Transcript The REO Institute of Colorado
Short Sales Simplified
Presented By: The REO Institute of Colorado
• • Masters in Real Estate • Certified Commercial
Education Broker/Owner Browning Group LLC
•
Liquidated 115+M REO Properties/last 3 years
•
25 years of Commercial Real Estate Experience
• Commercial Director for CB
NRT-17yrs
•
National Trainer/CREOBA
• CEO/The REO Institute of
Colorado
James A. Browning
MRE,CEC,FSP,CREO, SFR, REO Certified, Short Sale Certified
The Distressed Market, Short Sales, & Pre-Approved Pricing
2014, 2015, or Longer
Many banks, lenders, & outsourcers are looking for solutions to our current market problems.
Unknown Quantity
REO, Pre-Foreclosure, Foreclosure, and/or Short Sale What is the solution?
Pre-Approved Pricing
• Increase residential sales • Spur recovery • Complete submission package
The Short Sale Prospect
• Distressed market has the potential of continuing into 2013-2015 • The Broker with education & training can succeed.
• Have compassion.
• Ask the right questions.
Property Profile
• O & E • Understand the financing on the property.
• Additional liens on the home.
• NED, NOD, NOI filed?
• Sale or Auction date?
• Order a payoff- either from the mortgage company or the foreclosure attorney (10 days)
UNDERSTANDING THE SELLER’S FINANCIAL CONDITION OR STATUS
• Is the Seller in financial distress?
• Request the most recent mortgage statement.
• What are the other financial stressors?
Seek Tax/Legal Advice • Recommend the Seller obtains Tax/Legal Advise • You are not the expert!
• Provide the client with a letter stating these recommendations, and have the Seller receipt for a copy
Acquisition Indebtedness = • Is incurred by acquiring a property • Is secured by the residence • Is secured by the property resulting from a refinance, but not to exceed the original indebtedness
Example: • A borrower refinances an original note, and then takes a vacation, or purchases a vehicle • Answer: This indebtedness is taxable
Negative Credit Reporting • The Seller’s thought process may only be survival today • Armed with knowledge, the Seller can take steps to improve his/her credit
Credit Basics • FICO- 35% is made up of payment history • Negative public record information • Severity of delinquency • How recent is the delinquency, and the number of items on file • Number of accounts paid as mutually agreed upon
Late Payments • It is possible to negotiate a short sale without late payments, however it is more difficult • Both HAFA and FHA require that the seller be delinquent, and display a negative cash flow
Short Sale Listing
Documents • State or Division required listing contract • Short Sale Addendum • Seller Authorization Letter
Approaching the Lender – What’s Next?
• Is the lender open to a short sale?
• What will the conditions be?
• Fannie Mae or Freddie Mac are more motivated then private lenders • Discuss and negotiate what the seller wants from the lender
LOSS MITIGATION DEPARTMENTS, WHO?
What department?
Who?
What?
Wrong number… “Who’s on first base?”
Get past the call center!
• Loss Mitigation Department • Default Managers • Persistence • Objective- Where do I need to send the short sale package?
GETTING ALONG WITH THE LOSS MITIGATION DEPARTMENT AND PREPARATION OF THE SUBMISSION PACKAGE
Submission Package • One time, with all required docs • Installments = rejection • What should be included?
Listing Agreement • Listing Agreement • Short Sale Addenda • MLS • Website Advertising, Flyer, and any other marketing or advertising
MARKETING THE SHORT SALE LISTING
Accurately Market • Listing Broker – your responsibility to accurately represent your listing!
• Continue your education and designations!
Timeframe for Lender’s Response • Could be the most frustrating aspect • One week… Six or seven months… • What is the requirement for the lender? • The property may have to be listed for a period prior to acceptance of short sale • Your expertise can make the transaction much smoother!
Problems and Pitfalls • Loss mitigation departments are overwhelmed with loan modifications, short sales, & foreclosures • Subject to final senior management approval • Private mortgage insurance • When your negotiator is no longer employed there…
Lender Takeovers and Merging • Reasons – Government influence, cost cutting, bank failure, contract issues, etc • Decisions are now delayed, who has the file now • Be prepared to re-submit all docs!
This is everyone’s main concern What’s the loss and deficiency?
Buyer Cooperation • Is the Buyer serious?
• Is the Buyer going to be patient?
• Is the Buyer going to complete inspections and appraisals?
Education • Laws, programs, & regulations are changing constantly • Be familiar with state regulations • Knowledge, disclosure, compliance
Thank you!
The REO Institute of Colorado Congratulations on becoming Short Sale Certified