In any business, whether it be real estate or other, in order to be successful one must have a systematic approach to their craft. This holds true when putting a short sale transaction together. During our 5 year tenure negotiating short sales, we have found that some Real Estate professionals lack such an approach.
I learned early in my mortgage career that if I submitted a lackluster credit file to my underwriting department I would receive lackluster results. These results included denied files, upset underwriters and a processing department that wanted to throw the file back on my desk faster than I wanted it submitted. I quickly remedied the situation after a conversation with a very good friend who is a million dollar producer in the financial services industry. He shared with me his systematic approach when handling his clients. He did not sway from this system. He applied the approach to every client that he spoke to. He did the work up front, asking every detailed question imaginable on his fact finding sheet. He left no stone unturned. Though sometimes monotonous in nature, this systematic approach allowed him to implement a solid financial plan for his clients and provide the bridge to a solid financial future.
I quickly adopted a similar approach with my clients. I was able to come up with a systematic approach to my origination method that was both trackable and attainable. I left no stone unturned when speaking to my clients. I made sure I over documented the credit file and provided a complete and accurate credit profile to my underwriting department for every client I had the pleasure of writing a loan for. The results were amazing. I was pushing files through underwriting with transaction speeds never seen before and I was making allies doing so. When the processing and underwriting departments received a file from me, they knew it would only have to be touched one time and a conditional approval would be granted. They actually wanted to receive files from me rather than wanting to throw them back on my desk. Success!
I share this information because the short sale application process is very similar to the loan origination process.
However, if you take a shot gun approach rather than a targeted systematic approach to the process, you will set yourself up for failure. Below are the documents one must attain to make sure the short selling bank does not throw the file back on your desk when submitting the file for short sale approval:
Financial Information
- § Tax information
- § Two most recent 1040?s
- § Two most recent W2?s
- § 60 days of current bank statements
- § 30 days of current pay stubs or commission check stubs
- § If self employed-pay stubs or YTD profit and loss statement
- § Monthly budget/financial statement signed and dated same day as P&S
- § Hardship letter dated signed same day as purchase contract
- § Any docs supporting the actual hardship
- § Medical bills
- § Child support or alimony payment information. Divorce decree or child support order
- § 1st Mortgage statement
- § 2nd Mortgage statement if applicable
- § Recent Real Estate tax bills
- § Recent condo association bills if applicable
- § Any recent water or sewer bills
- § Authorization form
- § Short sale disclosure
- § Waiver of conflict if representing the buyer
- § 3 recent comps
- § Listing agreement
- § Offer/P&S
- § Listing history
- § Buyer proof of funds letter or Pre Approval letter
Hardship information
Mortgage & Other Relevant Property Information
Other Pertinent Documentation
It is important to understand that the above documents are required for almost every short selling bank. There are also bank specific forms that, in most cases, must accompany the above. You may contact your negotiator or the bank directly to obtain the bank specific documents. However, if you make an attempt to structure a document checklist with the above documents and systematically approach every short sale file with the idea of fulfilling that checklist, you will soon see that the short sale process will be one which will prove to be lucrative. The end result will be a happy buyer, seller, production team and, of course, bank negotiator. After all, a systematic approach to the short sale process will alleviate the negotiator throwing the file back on your desk for deficient information. In fact, they will be eagerly awaiting the next file with your name on it!