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Successful Short Sales: Giving the Lender What They Want
By Gee Dunsten
As I mentioned in my first two columns on the subject of short sales (see the January and February issues of Real Estate magazine), short sales are enjoying a much-needed resurgence as lenders become more motivated to move short sale transactions through the pipeline more quickly. So, if you’ve soured on short sale business, now is the time to rethink your position as the lending landscape begins to change.
Your approach to successful short sales must be focused in two areas: making sure the seller is truly a short sale candidate and making sure you foster the right relationship with the lender.
A little secret nobody realizes is that many lenders are desperately looking for a competent real estate partner in the short sale arena. I walked into my local bank, for example, and discovered that they were getting barraged with calls from clients inquiring about a short sale on their property. While a lot of us think that banks are against short sales, the reality is, they just don’t have the time to handle the volume.
This is where huge opportunity lies for real estate professionals. Take the time to build a relationship with your local lenders, understand exactly what they need in order to process a short sale, and then be the conduit throughout the entire process. In other words, work with your clients to give lenders what they want. This will eliminate notorious delays and save you, your client and the lender precious time.
Following is the lender package that I require all short sale clients to complete. When it comes to short sales, the devil is truly in the details.
Required Items: Before the Sales Contract
1. Cover letter
2. Table of contents (this lets the lender know right away that everything they need is included)
3. Third-party authorization
4. Seller’s tax returns from the previous two years
5. Seller’s bank statements from the previous two months (six months is even better)
6. Most recent paystubs
7. Seller’s hardship letter
8. Bank worksheets (financial situation)
b. Projected in next three months
c. Projected in next six months
9. Listing agreement
Required Items: After the Sales Contract
10. Necessary short sale addendums
11. History of listing – market report
12. Sales activity report
13. Local community economic report
14. CMA/absorption rate
15. Sales contract
17. Buyer’s pre-approval letters
18. Earnest money verification
19. Damage report with photos
20. Carry cost estimate
21. Agent personal letter
By providing banks with the right information, you are helping them push through the glut of short sale requests. Make sure you become their partner in this effort.
George “Gee” Dunsten, president of Gee Dunsten Seminars, Inc., has been a real estate agent and broker/owner for almost 40 years.