SHORT SALE TIPS FOR YOU AND YOUR BUYERS

When considering the acquisition of a property that will be a short sale, make sure that you understand the process and set expectations accordingly. One big difference between a short sale and a conventional sale is the approval process. Although many lenders are streamlining their procedures, it can still take 45 days or more from contract acceptance to receive lender approval. Here are some tips to help things go smoothly:

Make as clean an offer as possible, but be sure to include contingencies for inspections, and for appraisal and loan approval. Your contract should also include a short-sale addendum that includes provisions that are uniquely applicable to short sale transactions.

Listing agents often want the buyers' contingencies to begin when the offer is accepted by the seller. However, buyers usually prefer to pay for inspections and the appraisal after lender approval. These items are negotiable.

Your short-sale offer will stand a better chance of lender approval if your client is pre-approved for financing. Include verification of the funds needed for your client’s down payment and closing costs and a preapproval letter from his lender with the offer. In some cases, advise well heeled buyers to eliminate the mortgage contingency altogether to make their offer stand out among other competing offers.

Advise your buyers not to look at a short-sale listing until you have talked with the listing agent to find how much ground work has been done. Does the listing agent have the sellers' written authorization to negotiate on their behalf with the lender? Has the listing agent been in touch with a representative of the lender's loss mitigation department? Have the sellers provided all the documents that will need to be submitted to the lender when an offer is accepted, such as a financial statement, hardship letter, bank statements, pay stubs, etc.

Some listing agents may lack short sale experience. In these cases the you, as selling agent, should tactfully help the listing agent as necessary to ensure that a complete short sale package is submitted to the lender.

As we have said before, short sale properties are not for everyone, but they do represent a large segment of the current listing inventory. With skilled representation on both sides, the process can be made much more palatable.