The short sale process as we know it today is far more systematized than it was when these transactions began in earnest several years ago. The lenders in particular have gotten better in dealing with them. Overall, in addition to the Realtors who are becoming short sale certified, the other major players are getting in the game:
· Banks recognize that selling homes for less than what is owed is sometimes the reality
· Sellers take advantage of this means of retaining some integrity for their credit profile
· Buyers are more savvy when it comes to shopping short sales
As a mortgage banker and the fifth piece of the puzzle, I guide my clients to proceed cautiously in short sales. This caution takes the form of having them go through underwriting first to get all the kinks out of their application while we are still 2-4 months away from closing. Since the time frame exists, we should utilize it. By proactively making sure that we address any of the issues that could become roadblocks later, we can just wait until all the other players catch up to us.
1. Be Prepared – We don’t want to be less than a month away from closing when the buyers are focusing on alerting the utility companies and finalizing arrangements for their child’s new school and get hit with a huge loan package to complete or have to scramble for bank statements, etc. when these are all things we could have already completed and had ready in a big, fat folder.
2. Be Prudent – I encourage my clients to hold off on expenditures like surveys, appraisals, and loan lock fees because these cost money they may not need to spend. I always recommend waiting until we have written approval in hand.
3. Be Primed – Short sale terms can change. Sometimes it’s more money needed at the closing, or the conditions of the deal get altered. We wait until we get it all in writing. I never want my clients to be in a position where they are told one thing and then another thing comes knocking at the door.
With short sale transactions we do what we can do: control the components that are controllable, and maintain plenty of elbow room to insulate from the ones that are not.