Short Sale Practice

Pearl Zavertnik

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Pearl Zavertnik

Real Estate Investor

Loss Mitigation Specialist

SJREI

November 17, 2009

Short Sale Process•Realtor Short Sale Vs. Investor Short Sale

•HUD-1 Vs. Net Sheet

•Success Rate

•What Short Sale is and What it is Not•At the lenders discretion

•Not an Entitlement

•Short Sale Documents

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• Authorization to Release Information

• Offer/Cover letter

• Financial worksheet/Bank forms

• Mortgage statements

• 2 months pay stubs or Unemployment statements

• 2 months Checking/Savings

• 401K or other retirement stmts

• 2 year tax returns

• Listing agreement

• CMP/BPO/Repair list

• Purchase Agreement

• Proof of Funds

• HUD1 or Net Sheet

Short Sale Practice• Short Sale Process

1. Home owner to listing agent

2. Documentation and CMA or BPO1. Financials - summary, income, checking/savings

2. Personal - hardship, tax returns,

3. Property - CMA/BPO, purchase/listing contract, repairs

4. Communication -cover letter/offer letter, contact info, HUD1

3. Buyer and selling agent1. Lender selection

2. Exit strategy

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2. Exit strategy

4. Complete package submission

5. Verification of package in the system

6. Follow up and negotiation• Purchase price

• Closing cost

• Escrow length

• 2nd payoff

• Promissory notes

7. Submit supporting documents as necessary

Short Sale Practice

• Common Short Sale Mistakes

• Top 10 List1. Inadequate education

• Know what ss is - not an entitlement

• Time frame for the process

• Deal with the lender as loss mitigation specialist

2. Dealing with Suspects not Prospects• They have at least the light hardship

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• They have at least the light hardship

• Overleveraged - not hardship

• Home owners attitude

• Ss is not short STAY - ready to move!

3. Lack of Funding• More down payments, seasoning, first time buyers

4. Not knowing the real value of the property• You are the professionals - know how to do this

• 10 comps - 2 high and 2 low

• Apples to apples; bed/bth/sq ft/year/distance

Short Sale Practice• Common Short Sale Mistakes

• Top 10 List5. Unrealistic Offers

6. No Exit Strategy• Resell- flip, retail, assign

• Equity - reinstate and short 2nd

• Find buyer instead

7. Not knowing the jr. liens• Do your title search

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• Do your title search

• Ex: 3rd, 4th + income tax lien

8. Incomplete short sale package• Each document update will take +2 weeks

9. Not understanding the BPO process• This is where you justify your price - Be there!

10. Giving up too easy• Demand new BPO, send local info, etc

Short Sale Practice

•Changes in Short Sale Processing•Government Mandate

•Mandatory loan mod review - MHA program

•Pros and Cons

•Lenders and their investors•Being educated

•Correcting the original errors

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