Loan modification, foreclosure defense, short sales and other strategies for the burdened homeowner

Emergency short sale guide

Hello, welcome to day 7 of the free trial version of Short Sale Your Home and Get Paid to do it home study course. Today we’re going to be talking about the 30 Days To Sheriff Sale Emergency Quick Start Plan. If you have 30 days or less before your house is scheduled to be auctioned off and this constitutes an emergency. You have to do something quick to start a short sale and if necessary you need to also consider and start researching immediately ways to delay the sheriff sale further, so you can actually do a short sale.

The first thing that you do in an emergency situation is call your lender. When you reach someone if possible ask to be talk to or be transferred to the loss mitigation department or the department that handles short sales.

Once you have found the best person that seems to know they are talking about, you want to let them know that you’ll have an offer very soon. Ask “What are the requirements to submit an offer in order to get a short sale acceptance.” Create a check list based on what they say.

Your lender is going to tell you a few things that you may need to submit a short sale offer. But for sure you’ll need the following things. You’re going to need a purchase agreement. In a minute we will talk about how to find a buyer in a jiffy. You’ll also need a HUD 1 which is a settlement statement that’s required to be used by all title companies and closing attorneys when they close the sale of a home. It shows all the details of a real estate sales transaction.
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The first thing you need to do after you have found out the banks requirements is to find a title company. You might say something like, “Hi, I’m looking for a title company to help me in the sale of my home doing a short sale and I have a few questions for you. Can you do a title peak?” A title peak is a quick view of the title to see if, at first glance, there appears to be any liens on my property. You’d be surprised of what can pop up and attach to your property. You want to know about these things as quickly as possible. They can typically do a 5 minute search for free and tell you exactly what’s happening on your property. You also want to ask them, “hey I have an offer [or I’m getting ready to have an offer] and I need the bank to evaluate it, but before I do that, I need a preliminary HUD 1 net sheet. Can you help me prepare one if I give you the offer? If they say yes, great you have a title company.

How do you find the buyer? I told you I’d help you find one in a jiffy. There are thousands of ready, willing, and able buyers. The only reason they need in order to make an offer on your home is if they have the opportunity to get a good deal. They don’t need you to spend beautify it or spend thousands of dollars doing all sorts of repairs, like most Realtors are going to ask you to do in order to make it retail ready. All they want to know is “May I have an opportunity to get a good deal on your property.”
It benefits you to work with these people because they’re offering you the opportunity to be able to get out of your house with the least damage to your credit and also they’re your one opportunity to use a sale to help delay the foreclosure on your property.

During the period that you are negotiating the short sale you’ll have time to possibly find a better offer as well. Essentially an investor buyer will help you do what you need to do in order to arrange your finances properly. So how do you find this crappy low buyer that’s going to low ball your house? One of the best ways is on the internet. Do a Google search for “I buy houses”, “we buy houses” or “home investors”, you can also search for specific cities like if you live in San Diego, Can you can say “San Diego we buy houses.” You want to look for someone who’s willing to make a cash offer on your property. You don’t necessarily need someone who is a foreclosure investor, especially if you’re planning on handling the negotiation of the short sale on your own home. All you need is someone that has cash and is willing to make a quick offer even if its probably going to low.

The other thing you can do is visit Craigslist.org. Pick your city go to the services section and go to real estate. You’ll find a lot of Realtors and people offering various real estate services. Some of these may be great services, but there are specifically looking for adds that say, “we buy houses” and or “cash offers for homes.” Go after those people and see what they can offer. Along the same line you can go to your local newspaper and check out the real estate wanted section. Typically there’s a bunch of “we buy houses” ads and stop foreclosure ads and real estate wanted ads, so you can call some of those people and see how they work and see if they can put an offer on your property. Also you can check out the for sale section and look for numbers that re-appear over and over again. Especially rent to own ads. If it is not a Realtor then it’s probably an investor. Talk to to these people and see if they’re interested in your property. Keep your eyes open. In the next week you’re going to see “we buy houses” on bus stops, TV ads saying “we buy ads” and “I buy houses” billboards.

You want a buyer that’s going to pay cash. Ask them how they’re getting their cash. Make sure they offer proof they can actually buy your property with a bank statement or letter from their banker. Let them know you need this in order to present it with their offer to the bank. Often times banks do require what’s called a proof of funds. So just ask them for that, to make sure that your buyers qualified. As long as your buyer is qualified there is no reason to turn down an offer. Just accept the offer with the following line written in the contract. You will always write in a contract, hand written on the front page with big ugly blue pen the following “This offer is contingent on bank acceptance of short sale and forgiveness of debt. All title and escrow will be performed by XYZ title company.” Insert your title company name. Initial next to that and have the buyer initial as well. This phrase will now supersede the offer and it protects you if the bank doesn’t offer you the terms you need in order to close the short sale and feel good about it. If for some reason the bank doesn’t give you really good terms for a short sale letter it’s your option not to continue the short sale and the buyer can’t force you to go through with it.

Once you have this offer you can put it together with the packet you’ve compiled and present it to the title company and have them create a correlating HUD 1 that matches the contract. Then you submit it the bank along with the required hardship information.

Once you’ve submitted to the lender you want to follow up every 24 to 48 hours to see how things are going and you want to make sure that the lender sends somebody out to value the property. The lender valuation, also known as the Brokers Price Opinion (or BPO) is actually the most essential part of the entire short sale process. There’s a whole set of things that you can do to influence how that value comes out, which for this introductory course is a little too much to talk about. In the full Short Sale Your Home and Get Paid course I talk in depth about all the ways to make sure that the BPO value supports your offer.

Now I want to talk about what happens after you have gotten your offer, you’ve gotten a BPO value, your lender has evaluated the offer and they’ve accepted it. They are going to give you something called an acceptance letter. In the letter that they give you, it’s going to spell out all of the details of the short sale and what they’re accepting and how they’re going to do it. There’ll be terms for whether the deficiency is forgiven or not. If you see something that says, “this is a settlement” or “this will be marked as paid in full on your credit” then typically that means that your debt is going to be forgiven. The amount of money that comes from this sale and goes to the bank is going to actually pay off the loan. If you see the phrase “lien release,” then be very careful. The phrase “lien release” means the mortgage or trust deed may be released but unless other wise stated you may still be obligated to pay on the short sale defficiency. Sometimes they will try and collect and sometimes they won’t. If you’re filing chapter 7 bankruptcies or have already, then a lien release is just fine chapter 7 removes all your personal obligations any ways.

I always advise that you have an attorney review the short sale letter.

In addition to negotiating how the deficiency is handled there are other terms that can be negotiated as well. One term that is definitely negotiable is the you have to close. Very often your buyer will need more time than the lender offers in order to close. Banks don’t want to take back the property and they will typically give you almost has much time as you need to get things closed. They’ll tell you they won’t but when they understand that it’s not going to close anyways they will always give it to you because they want it to close.

Understand that short sale letters are negotiable sometimes. Other times there they’re completely non negotiable. For a lot of the bigger investors like Fannie May and Freddy Mac, and some of the bigger servicers, the short sale letter is a standard legal letter and it really can’t be changed outside of special circumstances. It may also be worth while try to negotiate how the short sale will be reported on your credit report. Ideally you would request that the loan will be reported as having been paid in full and that it all payments will be reported retroactively as having been made on time. You can ask for things like that and its always worth you asking.

Below on this page (see the actual lesson- get Immediate access to video and lesson resources by opting at the bottom of this page) I show an PDF example of a pay off letter before negotiation and then afterwards with the language changed protecting my client from deficiency collection. I also show several other payoff letters so you can get a better idea of what you can expect for various lenders.

If you think a short sale is for you then your homework is to call your lender and ask them what the requirements are for a short sale. Till we talk again… good bye.