What You Should Know About Short Sale Brokers
Short sales are complicated, because two or more parties are involved. You have the house’s owner or seller, you have the primary lender, and in some cases, you’ll have a junior lender (if the owner has taken out a second mortgage). Short sales require a lot of negotiation between everyone involved, so including a real estate professional who has handled short sales before is critical.
A short sale agent, or broker, will perform the following duties on your behalf:
- Assemble all the documents required by the homeowner/seller's lender and see that those documents are sent to the lender.
- Collect the seller’s updated bank statements and payroll stubs and send those to the lender.
- Send the HUD 1 Settlement Statement to the lender.
- Assist the lender in obtaining a Broker Price Opinion (BPO), which is similar to an appraisal.
- Prepare and deliver a Current Market Analysis (CMA) to the lender. A CMA is an evaluation of homes of similar size, condition, and age that were recently sold in the same neighborhood.
- Negotiate a price offer with the lender.
- Negotiate a price offer with the second lender, if there is one.
- Stay in touch with the lender regarding the short sale’s status and whether other documents are needed.
- Communicate with the buyer's agent about the status of the short sale.
- Order the preliminary title report for the property. A primary title report lists all previous owners of the property and any liens, encroachments, easements, or anything else recorded against the property.
- Comply with demands ordered by the short sale lender.
- Advise the seller to seek legal advice and tax advice if needed.
- Make sure the short sale approval letter matches the HUD 1 Settlement Statement.
- If possible, obtain a release of liability for the seller.
- Distribute the short sale approval letter to all involved parties.
- Arrange access to the property for the buyer's inspection.
- Review all closing documents and attend the closing.
Choosing a Short Sale Agent
Short sales are generally four to five times the amount of work that a normal home sale is, so it's important to find someone who's willing to put that amount of time and energy into your sale. Experience is probably the most important thing to look for in a short sale agent - ask your candidate how many short sales they have actually done. How long someone has been a short sale agent is not as important as how many short sales they have successfully completed. Finding the right short sale broker is important, because they are going to be your voice in negotiating your deal with the leaders.
Choosing an Attorney
While a short sale agent can represent you in terms of real estate issues, you'll need a lawyer to advise you on the many legal issues involved in completing a successful short sale.
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