Preparing Your Client For A Short Sale PurchaseConfusing. Time-consuming. Complex. Sometimes advantageous. Short sales are often misunderstood and can be confusing for both the buyer and the seller. They typically don’t damage the seller’s credit quite as much as a foreclosure does, but sellers are still left without any earnings moving forward. On the other hand, buyers may initially find a short sale home appealing due to the lower price range, but they need to be prepared for the potentially lengthy transaction. Because short sales are typically priced under market, they are also attractive to first-time home buyers and investors hoping to flip or rent out a property.
Educate And Prepare Your ClientWhat is a short sale? It’s the sale of a house in which the proceeds are less than what the owner still owes on the mortgage. The lender agrees to a payoff for a lesser amount than what is actually owed, even on a current mortgage, in order to facilitate the sale of the property to a third party.
Make Sure Your Client’s Agent Is Short Sale Savvy
If you have a client who’s interested in a short sale property, make sure they’re working with an experienced real estate agent. If an agent doesn’t have a clear understanding of short sale details, it could damage any chances of an offer being accepted. To create the most promising offer, your client will need to submit a compelling offer that is close to the market value of the home.
Use Our Helpful QLMS Tools
This is where our valuable QLMS tools come into play. Using our home valuation tool, Property Hub, you can research the property’s worth, then determine a plan of action for your client. With Property Hub, you’ll get the property value details, a property description, an interactive map with street-level details that includes a list of comparable sales and more – all within seconds.
Tell Your Client To Pack Their Patience
The seller and lender will need to be confident that the buyer is willing to wait, as short sales traditionally have a much longer approval period. The buyer has the ability to gain that confidence by putting down a strong earnest money deposit. While the approval process can feel like an eternity, it’s crucial for the buyer to have a sense of urgency when submitting all paperwork required. A small delay on the buyer’s side could further postpone the deal.
If you’re a QLMS partner, we can help speed up the process by starting the underwriting as soon as your client has a signed purchase agreement from the seller. Sometimes this gives your clients more time to close the loan.
Don’t Forget The Fees Associated With Short Sales
Clients purchasing a property that is a short sale or preforeclosure may pay additional fees or payments in connection with acquiring the property that are typically the responsibility of the seller. Examples of these fees include:
- Short sale processing fees – these are also referred to as short sale negotiation fees, buyer discount fees or short sale buyer fees
- Payment to a subordinate lien holder
- Payment of delinquent taxes or HOA fees
Documentation RequirementsMake sure your clients are aware of all the documents required for a short sale. These include:
- A written agreement signed by the buyer, seller and servicer that includes the final details of the transaction, including all additional fees or payments being made by the buyer.
- The buyer (your client) must be provided with written details of the additional fees and payments, as well as any necessary funds needed to complete the transaction.
- The servicer that is agreeing to the short sale must be provided with written details of the additional fees and payments and has the option of renegotiating the payoff amount to release its lien.