree to pay part of those fees, even if the
bank receives an offer identical to yours, your
offer will probably be accepted.
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As a Realtor for Buyer / Seller
SECRETS TO GET YOUR OFFER ACCEPTED
Provide a Persuasive Preapproval Letter
A lender pre-approval letter, which specifies
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the buyer is actually pre-approved
-- run
through underwriting. Is a very solid
statement and one few buyers submit. A
serious concern on the short sale seller's mind
is whether the buyer is financially capable of
closing the transaction. When you make a
short sale offer, you want those documents
that show strength.
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As a Realtor for Buyer / Seller
SECRETS TO GET YOUR OFFER ACCEPTED
Shorten Your Inspection Period
In California, standard purchase contracts give
the buyer 17 days to conductwww.Mckissock.com
inspections. In
Connecticut it is 14. That means the home is
off the market while the buyer does due
diligence, and the sale is not considered solid
until that contingency period has been
removed. If you can do your home inspections
within 3to 17 days, your offer will hold be
much more valuable.
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As a Realtor for Buyer / Seller
SECRETS TO GET YOUR OFFER ACCEPTED
Agree to Put Your Deposit Into a Trust
Account
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Depending on the state some
real estate
contracts call for the earnest money deposit
to be placed into a trust, escrow etc. upon
short sale approval. Sellers like buyers
committed to the transaction.
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As a Realtor for Buyer / Seller
SECRETS TO GET YOUR OFFER ACCEPTED
Check the Comparable Sales
Some short sale listings are deliberately
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priced under priced to create action. Seldom
does the home sell at that price. Many banks
will approve a short sale that is priced
between 5% and 10% under market.
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Feedback Question 26.
When presenting an offer to the bank
specifying a time or date to close must be
done to ensure the lender takes action on
your offer.
A
TRUE
B
FALSE
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1-800-328-2008
Feedback Question 26.
When presenting an offer to the bank
specifying a time or date to close must be
done to ensure the lender takes action on
your offer.
A
TRUE
B
FALSE
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1-800-328-2008
As a Realtor for Buyer / Seller
SECRETS TO GET YOUR OFFER ACCEPTED
Talk To the Short Sale Listing Agent Before
Making an Offer
Your Buyers offer may need www.Mckissock.com
to be priced
higher than list price if the agent has already
received a number of offers. If the seller has
already accepted an offer, you may be wasting
your time trying to buy that home.
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As a Realtor for Buyer / Seller
SECRETS TO GET YOUR OFFER ACCEPTED
Don't Ask the Seller to Pay for Special Reports
or Make Repairs
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Any inspection you ask the seller
to pay for will
lower the bank's bottom line on the HUD-1.
The lowest offers are rarely accepted. The time
to negotiate major repairs is not at offer
inception. Do not ask for seller-paid pest
inspections, roof certifications or home
warranty plans. Buy the home in "as is"
condition.
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As a Realtor for Buyer / Seller
Getting a Seller to Accept More Than One Short Sale Offer
You have nothing to lose by submitting an offer on an active short sale
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contingent listing. That's because
some buyers write many offers on other
homes, even though that practice is frowned upon by lawyers and may
result in legal ramifications. When another offer gets accepted for these
types of buyers, the buyers then withdraw their outstanding contingent
offers.
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As a Realtor for Buyer / Seller
Getting a Seller to Accept More Than One Short Sale Offer
If the first buyer walks away, the agent will then generally notify the buyer's
agent whose buyer is in back-up
position. But it doesn't mean a buyer in
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this position will necessarily be any closer to short sale approval. Many
banks make sellers start over when a new buyer enters the process.
A seller is not obligated to accept a back-up offer for a short sale. If the
seller is unwilling to accept a back-up offer, you cannot force the seller to
sign yours.
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Feedback Question 27.
Even though the listing agent set a low price for
the short sale property it is best to check the
_____________ to ensure you are going to make
an offer the lender will probably accept.
A
Lis Pendens
B
Comp Sales
C
MLS Price
D
None of the above
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1-800-328-2008
Feedback Question 27.
Even though the listing agent set a low price for
the short sale property it is best to check the
_____________ to ensure you are going to make
an offer the lender will probably accept.
A
Lis Pendens
B
Comp Sales
C
MLS Price
D
None of the above
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As a Realtor
To combat multiple offers the listing agent needs to explain to the first
buyer's agent that a higher offer will be sent to the bank. The listing agent
should ask the buyers agentwww.Mckissock.com
if the buyer wants earnest money etc to be
held in escrow for another 30 to 90 days while the bank contemplates
accepting a higher offer. Usually most first-place buyers who have
submitted a lower offer will retract their offer when they realize their offer
will most likely be passed by.
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As a Realtor
Be careful when submitting a short sale purchase offer above market value.
The bank might accept the offer but chances are the new lenders appraiser
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will come in with a lower appraisal.
In that event, the listing agent will need
to renegotiate with the short sale bank, and the short sale bank might not
be willing to lower the price. Your buyer could wait a long time to discover
the buyers loan was declined because of a low appraisal.
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As a Realtor for Buyer / Seller
Can a Seller Send a Second Short Sale Offer to the Bank?
Some short sale listing agents advise their sellers to send only one short
sale offer at a time to the bank. But what happens if the seller receives a
higher offer, like the offer you propose to submit?
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To answer this, you must read the purchase contract, specifically the short
sale addendum. In California, the Short Sale addendum allows the seller to
continue marketing the property and to send competing offers to the bank.
The seller probably cannot force the first buyer to cancel the contract,
there are ways to put pressure on the buyer to cancel.
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Feedback Question 28.
Chad & Jeremy want to purchase a short
sale house. Buyer’s agent Dino finds out
there is already an offer submitted should
buyers agent Dino submit a 2nd offer or
wait until the property is available?
A
YES
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B
NO
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1-800-328-2008
Feedback Question 28.
Chad & Jeremy want to purchase a short
sale house. Buyer’s agent Dino finds out
there is already an offer submitted should
buyers agent Dino submit a 2nd offer or
wait until the property is available?
A
YES
www.Mckissock.com
B
NO
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1-800-328-2008
As a Realtor for Buyer / Seller
Can a Seller Send a Second Short Sale Offer to the Bank?
After the listing agent explains to the first buyer's agent that a higher offer
will be sent to the bank, generally
the listing agent will ask the buyer's
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agent if the buyer wants to sit in escrow for another 30 to 90 days while the
bank contemplates accepting a higher offer. In that situation, most firstplace buyers who have submitted a lower offer will bow out when they
realize their offer will most likely be passed by.
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As a Realtor for Buyer / Seller
Can a Seller Send a Second Short Sale Offer to the Bank?
Be careful when submitting a short sale purchase offer above market value.
If your offer is too high, evenwww.Mckissock.com
if the bank accepts the short sale, odds are
your bank's appraiser will come in with a lower appraisal. In that event, the
listing agent will need to renegotiate with the short sale bank, and the
short sale bank might not be willing to lower the price. It's risky to offer too
much, and you could wait weeks or months only to discover your loan was
denied due to a low appraisal.
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CHAPTER 6
LENDER
NEGOTIATIONS
INCLUDING BPO
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As a Realtor
www.McKissock.com
As a Investor
1-800-328-2008
Following is a typical short sale process at the bank:
1
Bank
acknowledges
receipt of the
file. This can
take 10 days to
a month.
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2
3
4
5
6
7
8
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Following is a typical short sale process at the bank:
1
2
3
4
5
6
7
8
A negotiator is
assigned. This
can take 30 to
60 days.
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1-800-328-2008
Feedback Question 29.
When making your short sale offer making a
high offer price to get accepted is also bad
because:
A
Higher deficiency for the seller
B
Banks don’t like to see BPO agents be
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exact on a short sale
C
The comparable sales prices will change
in 60-90 days
D
Chances are the appraisal won’t come in
as high as the offer.
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Feedback Question 29.
When making your short sale offer making a
high offer price to get accepted is also bad
because:
A
Higher deficiency for the seller
B
Banks don’t like to see BPO agents be
www.Mckissock.com
exact on a short sale
C
The comparable sales prices will change
in 60-90 days
D
Chances are the appraisal won’t come in
as high as the offer.
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Following is a typical short sale process at the bank:
1
2
3
4
5
6
7
8
A BPO is
ordered. The
bank could
refuse to share
the results of
www.Mckissock.com
the BPO.
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1-800-328-2008
Following is a typical short sale process at the bank:
1
2
3
4
5
6
7
8
A second
negotiator may
be assigned.
Possible
another 30
days. www.Mckissock.com
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1-800-328-2008
Following is a typical short sale process at the bank:
1
2
3
4
5
6
7
8
The file is sent
for review or to
the PSA.
Possible 2
weeks to 30
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days.
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1-800-328-2008
Following is a typical short sale process at the bank:
1
2
3
4
5
6
7
8
The bank may
then request
that all parties
sign an Arm'sLength
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Affidavit.
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1-800-328-2008
Following is a typical short sale process at the bank:
1
2
3
4
5
6
7
8
The bank issues
a short sale
approval letter.
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1-800-328-2008
Following is a typical short sale process at the bank:
1
2
3
4
5
6
7
8
The buyer
cancels.
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1-800-328-2008
Following is a typical short sale process at the bank:
1
2
3
4
5
6
7
8
The buyer
cancels.
It is quite common for yourwww.Mckissock.com
buyer to walk out of the deal. Buyers get
angry and annoyed because the short sale process can be so lengthy.
They might cancel and not even call you Some short sales get approval in
6 to 8 weeks. Others take 90 to 120 days, on average.
NOTE: Occasionally the listing agent has some idea of when approval
will come when the file is sent for final review. At that point, buyers may
want to start the loan process so they've got a head start in case the
bank gives 2 weeks to close.
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A typical short sale package will request these items. Be
prepared to gather and submit:
1. Financial Statement - to qualify the debtor for the short sale
2. Hardship Letter - the reason for default by the debtor
Get the actual form
from the lender
requiring it.
3. Two Recent Pay Stubs - Income verification
4. Checking Statement - Verification of spending
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5. Deposit Receipts - Verify money deposited
6. Bank Statements - Complete banking snapshot
7. Last two year’s tax returns - Total income verification
These items expire every 30 days, and if they have, you’ll find
your package getting ignored for non-compliance. If the debtor
is not working and can’t produce pay stubs have them write a
letter explaining this. The letter must be signed by the debtor.
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Again, you do not have to purchase a short sale with cash. You can finance the deal
but your financing has to be pre-approved.
This means that you have to get a pre-approval letter from the bank. A pre-approval
letter is not a pre-qualification letter. A pre-approval letter is a letter from the
underwriter that states that you are approved for a mortgage up to a certain amount.
They have reviewed the purchase and sale agreement and the only contingency is
clear title. They are ready to give you the money as you have submitted all supporting
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documents (proof of employment, income tax statements, financial information) to
the lender. The lender is ready to close on the property.
Usually, a lender will only loan you 80 percent of the amount of the purchase. You
should also present the short sale lender with proof of your down payment. This
should be a bank statement reflecting the amount of the down payment in your bank
account.
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Your financial information
In order to make the short sale fly with
the lender, you are going to have to show
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proof that you are able to close on the
property in 30 days. This proof entails
either bank statements that reflect
enough cash in the account or a preapproval letter from a _________?
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The actual loss mitigation process can take only a few days. The snags and
hold ups happen while waiting on the results of the new B.P.O. At this point,
you will probably have a new B.P.O. that will support your updated offer. Your
updated offer will be about 20% lower than the retail price for your end
buyer. This is your purchase price, as you are the buyer, with a real offer to
actually purchase the house. www.Mckissock.com
It is NOT a straw buyer, or fake contract with the Seller. It is your plan to close
the purchase of the property, however, our offer to the homeowner is
contingent on the acceptable short sale we receive from the bank. This way if
the market doesn’t bear a buyer we are not caught in the middle being forced
to close.
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