What Can a Buyer Do in a Short Sale?
Before we talk about what a short sale listing agent does, let's look at what a buyer can do to make a short sale move along. There are buyer duties in a short sale. They are:
- If your purchase contract is signed electronically, print it out and sign it with an ink pen. Just sign above your initials and signatures. Give it to your agent to deliver to the listing agent. The bank might want it because not every bank accepts digital signatures.
- Make sure your preapproval letter has a current date. Many preapproval letters are good only for a limited period of time. Do not let your preapproval letter expire.
- When the short sale agent asks you to sign an addendum or get a document notarized for the bank, do so promptly. A delay in returning such a document could delay or close the short sale negotiation.
- Do not alter or change your financial situation while you wait for short sale approval. If you make a major purchase, you could cause a problem with your loan. Do not deplete savings nor put any unusual charges on a credit card.
- Be patient. Do not tempt yourself by looking at homes online or going to open houses. You've made your selection. You'll drive yourself nuts if you don't focus on this purchase. If you are not committed to buying this home, don't buy it.
What a Short Sale Listing Agent Does to Process a Short Sale
You should find out if the short sale agent handles his or her own negotiations or if the agent hires a third-party for negotiation. It is almost always better for the short sale agent to personally handle the negotiations. A third-party negotiator rarely represents the seller and might not know how to handle conflicts, problems or irrational demands, all three of which are prevalent in short sales.
Here are the typical duties and responsibilities of a short sale agent:
- Packages the documents required by the seller's bank and sends those documents to the bank.
- Requests updated bank statements and payroll stubs from the sellers and sends those documents to the bank.
- Orders the HUD and sends it to the bank.
- Coordinates the bank's efforts to obtain a BPO.
- Prepares and delivers a CMA to the bank.
- Negotiates offer price and second-lien payoffs with the first lender.
- Negotiates demands of second lender, if any.
- Checks in with the lender weekly to inquire about status and whether other documents are needed.
- Delivers updates to the buyer's agent as they happen.
- Orders the preliminary title report.
- Complies with demands from the short sale bank that may appear ridiculous but nonetheless are required.
- Advises the seller to seek legal and tax advice when the short sale agent recognizes such advice is warranted.
- Reviews short sale approval letter to make sure it matches the HUD.
- Obtains a release of liability for the seller, if such a release is possible.
- Delivers the short sale approval letter to all parties involved in the short sale.
- Coordinates access to the home for the buyer's home inspection.
- Reviews closing documents and / or attends the closing.
Any little upset along the way can throw the short sale into chaos. It is the short sale agent's responsibility to put it back together, keep all the parts humming along and manage the expectations of the parties through communication and updates.
This is not a simple task, even if it sounds fairly simple. It is the reason many agents would rather drink a bottle of cod liver oil while beating themselves on the head with a hockey stick than do a short sale. Short sale agents who specialize in short sales know how to handle unpredictable events and are prepared to deal with the unknown. Every day is different.
It requires patience, skill and never letting go of the big picture: closing that short sale.
At the time of writing, Elizabeth Weintraub, DRE # 00697006, is a Broker-Associate at Lyon Real Estate in Sacramento, California.