Bank Pays Seller $23,000 To Do A Short Sale

The story:
Underwater on their mortgage, the owner of this Issaquah townhome had decided to walk away and let the home go into foreclosure. The HOA president talked to the owners and convinced them to try a short sale.

Washington Property Solutions was able to successfully broker the short sale, as well as negotiate with the lender to get 100% of the seller's debt forgiven. Not only are the sellers in a better position financially than they would have been had they gone into foreclosure, they also got a bonus: a $23,000 cash incentive paid to them by the lender.

Lenders, including Chase and Bank of America, are paying significant cash incentives to encourage sellers to do a short sale and avoid foreclosure. The programs are for a limited time. Find out more about how short sale cash incentive programs work.

The Top 3 Reasons Short Sales Fail

Short sales are complicated.  With all the variables that need to be juggled,  it's easy to make mistakes that end up derailing a transaction.  Here are the most common reasons that short sales fail.  
 

1)  Failure to understand and justify market value. 

 

Setting a price for a short sale is the delicate art of balancing what a buyer will pay and what the lender will approve. It's important to understand how the lender values a property. The bank will commonly hire an appraiser or BPO broker to set a value after you submit an offer.  If you have set the price too low, the lender will not approve the offer.  Everyone loses.  The buyer has been given an unrealistic expectation of what they should pay, so usually is not willing or able to offer much more.  More importantly, your client's clock is ticking.  They have a certain deadline to do a short sale and avoid foreclosure, and you have squandered valuable time on a deal that was never going to go through. (If you think the value the bank set is unreasonable, this Ask the Expert article explains how to dispute lender valuations.)

 

2)  Not knowing the specific lender's short sale process.

 

On average, the bank's short sale negotiator has over 1,000 short sale transactions that they are processing at any given time. And each lender's process is different. If you don’t follow the lender's specific process or there is an error in the paperwork or you're missing a form, it all comes to a halt. Your file gets set  aside until the issues can be resolved. And unless you call, it can be weeks before you are even aware that there is a problem. (We have a dedicated staff that follows up with lenders daily to make sure the process is moving forward.)  The short sale transaction that closes, and closes quickly, is the one where everything is done right the first time. 

 

3) No system to monitor the short sale process.

 

Because a short sale has so many more variables than a traditional real estate transaction, one of the most important jobs the listing broker has is making sure everyone involved has all the information they need to make their part of the deal happen. We have a private password-protected online system that lets all parties see what's happening with a transaction at any time- 24 hours a day, 7 days a week. This helps everyone involved track deadlines and ensure that no details fall through the cracks.  It's also important for you to build a team of professionals who are highly experienced in short sales. For example, we work with title and escrow agents who understand the additional documentation and complex issues that are specifically related to short sales.

How to Dispute a Short Sale Valuation That's Too High

Occasionally a lender's valuation of a short sale property is significantly more than what the market will pay.  As a broker you may have recourse,  however, every lender has a different process for reevaluating value. The first step is to contact the lender and get a detailed overview of their value dispute resolution process.  You want to make sure that you are providing the lender with the precise information they need to consider a change in value.

The BPO broker or appraiser who sets the original value often does not have a complete picture of the property. When we request that a lender reconsider a home's value, we gather as much documentation as possible.  That includes comps, a summary of repairs needed, and contractor bids for those repairs. We sometimes pay to have our own appraisal done as well.

 

If the lender is unwilling to budge on their value, we find out when the appraisal or BPO figure expires and then work with the lender to order a new one. 

 

Bank of America is one lender who is making an extra effort to work with brokers. BofA has streamlined their process for settling valuation disputes during a short sale, making it faster and easier for brokers to get the bank to consider an alternate value. Get step-by-step  instruction on How to Dispute a Bank ofAmerica Short Sale Valuation.  

Questions Buyer's Agents Should Ask in a Short Sale

Some buyer's agents shy away from short sales because of the complexity and uncertainty involved.  And it's true, short sales are complicated transactions even for those highly experienced in short sale negotiation. Properties that are represented by brokers with little or no short sale experience can result in transactions that are a nightmare for both you and your buyer. Here are a few questions you can ask to determine whether you want to move forward with an offer. 

    

1)  Who are the lien holders?

 

The amount of time it takes to process a short sale varies greatly from lender to lender. The broker should be able to tell you who the lien holders are, and the average number of days the lenders take for closing. This will help your buyer decide whether the lender timeline matches their timeline.  

 

2)  Who is negotiating the sale? How many short sales have they closed? Do they have experience working with the seller's lien holders? 

 

Real estate brokers, attorneys and mortgage brokers are the only individuals that can legally negotiate a short sale.  If the negotiator is a real estate broker, they must be listing or co-listing the property — they cannot legally negotiate the sale unless they are part of the listing agreement. 

 

Because of the complexity and ever-changing nature of short sales, you want to make sure the negotiator is highly experienced. That means they've closed a minimum of 100 short sales and have worked with a broad range of lenders, including the seller's lien holders. 

 

3)  Are there any additional costs to negotiate the sale? If yes, who pays those costs?

 

If the negotiator is a real estate agent, negotiating the short sale is part of the service that they provide when they list or co-list the property. There is no additional fee to anyone.

 

Attorneys typically charge a fee of 1-2% of the purchase price to negotiate a short sale. The lender may be willing to pay their fee, but more and more often they're not. The seller typically is undergoing economic hardship and doesn't have the funds. That leaves the listing agent, buyer or buyer's agent to pick up the attorney's fee. Before you make an offer make sure you have in writing who is responsible for the negotiating cost. 

 

4)  Is there someone dedicated specifically to follow up with the lender?  How often do they follow up? 

 

For a short sale to progress smoothly it is essential that the negotiator has a system to follow up regularly with all the various lender departments that are involved with the short sale.  The negotiator can never assume that just because they have sent the correct paperwork, the lender is moving forward on the sale. We call lenders daily to make sure the right people have the right information to close the sale in the shortest possible time. 

 

Here is more information to help your buyer decide whether buying a short sale is right for them.   

 

If you have any additional questions, we're happy to give advice. Call Richard Eastern at (206) 612-5541.

3 reasons why NOW is the best time to do a short sale

If you have a client who is considering a short sale,  there are a number of compelling reasons to make the move now.

1)  Tax advantages for doing a short sale are set to expire.

When a lender forgives a homeowner's debt, the tax laws had previously considered the forgiven debt as taxable income. This law applies equally to short sales and foreclosures. 

 

The Mortgage Forgiveness Debt Relief Act enacted in 2007 allows debt forgiveness of up to $2 million to NOT be considered taxable income if:

• The house has been used as the principal place of residence for at least two of the  previous five years.
• The debt has been used to buy, build, or make substantial improvements to the home.

That law is set to expire at the end of 2012. While Congress has begun discussions on extending the act, the outcome is uncertain. If a seller wants to make sure their deficiency is not counted as taxable income, their short sale must close by December 31, 2012. That means they need to get their house on the market now.        

2)  Lenders are offering significant incentives for sellers to do a short sale instead of foreclosure.

Banks have recognized how expensive the foreclosure process is for them. They also do not want to add to their already bulging inventory of bank-owned homes, which are expensive to insure and maintain. As a result Chase and Bank of America are paying significant cash incentives to encourage sellers to do a short sale and avoid foreclosure.

 

Recent examples include a client who sold a $200,000 home and received a cash incentive of $20,000 at closing, and the owner of a $350,000 home who received $30,000.  If you have a client who is – or should be – considering a short sale, this may be the incentive they need to move forward.  

3)  It's a seller's market.

 

Inventory levels in the Puget Sound area are the lowest they have been since 2006.  Low interest rates and affordable home prices have drawn additional buyers into the market. As a result, more buyers are competing for a shrinking pool of properties. That growing competition for homes has resulted in multiple offers and escalation clauses on many of our short sale listings. It's an ideal time to sell a home.   

How Short Sale v. Foreclosure Affects Credit Scores

A key issue for clients facing a short sale or foreclosure is how each affects their credit score. There are a number of factors that favor a short sale over foreclosure.

If the homeowner is participating in the federal government's Home Affordable Foreclosure Alternatives (HAFA) Program, there are definite credit benefits to choosing a short sale over foreclosure. Recent changes to the HAFA Program dictate what the lender can state on the borrower's credit report after a short sale, and lessens the impact on the borrower's credit rating. Credit bureau reporting of HAFA transactions where the deficiency is forgiven is now to be reported as "Paid or closed account/zero balance" or "Account paid in full/a foreclosure was started", as applicable.   A short sale is usually reported as “Account paid for less than the full balance”, or similar statements which have a negative affect on the homeowner's credit score.

While doing a short sale will negatively affect credit, short sales by their very nature may well have a lesser effect on credit than foreclosures. For instance, a completed foreclosure means the borrower has, at a very minimum, missed six months of payments (often considerably more). The property has also gone through a completed foreclosure sale. So while a short sale negatively impacts credit, the effect has been shown to be less than a full blown foreclosure which followed months, if not years, of missed payments.

Here are a few additional benefits of doing a short sale v. foreclosure:

• With a short sale, the homeowner is in control of the sale, not the bank. In fact, today cash incentives may be available to homeowners who decide to do a short sale instead of foreclosure.
• When the consumer wants to obtain a loan to purchase a property in the future, more opportunities will be available to them sooner if they do a short sale. For example, contrary to popular belief, one can be current on their payments and still do a short sale.  And if a homeowner is current on their mortgage through a short sale, they can qualify for an FHA loan afterwards without any waiting periods.  The same option is not available following a foreclosure.
• Some people feel there is a much stronger social stigma attached to foreclosure as compared to a short sale.

Every homeowner's situation is different, so we always recommend speaking with a real estate attorney who can offer advice on the legal and tax implications for each individual's circumstances.   Washington Property Solutions partners with a highly respected real estate tax attorney who can answer any financial questions your client may have and help them make the right decision. Call us at 425-381-2233 and we can refer you for a consultation.

Tips For Pricing A Short Sale

We often get questions about the best way to price a short sale. In reality, many of the same principles that go into pricing a non-distressed property  apply equally to setting the list price of a short sale. Price depends on the location of the property, its condition, the availability of strong comparable properties, and the amount of competitive inventory.

When pricing a short sale,  the key is to strike a balance between what a buyer will pay and what a bank will approve. It's not unusual to see agents apply an across the board discount to a short sale property (for example, a 10% price reduction). This is a mistake. In so-called "hot" neighborhoods, short sales often can be priced at market value.  When the bank's appraiser does a value determination of a short sale property, they generally will try to seek out comparable short sales in the neighborhood. If there are none, the appraiser will use non-distressed properties as comps. If an agent lops $30,000 off the value of a home just because it’s a short sale, it's unlikely that such low offers would be approved by the bank.  

An added note: If you want to dispute a short sale valuation, and your client's loan is with Bank of America, BofA has launched a streamlined process for considering an alternate value.      

3 Landmines That Can Destroy a Short Sale

There are some assumptions that a short sale negotiator can make that will wreak havoc on the process.  Here are a few common mistakes inexperienced negotiatiors make, and tips on how to avoid them.

Landmine #1: Assuming lender approval of an offer will automatically postpone foreclosure proceedings. 

In Washington State, lender approval of a short sale does not automatically halt a foreclosure sale. Once foreclosure proceedings are initiated, there are three parties involved in your transaction: the lender's loss mitigation contact, the lender's foreclosure contact (who is in a separate department), and an independent local trustee who has been hired by the lender to sell the property at auction.  Once lender approval is obtained, the relevant parties are supposed to take the necessary steps to take the foreclosure sale off the calendar.  However, there are instances where that does not happen, and the results can be disastrous. We recommend that agents always follow up with the loss mitigation department and local trustee to make sure they've received directions to cancel the scheduled foreclosure.  

Landmine #2:  Assuming that the short sale approval letter includes satisfaction of the seller's debt. 

Lenders may or may not issue a short sale approval letter to satisfy the buyer's debt or waive the deficiency in full.  Unless it is clearly stated in writing that the debt will be satisfied or the deficiency waived, you should assume that it is not.  While it is getting better of late, lenders can be notoriously vague on this subject in many of their letters. If you receive an approval letter that does not clearly outline satisfaction or a full settlement of the debt, it may require you to do further negotiation with the lender on your client's behalf. 

Landmine #3:  Assuming all banks have the same timeline. 

In the over 800 short sale transactions we've completed, we have seen timelines vary significantly from bank to bank. In our experience, after mutual acceptance is received it can take from 30 to over 90 days to get lender consent, depending on the bank. The investor on the loan may require another level of approval, and the existence of second liens and mortgage insurance can add yet more time to the process.  Knowing individual lender timelines is key in managing the expectations of the buyer and seller upfront.  

Some good news: Banks that use the Equator system- including Bank of America, Wells Fargo and Nationstar- have sped up the process considerably. The system includes deadlines and specific lender contact information, so it adds a level of accountability that helps you identify bottlenecks in the process and allows you to escalate things if necessary.           

Understanding Form 22SS: The Lender Consent Deadline

Every week we get numerous questions about Form 22SS, the short sale addendum to the Purchase & Sale agreement. One of the most common sources of confusion is in paragraph 2, which outlines the number of days after mutual acceptance that the parties have to secure Lender Consent. What happens if that deadline passes?

If the date for Lender Consent outlined in the purchase and sale agreement expires, the agreement automatically terminates. However, termination of the agreement can be avoided. If the time limit is looming and it doesn't appear Lender Consent will be given in time, the listing broker can prepare an addendum to the P & S agreement to extend the deadline.

The addendum needs to reflect the additional time the lender will need, so it's important to talk to the bank and get a realistic estimate of their timeline. That information can then be used to talk to the selling broker and help them set expectations for their buyer. When there's uncertainty about where the transaction stands, buyers can get frustrated and walk away. If all parties have an accurate picture of the process, the chances of a successful closing are much higher.

Top 3 Myths about Short Sales

We hear a lot of misconceptions about short sales. In the interest of myth-busting, here are the ones we hear most often, and the facts behind how short sales really work.

Myth #1: All short sale negotiators charge a fee.

Most third-party negotiators, including attorneys, typically charge a fee of 1-1 1/2% of the sale price. They commonly try to get that fee paid by the lender. If the lender opts not to cover the cost, then who pays? In most cases, the seller doesn’t have the cash, or they'd be paying their mortgage. Usually, the buyer or buyer's agent is asked to pick up the cost.

Broker-affiliated negotiators like us include negotiating the short sale as a part of the professional services offered. There are no additional fees to anyone in the transaction.

Our feeling is: The market is tough enough – why make it harder to sell your listing? Which of these listings do you think will sell first?

"Short sale. Buyer to pay negotiation fee of 1 1/2% of sale price. ” “Short sale. Sale professionally negotiated by Washington Property Solutions with no fee to you or your buyer.”

Myth #2: Short sales are low-end properties.

There are short sales at every price point. Among our current listings are a $2.25 million home and two $1 million properties. Nearly 20 percent of all short sale properties sold in King County in 2010 sold for $500,000 or more. Short sales are projected to represent a significant portion of available inventory in 2012 and moving forward, and will be an important source of income for brokers as the real estate market works its way towards recovery.

Myth #3: You can buy short sales at huge discounts.

Short sale homes do sell for less, but not significantly less than market value. The selling price for short sales is usually 5 to 10 percent less than for non-distressed properties. The lender is looking to recover as much of the value of the home as possible, so they will not accept offers that are significantly under market value. So why do buyers purchase a short sale? In our experience, it's the same reason anyone buys a home- they like it. That 10% discount provides an added incentive, allowing buyers to get more house for their money.

How Does Short Sale vs. Foreclosure Affect Credit Ratings?

Many homeowners we work with have questions about how a short sale may affect their credit score, and how that compares with the implications of allowing your home to go into foreclosure.

The short answer is that both will lower your credit rating, however there are many benefits to choosing a short sale over foreclosure. We've put together more information about how short sales and foreclosures affect FICO scores on our website. It includes two documents that our colleagues at Windermere Mortgage Services created that may be helpful for clients who owe more than their home is worth and are looking at their available options:

The Impact of Short Sale and Foreclosure on Your Credit Score

How Your FICO Score is Calculated

What "Lender Consent" Does (and Does Not) Mean

The term Lender Consent is found throughout Form 22SS, the short sale addendum to the purchase & sale agreement. When we're working with a buyer's agent on a short sale, we often find that there is a lot of confusion about what Lender Consent really means. What is does not mean is that the deal is done. Unlike a standard sale, there are two parts to a short sale closing. Here's how the process works:

Once an offer for a short sale purchase is agreed upon by the bank, they send the seller a written approval letter that outlines the terms under which the lender will authorize the sale. The letter includes the price, deadline for closing date and may address how the debt is treated. It may also include a dollar amount the seller must bring to closing or other terms. For the sale to actually proceed, the seller must agree to all the terms in the lender's approval letter. The seller's other option is to terminate the agreement. The sale will not move forward until the seller gives notice to the buyer that they have received the approval letter and have consented to the terms. We have additional FAQs about the short sales process on our website.

How Brokers Can Avoid Common Short Sale Mistakes

Any broker who has worked on a short sale will tell you that it is much more complicated than a traditional real estate transaction. There are additional forms, endless calls to lenders, and numerous decisions you need to make along the way that can make or break a deal. Here are three of the most common mistakes that I see, and advice on how to avoid them.

Mistake #1: Assuming the bank is working on the transaction.

Just because you've submitted all the right documents to the lender doesn’t mean the process is moving forward on their end. Over the years we've sent countless reams of paperwork to lenders only to find that no one there has any record of receiving them. Regular confirmation and follow-up is critical. Your transaction may be one of thousands that the bank's negotiator is working on at any given time, so it's easy for your documents to get lost in the shuffle. Persistence and patience pay off big dividends in short sales.

Mistake #2: Thinking lender approval of an offer will automatically postpone foreclosure proceedings.

Several of our clients have received a letter of approval from the bank for the sale of their property only to receive a notice of foreclosure from that same lender a few days later. Loss mitigation and foreclosure are handled by separate departments at the bank, and they rarely communicate with each other. You need to be the communication bridge for your client and insure that all parties have the information necessary to postpone foreclosure and move the sale forward.

Mistake #3: Assuming that the short sale approval letter includes satisfaction of the seller's debt.

We always negotiate with lenders for satisfaction of our seller's debt, and have an excellent track record of achieving that goal. The short sale approval letter needs to clearly state that the lender is agreeing to waive all rights to the deficiency. Unfortunately, many approval letters contain ambiguous language. Make sure and clarify any language in the document before your seller signs or they risk having the lender come back at a later date to collect any balances due after the sale. You can find further clarification of the difference between a full debt satisfaction and a lien release in our Short Sale FAQs.

Foreclosure Fairness Act Success Story

The Washington State Foreclosure Fairness Act that went into effect in August requires lenders to discuss potential mediation options with homeowners before initiating foreclosure procedures. And it's working.

We recently listed a home with a seller who was attempting to do a short sale. We got a solid offer from a buyer that met all the bank's criteria and submitted all the paperwork. However, the home was on the verge of foreclosure, with an auction already scheduled. We advocated on the client's behalf with the lender, but were told they would not postpone the auction to consider the offer. We counseled the seller to call the FFA Hotline and outlined all the information they would need to present. Now for the good news: As a result, the auction was postponed and the original offer is currently in the lender's system awaiting approval.

You can access the Foreclosure Fairness Act Hotline at 1-877-894-HOME (4663). Here are details about how the Foreclosure Fairness Act works.

Buyer's Brokers: The most important step in buying a short sale

We get many questions from buyer's brokers about things they can do to make sure their client's short sale offer is approved. The single most important step you can take as a buyer's broker to ensure success in a short sale is this: Qualify the listing broker.

If the listing broker is unfamiliar with short sales, no matter what you do on your end, the chance of a successful outcome decreases dramatically. If your client is interested in a short sale property, call the listing broker and ask them these qualifying questions:

1) Who will be negotiating the short sale?

2) How long have they been negotiating short sales?

3) How many short sales have they closed?

4) Do they have experience with the HAFA process? (HAFA provides incentives for the seller such as a $3,000 relocation incentive, and an agreement by the lenders to forgive the debt, which increase the likelihood of seller participation in the short sale.)

5) What is their system for communicating with you, the buyer's agent, so you know how the transaction is progressing?

Asking these questions will help you determine whether the broker has the level of experience needed to successfully negotiate a short sale-- and it can save you and your client a lot of time and frustration.

How to Use the New Short Sale Form 22SS to Your Advantage

This fall the Northwest Multiple Listing service made revisions to Form 22SS, the Short Sale Addendum to the Purchase & Sale Agreement- and we continue to get lots of questions about what that means to brokers.

One key change is that the new form presumes that the seller has the right to consider other offers after mutual acceptance (Paragraph #3). Another change is the option to have timelines in the agreement begin on mutual acceptance rather than the notice of lender consent (Paragraph #5).

Ultimately, the changes allow the listing broker more flexibility in negotiating the short sale based on the property and the situation. However, by opening up a greater number of options, it has also made this short sale form a bit more complicated.

Since every transaction is unique, there are no universal guidelines for which boxes to check or how you may want to alter the language of the addendum. The factors that will help you decide which course of action is in the best interest of your seller include:
The profile of the buyer
How committed the buyer is to the transaction
Who the lenders are
The price point of the property

Here's an example: You have what you've qualified as a strong offer. The buyer would like to close the sale as quickly as possible. You negotiate an agreement to deposit earnest money and do an inspection on mutual acceptance, rather than lender consent. The buyer's willingness to make a financial investment let's you know that they're really interested in the house. If they hesitate, you may have a less committed buyer.

Second, an inspection at mutual acceptance will help everyone in the transaction get their needs met. Most short sale sellers don't have the money to pay for the repairs that may be outlined in the inspection report. And the bank has set an "as is" value for the house. You're familiar with this particular lender's short sale process, so you know that if you submit a lower offer with an inspection report and contractor bid attached that explains the difference, your chances of getting a price reduction accepted by them is much greater. If you wait until lender consent to do the inspection and subsequently lower the offer price the chance that the bank will change its mind are very low.

10 Key Questions To Ask Short Sale Clients

When we get an initial call from a homeowner, they usually don't know if they need a short sale or not. In fact, they don't commonly know what a short sale is. To help determine where they are and what options are available to them we ask a standard set of questions. These key questions can help you discover how difficult the transaction will be, set proper expectations for the seller and position yourself as someone who can successfully solve their problem.

1) How many mortgages do you have and how much do you owe on each?

Since homeowners often don't know if they need a short sale or not, your first task is to determine the total amount of mortgage debt they have.

2) If you were to put your home on the market today, what do you think the price would be?

If the value the homeowner estimates for the home is less than what they owe, you know they're underwater. Keep in mind that most homeowners tend to overestimate the value of their home, but their opinion will give you a point to start your assessment.

In addition, the homeowner's estimate of the home's value is a valuable piece of information in managing their expectations and tempering your discussions. If a homeowner has a highly inflated view of the what their home is worth, you'll need to take some time to help them understand its current market value.

3) Are you current or behind on your payments?

If they're current, qualifying for a short sale is more difficult, though there are circumstances where it's possible. If they're behind, you can start to evaluate whether they will meet the criteria for financial hardship that lenders require for short sales.

4) Who are your mortgages with?

Because each lender has their own short sale process, knowing who the lenders are will help you determine potential recourse and timelines for approval. Knowing upfront how long the approval process takes will drive your marketing. For example, if Bank X is the lender and they take an average of 90 days for approval, you're looking at a five month process for closing. That timeline helps you define the type of buyer you need to find. If a buyer needs to move into a new home within 60 days, no matter how much they like the house, they're the wrong fit.

5) Have you received any notices from your lender?

This will help you determine the potential for foreclosure and the timeframe available to you to attempt a short sale. A Notice of Default is a private notification from the bank to the homeowner. It's the start of the foreclosure process. Generally, once your client has received a Notice of Default, you have less than four months to come to an agreement with the lender on a short sale. A Notice of Trustee Sale is a public notification from the lender indicating when the home will be put up for auction. If your client has already received a Notice of Trustee Sale, your timeline for finding a buyer and selling the home is significantly shortened.

6) Who is on the title?

It's surprising how many times homeowners aren't aware of who is on the title. A common scenario is a title that lists an ex-spouse, in which case that individual will need to be involved in the process as well. Pull the paperwork so you know who is legally obligated in the transaction.

7) Has the home been listed recently?

If it has, that listing price will help you determine what the market has established as its value.

8) How many beds and baths are there?

You want to gather information so you can accurately assess the value of the home. It's not unusual for a 2 bedroom/1 bath home to show up in the county records as having 2 bedroom/1 1/2 baths. This is also the time to ask about other qualities of the home that may negatively affect the value, such as a less than desirable location next to a freeway or a basement that floods regularly. When we work with brokers on negotiating a short sale, one of the critical steps is gathering information beyond the square footage and bed and bath count the lender will be relying on to value the property.

9) Does the home need any structural repairs?

If the home needs a new roof, you'll want to get bids that you can submit to the bank to help them set an appropriate price for the property that the market supports.

10) What's the best way for me to contact you?

Some clients prefer phone calls; others text or email. Calls during work hours are fine for some people and not for others. By respecting their preferences, you let your client know that communication is a priority for you. (Note: Lack of communication is one of the top complaints sellers have about the short sale process.)

How Short Sales Affected The Tax Credit Extension Debate...

Apparently, the huge number of short sales was a key factor in why Congress ultimately decided to extend the $8,000.00 tax credit deadline until September 30. In a letter to Congressional leaders on June 29, the National Association of Realtors said as many as 75,000 buyers and sellers were still awaiting bank approval of short sales or were coping with delays caused by third parties with responsibility for closing the transaction. Major news outlets such as CNN speculated that the complication of closing short sales was a primary reason so many people faced losing the tax credit benefit.

WPS knows this reality only too well...We track short sale statistics in the Greater Seattle and Puget Sound area, and we see than an alarming number of short sale transactions get stuck in the pending status and never get to a closing. This will continue to be a problem unless and until real estate agents get better education on how to handle short sales or hire professional third party short sale negotiators.

Maybe the Congressional tax credit extension debate will shine some light on this important issue.

Is a Short Sale Better Than a Foreclosure?

Washington Property Solutions is often asked about the benefits of a short sale versus foreclosure. In most cases, a short sale is considerably better. However, the issue is not about credit. Leave the credit conversation to a credit expert.

The pros/cons discussion should really be about how long someone will have to wait before buying again in the future.

We have combed through the latest information from Fannie Mae, Freddie Mac, FHA and VA to compare the financing waiting periods between short sales and foreclosures. You can see from the chart below, that in many, many instances a short sale is a better outcome in the long run compared to a foreclosure.

The Key To Navigating the Short Sale Process with Bank of America

Understandably, Bank of America has been the target of much criticism for how difficult they have been to work with in trying to successfully negotiate a short sale. Just this week nearly 100 angry homeowners took to the streets in Las Vegas, protesting what they call unfair treatment by Bank of America.

But since December 2009, Washington Property Solutions has utilized BOA's Equator Financial web-based system and it has been a great experience. Our ability to communicate with BOA directly through the Equator system is an extreme improvement on their execution and response time. Other lenders have been using Equator also and WPS has become proficient with each of their unique processes.

The system can be difficult to maneuver through, but we have been successful in learning the intricacies of the system. Previously Bank of America's short sale process could take up to 2 weeks for a file to be activated properly. Through the use of Equator we are now able to initiate the short sale process with Bank of America in less than a minute. We can upload the required documents directly into their system and get instant confirmation that they have been successfully received. The use of Equator has also eliminated the need for repeated requests for updated financial documentation from the sellers.

The new system does require that the sellers create an account and sellers do have required tasks assigned to them, but WPS is happy to assist all our clients to successfully navigate the system. At the seller's request, we are willing to take care of the tasks required for them if they are having problems or other time constraints.

Nice to see some positive developments with the Bank of America short sale process.