The key to a short sale in California is having a complete package and to maintain a consistent follow up with the assigned bank negotiator. If the agent is aware of the main bank contacts in charge of the REO department, he/she can raise the short sale process request past the low level negotiations. Throughout a short sale, the contacts that are known at the bank are often more essential than the information a person knows.
The below list is an outline of the steps involved with a short sale transaction and the approximate amount of time needed to complete each task.
- Meet with your Agent/Short Specialist to do a free property & personal evaluation.
- Fill out an application.
- Secure Financial data given by the homeowner to show hardship — 3 business days
- Acquire an authorization letter
- Place the home on the market and begin showing and reviewing offers — 1months
- Bundle all financial data according to bank requirements — 2 business days
- Give owner packet to bank and confirm receipt — 2 business days
- Confirm a negotiator is assigned to the file — 2 weeks
- Confirm the order of the appraisal/BPO — 2 weeks
- Receive an answer from the bank about terms and conditions — 3 weeks
- Negotiate terms and conditions — 2 weeks
- Escrow is established and the transaction closes — 4 weeks
The above steps will add approximately three to four months to the short sale process, not including the time it will take for escrow to finish.
Making A Short Sale Package That Is Compelling
One of the most important processes of the short sale process is showing a compelling hardship in accordance with an accurate package. Prior to placing the home up for sale, the agent will take time to adequately prepare and document a hardship that will be reviewed by the banks negotiators once the package is submitted.
After the hardship package is completed, the agentwill analyze the market and establish a competitive price for the home. Even though the agent may recommend a competitive market price for the home, the bank will be the final decision makerregarding the price and they will also base it on market information.
The purpose of the marketing process is to gather ready and qualified buyers who are willing to endure the transaction throughout the negotiation process. Getting a variety of offers will show the bank that that the seller has tried every option to get them the best possible price for the house.
After the offers to buy have been carefully reviewed and all of the buyers have been pre-qualified, the agent’s job becomes preparing the total package that will be handed to the bank. This part of the process is important because if the submitted paperwork is not packaged properly, the bank will normally put the package in the bottom of the file and nothing will go forward.
Follow Up Is Key
After the paperwork has been submitted to the bank, the agent must continue to follow up and confirm that the short sale package was received and put into the system. This is important and can save a lot of time. After the bank has put the documentation into the system, they will assign a negotiator to the file. An efficient short sale agent will follow up in a small amount of time after handing over the documents to confirm that all of the important paperwork was received and to get contact information about the bank negotiator.
Next, the agent is to confirm that the BPO/appraisal has been ordered. It is vital to obtain a report with the comparable sales for the individual doing the valuation. Handing them a list of repairs and the estimated costs to fix them, will give a more accurate evaluation while making sure that the process moves to the approval phase quicker.
Waiting For The Bank’s Decision
The bank normally reviews the documents with the appraisal and determines the price that they will agree to sell the house for. Their answer may or may not be reasonable, so it is essential to comprehend that the bank’s answer is only one response. It may begin a process or set of negotiations that will help to settle a price and conditions included into the approval from the bank. Perhaps this is the most important skill of the broker, since the bank is only looking for the highest amount of money. After all of the details have been negotiated and agreed to by all parties, the sale process will move ahead and open escrow. Throughout the period of escrow, the buyer will fully inspect the house and work with the lender to get a home loan. It is at this point, that there begins to be a light at the end of the long and dark tunnel.
After the buyer’s loan is approved, a final closing will be prepared for the bank to confirm that all conditions have been met and escrow can close the transaction. This may take at least three months in addition to the time needed to close escrow. Carefully preparing the case of the homeowner and pursuing the sale, the broker can make strong case in order to have a successful short sale and follow through every step of the way.