Ten Tips to Short Sale Success
When negotiating a short sale, there are more than a few steps to take before we can finally receive that approval letter. It’s important that you realize you cannot just skip some of the crucial steps and hope to have a successful short sale transaction. Do not try to submit too low of an offer to the lender. To find out the appropriate price you will need for your house, get today’s Market Snapshot by clicking here.
In order to be successful at negotiating short sales, you have to be able to get inside the head of the lenders to understand what they are thinking during those negotiations. Truth be told, all they're thinking about is which course of action will cost them the least amount of money in the long run. If they find any loopholes to collect that debt, they will be sure to. When they see a chance to avoid a long-term bad debt, they will generally move in that direction. Lenders have formulas they must abide by and know how much it costs to continue to collect debts and maintain bank-owned properties. They are aware of exactly how much money they lose when they allow a property to go to foreclosure.
Therefore, these are my straightforward tips for negotiating a successful short sale.
1. Get the highest and best possible offer on your house. This is where it makes the most sense to use a licensed real estate agent so they can get your home on the NWMLS and do all the marketing for your house. The more people that will come view your listing, the more people that will show interest in making an offer.
2. Once you have an offer, be sure to consult an attorney to make sure you are aware of your rights.
3. Be persistent. Contact your lender every couple days, if not every day. During your first call with your lenders, let them think you will be the thorn in their side until they accept your offer. Lenders are swamped with foreclosures, right now. The only way to push things through is to be persistent, yet nice.
4. Contact the Loss Mitigation department. Customer Service will not be able to help you through the process. Once you submit your complete short sale package, find out which loss mitigator it was assigned to. Do this immediately. As mentioned above, they are slammed with foreclosure paperwork, so you checking in, may help them keep your package from getting lost in the shuffle.
5. Find out if the loan is FNMA (Fannie Mae), FDMC (Freddy Mac), FHA (Federal Housing Administration), VA (Veterans Affairs), or Conventional. Be sure to ask the loss mitigator which owns the loan and take note of this. Each investor has their own idea of how much they are willing to accept from the short sale. Also, keep in mind that the bank does not own the loan. They are only the service provider.
6. Ask the loss mitigator to get an interior appraisal or BPO (Broker Priced Opinion) as soon as possible and summarize your offer to the mitigator. It’s very important that you manage the BPO effectively.
7. Pull a title report after the BPO is complete in order to resolve all outstanding issues that could come up at closing.
8. Ask the bank for the amount of the BPO. There is a chance that they won’t share this, but there is no harm in asking. If the lender refuses to disclose the BPO, you need to ask for a counteroffer. Once they make that counteroffer, this will generally be equal to the amount of the BPO.
9. When you submit your counteroffer, include additional documents to support the amount you’re offering. You can use low comps, repair estimates, inspection reports, negative news articles about the neighborhood, as well as the NWMLS listing, which will show the number of days the house has been on the market.
10. Find out whether or not you will be responsible for the deficient amount. If so, ask for a release of deficiency. In some cases, you may not be held liable for the remainder, so this is something you really want to find out about.
11. (Bonus Tip) It’s very important to keep in constant contact with your mitigator and remain proactive. Let them know that you’re doing everything possible to get them the highest amount possible for the property. Remember, it is important to make sure you have a strong offer for the house. Be sure to review the comparables by getting your copy of this week’s Market Snapshot.
Short Sales are not the lenders initial preference, but there are definitely worse alternatives for them. It’s up to you to find them the offer which proves to them that they will lose the least amount possible.
Remember that this is not the advice of an attorney, nor are we asking you to pursue a short sale if it is not necessary. Often times there are other ways you can successfully sell your house or modify your existing mortgage. Please ask us how.
David Berg, with Keller Williams Realty, is experienced with helping sellers get top dollar for their home. My team works with the #1 Short Sale negotiators in Pierce County. To see how the market is doing in your area, please get your Market Snapshot Report here.
