- Letter of Authorization: The letter of Authorization will allow Broker Alan to speak with your lender on your behalf. The letter should specify your property address and loan number, and signatures. I will also need the last four digits of your social security number for verification with your lender. It is essential to start this process early because lenders tend to ‘forget’ to get the fax. I faxed 2 weeks straight everyday to Chase in one case and they still didn’t get it.
- Listing your property: I will place your property on the market for fair market value. Most lenders will order BPO (Broker Price Opinion) to determine your home price for current market. I will do a CMA for current value and will monitor your list price to advise you of probably bank appraisal.
- Sale Contract: When we get an offer, I will ensure that it states it is “contingent on seller’s mortgage holders’ approval”. You may counteroffer the buyer at this step, as we don’t want to send an offer to the bank that we think will be rejected.
I will package up the contract with the following documents and fax or express mail them to your lender:
Buyer’s pre-approval letter
- Hardship letter which explains why you need a short sale
- Financial worksheet itemizing your income and expenses
- Most recent tax returns
- Most recent pay stubs or quarterly profit and loss if self-employed
- Most recent bank statements
- Copy the listing agreement
- Estimated net sheet or HUD-1 Settlement Statement and other documents
Expect to wait 90 to 120 days for a response from the bank. They will be ordering an independent appraisal and/or Broker Price Opinion on your real estate to ensure the offer is for fair market value. If the appraised value is higher than the offer amount, they may counter-offer at the appraised price. The buyer may choose to comply, to stay firm, or to increase his offer at this point.
- If there are two lenders involved, or a Mortgage Insurance company (MI), then I will facilitate the negotiations between them focusing on a fully approved sale on your behalf.
- If the lender deems you have sufficient income or savings, they may ask you for a cash contribution or promissory note, usually at favorable terms, to mitigate some of the loss.
- Further steps and negotiations occur behind the scenes.
Note: Different lenders have different procedures for short sales, thus the required documentation may vary slightly from one lender to another.