The New Face of Short Sales:
- Part 1: Basic Short Sale Information
- Part 2: Homeowner’s Preparation before a Short Sale
- Part 3: After Receiving Your Short Sale Agreement (Tomorrow’s Post)
The New Face of Short Sales: Part 2
By Phil Tesoriero
KCM Short Sale Sample Forms
Part of the servicer’s due diligence will be to determine “expected recovery through foreclosure and disposition.” If they can determine that they will experience greater recovery of funds via a foreclosure, as opposed to your offered short sale price, they often will reject the short sale. Preparing a carry cost analysis to project the costs associated with the foreclosure and the carry cost of the loan will be helpful in projecting a more positive outcome. The analysis should include items such as unpaid principle, interest, taxes, insurance, etc. in the projected time frame for the foreclosure sale to close.
Your servicing company will try to determine the value of the property often through a broker’s price opinion (BPO). By performing your own BPO, you are not substituting the servicing company’s BPO, but are helping to build a case for a short sale as well as influence the servicing company’s decision. A BPO is a summary of the property and a comparison of it to three sold properties and three listings. The sales and listings, known as comparables, should be geographically close and similar to your property. Comparable sales must be recent (usually within three months or less) and listings should still currently be on the market. A well prepared BPO can have a significant impact on the lender’s final decision.
With all this done it is important that an income and expense statement is prepared for the servicing company. This statement helps establish your income limitations and inability to pay your current debt. Attaching recent paystubs along with banking statements and copies of tax returns will also be very helpful and often required.
The servicer has also required you make available to them a preliminary title report to establish any other liens that will affect your ability to transfer title. Contacting a title company and requesting them to prepare this report for you to submit to the lender will be required and is an important part of the completed package.
For more information on Phil and his work go to http://thebigforeclosuresecret.com/.
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Phil Tesoriero has been actively teaching on defaulted real estate for the past 3 1/2 years. He has written and teaches the only class in the country approved by NAR to satisfy the prerequisites for receiving SFR certification. He is also one of only a few speakers NAR acknowledges to speak on the topics of Short Sales and REOs. As a former New York City firefighter, Phil knows what it is like to help a family in need. He extends the same helping hand when rescuing families from foreclosure.
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Click on the “Rescued Home” whenever you want more Short Sale information.
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