Category: Orlando Short Sales

The Complete Short Sale Process From A to Z

Posted on by Jenny Zamora

Even after all these years, the short sale process remains a mystery to many people. Distressed sellers are puzzled and desperate for some guidance from a short-sale agent. Even more confusing… most real estate agents in Orlando don’t know how to do a short sale.

What’s a Short Sale?

A short sale is a situation that occurs when a mortgage lender agrees to accept a lesser amount than what’s owed on the outstanding mortgage balance. This situation benefits both the lender as well as the seller [homeowner] when foreclosure seems unavoidable.

By agreeing to a short sale, the lender can avoid a long drawn out and costly foreclosure process. Because even if the bank forecloses, there’s no guarantee that it will sell at the auction in which case the lender would end up back with the property as an REO [real estate owned] property. If the lender keeps the property, they will ultimately have to put it up for sale again, and there’s no telling how much they will get or how long it will take.

The dollar amount offered on a short sale is often more than a lender would receive at the auction or as an REO listing. However, you should know that banks are never thrilled about releasing mortgage obligations at huge discounts either.

The Seller

There are 2 main reasons why lenders grant short sales. First, the homeowner is going through a financial hardship and cannot continue paying the mortgage. Secondly, there isn’t enough equity in the property to pay off the mortgage and closing costs, taxes, etc. Both of these conditions must exist for a bank to approve a short sale.

A few examples of financial hardship may include loss of employment, reduction in income, divorce, medical condition, job transfer, bankruptcy, or even death.

Sellers must prepare a financial package so they can submit it to their lender. Every bank has a different short sale package but the basics are the same among all lenders.

The Short Sale Package

Following are the main components of a typical short sale package:

  • Authorization Letter: This is a document which allows your short sale agent to speak with your lender on your behalf.
  • Hardship Letter: A detailed letter describing the hardship the seller is going through explaining why they can no longer afford the mortgage.
  • Preliminary Closing Statement: Discloses the contract amount, realtor commissions, closing costs, taxes and any other fees involved with the transaction.
  • Financial Statement: A statement which discloses your income versus your expenses.
  • Two years of your tax returns
  • Two years W-2s
  • Last two bank statements
  • Two months of pay stubs
  • CMA: This is a report prepared by your short sale agent which lists recent sales of comparable homes in your area.

Submitting an offer to the Bank

Before submitting a short sale offer to the lender, buyers should ask their real estate agent for a list of comparable properties. The lender will look to get an offer that’s close to market value.

It’s important to keep in mind that the listing price on a short sale may not reflect the market value. The property will most likely be lower than market value to entice more buyers to make an offer. Most short sales begin when there’s a signed and accepted purchase offer by the seller and buyer.

Keep in mind that the short sale listing price might not reflect market value. The property might be priced below comparable sales to encourage multiple offers. Some short sales can begin before an offer but banks will most often start the procedure upon receipt of an accepted purchase offer.

Once the seller accepts the offer, the listing agent will then send the listing agreement, signed purchase offer, and proof of funds to the bank together with the completed short sale package.

If the package is incomplete, the lender won’t even process it. This is why it’s so important to have an experienced short-sale agent representing the seller.

The Short Sale Lender

Short sales are anything but short… buyers can end up waiting several months to get a response from a lender. The short sale listing agent must follow up with the bank regularly and keep detailed notes of each contact. Being a short sale agent in Orlando since 2004, I can tell you that following up regularly with the lender is crucial to the success of a short sale transaction.

I can’t tell you the number of times a buyer has decided to cancel their offer because of the bank taking too long to respond. This is especially true when the buyer needs to buy a house ASAP. For buyers wanting to close quickly, a short sale may not be the best option for them.

The Usual Process

Once the lender receives the completed Short Sale package, this is usually what takes place on the bank’s end:

  • The loss mitigation dept acknowledges receiving the completed package. This alone can take between 1 – 3 weeks.
  • A short sale processor is assigned to the file, this can also take up to a week or two.
  • A BPO aka [Broker’s Price Opinion] is ordered. The lender will contract a local realtor to give their opinion on what the property is worth. They do this by looking at the comparable properties in the area and are supposed consider any repairs the home may need.
  • Another short sale processor maybe assigned to the file. This can add another week or 2.
  • A second short sale processor might be assigned. This can take another 30 days.
  • The offer is either denied or accepted. If the offer is denied, the bank will counter with the amount they are willing to accept. At this point the buyer may wish to counter the bank’s offer together with a contractor’s estimate and a CMA.
  • Once the bank has accepted the offer, the lender will require all parties in the transaction to sign an arm’s length affidavit. This document states that parties are unrelated and acting their own best interest.
  • The lender will send out a short sale approval letter approving the contract amount.

While all this is going on, sometimes buyers will give up hope and cancel. They become tired of waiting because the short sale process is taking much longer than they expected. I’ve had situations with clients where buyers just walk on the deal without even telling their real estate agent.

I’ve had some Orlando short sales get approved in two weeks and others take more up to 6 months on average. A top short-sale realtor can help speed up this process, but at the end of the day, it’s all up to the lender. Some lenders are easier to work with than others.

It’s crucial that the short sale agent check-in with the short sale bank at least once or twice a week. Unfortunately, there are many incompetent short sale processors and the short sale agent may have to go over the processor’s head or request an “escalation”.

Final Thoughts

A good short sale listing agent will often have a good idea about when approval will come after the file has been sent for the bank’s final review. If so, the buyer would be wise to start the loan process if they haven’t already. Occasionally, banks will only give buyers 2 weeks to close so it’s important to be ready.

Let's Keep In Touch!

New ORC Form Lead

"*" indicates required fields

How To Choose A Short Sale Agent in Florida

Posted on by Jenny Zamora


Your Success Depends on the Short Sale Agent You Choose

A quick word to the wise… pick your short sale agent very carefully. A short sale is way too complex of a transaction to trust a new agent with. And don’t make the mistake of just hiring the agent with the flashiest website either. When dealing with a short sale, you need a short sale specialist… an agent who specializes in short sales.

Back in 2006 when the market crashed and short sales were everywhere, a lot of agents decided to specialize in short sales. Real estate training companies made big profits by offering short-sale training to thousands of agents. However, there’s no way you can learn how to be a short sale agent in just 3 hours. Unfortunately, many homeowners fell victim to these newbie agents claiming to be short sale specialists resulting in a failed short sale transaction.

Now in 2020, short sales in Orlando are not as abundant and there are a lot fewer short sale agents. Many times I get referrals from other real estate agents in Orlando because they don’t want to deal with the extra work involved with processing a short sale.

Ask a Real Estate Agent to Refer You To a Short Sale Agent

If you have a friend or relative that’s a real estate agent, chances are they’ll be able to refer you to a good short-sale agent. Short sales require a lot more work than a traditional transaction which is why most agents avoid them and are happy to refer them to another agent.

How Experienced Should my Short Sale Agent Be?

There are realtors out there that have been in the industry for several decades and have a ton of experience. However, some real estate agents stay in the business for longer than they should. What I mean by that is… the real estate business changes constantly and if you have an agent that’s set in their ways of doing things and not willing to keep up with the changes, then you’re in trouble and you should probably find another agent.

When it comes to finding an experienced short sale agent, you need to verify how active they’ve been recent. Ask them to show you proof of recently closed short sale transactions and find out how many clients they’re currently working with. Sure, they must have been doing short sales for a long time but even more important is what have they done lately.

I’ve been a short sale agent in Orlando, FL since 2004 with thousands of closed short sale transactions and I can tell you that there have been a lot of changes in the way short sales were handled back then and now in 2020. From different incentive programs being offered by lenders to the Federal rules and regulations, everything will continue to change.

When choosing a short sale agent, here are a few questions you should ask:

  • How many years have you been a short sale agent? Your short sale agent should have a minimum of 3 years experience in selling short sales. There’s no better teacher than experience. Making mistakes and finding out things the hard way is a great way to learn and avoid making those mistakes on future short sale deals. If you’re able to find an agent with experience in real estate investing, even better.
  • How many short sale transactions have you closed? Just imagine the knowledge of a short sale agent that has closed over 1,000 short sale transactions. These are the elite short sale agents and they will know what each of the top lenders will require, how they operate and what to expect. They will also have short sale packages from every single bank on hand. These agents will more than likely have systems in place to help streamline the process while providing you with individual attention.
  • Do you foresee any problems with my short sale? An experienced short sale agent will know if there are any red flags to warn the seller about just by asking a few questions. Remember, a real estate agent is not allowed to give tax or legal advice. However, the agent should be familiar enough to point out some potential tax consequences, legal issues, etc. Your short sale agent should be able to refer you to a real estate attorney in needed.
  • Do you have any experience with my lender? A past deal doesn’t guarantee you’ll get the same response from a bank, but it can be a good indicator. Different banks have different processes and some are much tougher to negotiate with than others. Chances are that your short sale agent will have some experience with your lender, unless your lender is a private entity or investor. If you have a loan with a private investor, you may not get the answer you want but at least you’ll get a quick response.
  • Will you be processing my short sale? Make sure the agent you’re talking to is also the person processing your short sale. If an agent is too busy, they may pass your short sale off to a third party processors who may not even be licensed. Some people believe real estate attorneys are the best negotiators for handling short sales. This isn’t the case, I actually have several real estate attorneys referring there Orlando short sales to me. The difference is that an attorney will charge you whether the deal closes or not and a real estate agent only gets paid if the deal goes through.
  • How long do you expect it will take for my short sale to close? If you haven’t yet heard, short sales are anything but short. However, if your short sale agent has recently done some deals with your lender, they should have a pretty good idea how long everything will take.

Let's Keep In Touch!

New ORC Form Lead

"*" indicates required fields

Can You Negotiate The Price of a Short Sale?

Posted on by Jenny Zamora

Short sale deals in Orlando can mean big savings for home buyers and investors who are experienced with the process. Short sales can be very time-consuming and require a lot more work than a regular sale, but if you’re willing to hang in there, you could end up with a fantastic deal on a home.

WHAT IS A SHORT SALE?

In case you don’t know, a short sale is the sale of a house whereas the mortgage company allows the homeowner to sell the property for an amount less than what’s owed on the note. Because of this, short sales are very popular for homeowners who are no longer able to afford to pay their mortgages. This also allows banks to get most of their money back and avoid taking a homeowner through an expensive foreclosure process.

A short sale is also much better for the homeowner because it allows them to avoid having a foreclosure on their record which is very damaging to your credit score. The short sale process can be beneficial not only for lenders and homeowners but also for potential buyers… if they’re willing to stay the course no matter what.

CAN YOU NEGOTIATE A SHORT SALE?

Short sales are all about back and forth negotiations, but they are anything but short. It can be a very time-consuming process and there’s never a guarantee that the lender will approve your offer. Lenders are not required to accept any short sale offer on any property. To negotiate a successful short sale, you must be familiar with the process.

MAKING AN OFFER ON A SHORT SALE HOME

These days, very few first short sale offers are accepted so don’t get your hopes up. Your ability to negotiate will have a lot to do with what the final accepted price will be.

Very few initial short sale offers are accepted, and for those that are,
there is a large amount of negotiation involved. Your ability to negotiate will often determine the final price that is accepted. Check out the following tips to help you put your best foot forward:

Look at the comps: You must know how much the house is worth so that you know you’re getting a good deal. You should enlist the help of an Orlando real estate agent to help you with this as they have access to the MLS and other tools. Submitting a lowball offer is the quickest way to get rejected while offering too much can cause you to lose money. That’s why having a real estate agent in your corner is vital.

Submitting the 1st Offer: Assuming the homeowner has already been granted permission to short sell their home, the negotiation process begins when you submit your first offer. If the property requires repairs, then you should include a contractor’s estimate with your offer. This is done to justify your offer and also lets the lender know the home needs work.

The Short Sale Agent: Hopefully the listing agent that’s doing the short sale for the seller has some experience processing short sales. If not, then you might be headed for trouble, and unfortunately, there’s nothing you can do about it because it’s up to the seller to choose the listing agent.

The BPO aka [brokers price opinion]: After the offer’s been submitted, the lender will order what’s called a BPO. This is usually performed by a local real estate agent of the lender’s choosing to determine what the fair market value of the home is. Whatever this number comes in at will usually determine what the lender is willing to accept. However, sometimes [most of the time] this number will still be a bit higher than it should and so the negotiations begin…

The Counter Offer: If your first offer was accepted, either you offered too much or you are really lucky! Hopefully, it’s the latter…but not likely. Most of the time, the 1st offer will be rejected and the lender will either… tell you how much their willing to accept or they may tell you to submit your final highest, and best offer. At this point, you should tell your realtor to do the comps again before submitting your final and best offer. How the short sale agent handles this will have a lot to do with your chances of success.

Short Sale Tips From a PRO

In my career as an Orlando Real Estate Agent, I’ve completed thousands of successful short sales in Orlando and throughout the state of Florida. I can tell you that processing and negotiating a successful short sale requires skill, experience, tenacity, and most of all patience. To give yourself the best chance at getting a deal, here are some tips:

  • Work With An Experienced Short Sale Agent: Whether you’re looking to buy a short sale or do a short sale on your own home, you should do so with the representation of a real estate agent experienced in short sales. Take your time in finding the right agent as this part is crucial to your success.
  • Have Your Funding in Place: Sometimes lenders will only give you 2 weeks to close on an approved short sale property. You should have your financing in place before you even start submitting offers.
  • Start The Loan Process Early: While not always the case, some banks will offer a small closing window to those looking to secure a short sale (sometimes as little as two weeks). Those that have yet to secure funding may find that the window is too short. Therefore, it’s a good idea to get the ball rolling on financing as soon as possible—perhaps even before the file is sent for final review.
  • Follow up, Follow up, Follow up: Be sure to maintain constant contact with your real estate agent to be aware of what’s happening with the file.

Summary

Short Sale

Short sales in Orlando have served as some of the best deals since 2007 and still do so today, although it’s a bit more competitive now in 2019. However, if you’re willing to put in the work and stay the course, it could mean a big payday for you!

Let's Keep In Touch!

New ORC Form Lead

"*" indicates required fields

Orlando Short Sale Process: Get Rid of Mortgage Issues for Good

Posted on by Jenny Zamora

The Orlando Short Sale Process for Sellers Step by Step

I’ve been an Orlando short sale realtor since 2004 and although there have been changes in rules and regulations, etc., the short sale process for sellers has pretty much remained the same. Going through the short sale process can be intimidating, to say the least. However, by getting a handle on it from the start you’ll have a big advantage.

Why Consider A Short Sale?

A short sale is when a homeowner sells their property for an amount that is less than what they owe on their mortgage. A short sale is often the last resort for people who have exhausted all other options to save their homes and avoid foreclosure.

If you want to keep your home try a loan modification first. Speak with your lender about your situation. You may qualify for a loan modification and avoid having to sell it at all. A loan modification is exactly what it sounds like… it’s when a lender adjusts the terms of your mortgage making the payments more affordable so that you can keep your home.

The Home Affordable Modification Program aka [HAMP] is a program by the US Department of Housing and Urban Development and is a good place to start. Homeowners who qualify for HAMP are put on a 3 month trial period. Those who it through will be approved at the new payment avoiding foreclosure.

If a loan modification is just not an option pursuing a short sale would be the next step. When you speak to your lender about doing a short sale, do it sooner than later and don’t wait until you’ve already missed several mortgage payments. A short sale means that you are attempting to sell your home for less than what you owe on your mortgage which means your lender needs to sign off on it.

What’s A Short Sale Package?

Lenders have a set of rules or qualifications that need to be met before getting approved for a short sale. Although they may vary a bit, all lenders pretty much have the same requirements for their short sale packet.

The lender will require the homeowner to submit any documentation which proves they are going through a financial hardship and truly cannot continue to make the mortgage payments. These documents will include bank statements, pay stubs, financial statements, asset disclosures, and of course a hardship letter. A hardship letter is a letter written by the homeowner explaining in detail why they can no longer continue making their mortgage payment.

Hiring a Short Sale Agent

Speak with an Orlando short sale expert. A short sale can only be completed by a real estate agent so make sure you hire an agent with a lot of experience in the short sale arena to represent you. The best way to find a short sale agent in your area is to do a Google search using terms like “Orlando short sale expert” or “short sale realtor” and interview at least three of the agents that appear on the first page.

Once you’ve chosen the agent that will represent you, they will then put the short sale package together for the bank as well as determine a listing price that the lender agrees with.

Listing your property as a short sale is a next step in the process. The lender requires the home to be listed on the MLS at fair market value.

Once there’s an interested buyer, the offer should be submitted to the lender. Once the lender has reviewed the offer, there will almost certainly be some further negotiating between your short sale agent and the potential buyer before a price is agreed upon by all parties.

 

Short Sales are anything but Short

It’s important to be aware that short sales are anything but short. It can take several months for a short sale to be approved by the lender.

Make sure your agent finds out from the lender if there are any “cash for keys” incentives available to you. This is when the lender gives the seller money back at the closing to help with relocation costs. If you were able to qualify for HAFA for instance, you will receive $3,000 upon closing the deal.

If all goes well and the lender approves the buyer, the deal closes and all is good with the world. You move out [hopefully with a few thousand in your pocket] and the buyer moves in.

 

When can I Buy another Home?

The next question you have is probably… “how long before I can buy another home?”…

There is no black and white answer to this question. A short sale will surely affect your credit but not nearly as bad as a foreclosure will. Also, the IRS may treat the forgiven debt as taxable income. This means you may end up owing some money to Uncle Sam.

There’s no denying that short sales are a great option for a homeowner facing foreclosure. Firstly, It helps the seller avoid foreclosure and eliminate their debt. Also, the seller can stay in the home without making payments while the process is happening.

We’ve tracked some of our clients after a completed short sale. Homeowners can usually get a conventional loan after four years. Again, this is still much better than having a foreclosure on your record. A foreclosure can prevent you from getting another mortgage for up to seven years.

Let's Keep In Touch!

New ORC Form Lead

"*" indicates required fields

Orlando Short Sales: Ask The Expert

Posted on by Jenny Zamora

Orlando Short Sale Expert Q & A

In this post, we address the most common questions among consumers about short sales and how they differ from traditional sales. In the hot seat, today will be our very own Orlando short sale expert Jenny Zamora. She’s been successfully doing short sales since 2004 way before most people even knew what a short sale was.

Question: What’s the difference between a short sale and a traditional sale in a real estate transaction?

Jenny Zamora: In a short sale scenario, the home is sold for less than what’s owed on the mortgage. Short sales usually take much longer to complete because they need to be approved by the lender/mortgage holder. Sometimes there is more than one mortgage on the home which can sometimes complicate things if both lenders don’t agree.

Once the lender [s] have agreed to the short sale amount then it becomes a normal transaction with a contract signed by both the seller and buyer.

Question: How is a foreclosure different from a short sale?

Jenny Zamora: A foreclosure is when the lender files a lawsuit against the homeowner because they’ve failed to make several mortgage payments and haven’t pursued any other options such as a short sale, loan modification, or paying off the loan. As a result, the property is either sold at a public auction or taken back by the bank if the reserve hasn’t been met.

With a short sale, the homeowner is usually between 60 to 180 days behind on their mortgage payments because of some kind of personal or financial hardship. The property also must be worth less than what’s owed on the note for the short sale to be approved. Although a seller can’t profit from a short sale, many lenders often provide the sellers with relocation costs [usually around $3000] so they have money to help them move into another home.

A short sale however isn’t nearly as bad nor does it stay on your credit report as long as a foreclosure will.

Question: How long does it take to complete a short sale in today’s market?

Jenny Zamora: Short sales used to take 3 to 4 months and even longer to complete even if you followed up with the banks several times per week. As a result, many buyers were getting frustrated and walking away. This happened mostly because lenders just weren’t equipped to handle that many short sales at once and they had no systems in place to help streamline the process. These days, lenders have systems in place and more staff to help move the short sale processing along much faster resulting in much faster responses, typically within 2 to 3 weeks.

Question: Do you have any advice for someone wanting to purchase a short sale?

Jenny Zamora: 1st and foremost to make sure they’re dealing with a short sale specialist. If the agent isn’t familiar with short sales and how they work you could end up being disappointed and not getting your offer approved. Even though I’ve been doing short sales in Orlando since 2004, I’m constantly keeping up to date on the latest information when it comes to short sales, bank procedures, and guidelines.

An experienced short-sale Realtor knows how important it is to stay up to date. Just like there are specialists in the medical field, the same holds in Orlando real estate. We specialize in foreclosure prevention and short sales which is why our company is so proactive in staying educated and informed.

Question: What are the things that can most likely go wrong with a short sale transaction?

Jenny Zamora: Some things can happen with a short sale that is sometimes beyond our control. The most important thing to realize is that it’s ultimately up to the lender to approve or deny a short sale offer. This is another reason to work with a short sales specialist. If the bank comes back with a value that’s way too high, we have to do everything we can to dispute their valuation. Sometimes that means providing contractor’s estimates for repairs as well as a CMA on the home.

A traditional listing agent may not even be aware that you can dispute the bank’s valuation of a property and just let the deal fall apart.

Do you need a Realtor to short sale?

Question: Do you need a Realtor to short sell a home or buy a short sale?

Jenny Zamora: Yes and Yes… and I can’t stress enough to hire a Realtor with a lot of experience in short sales. On the seller’s side, the home needs to be listed by an agent as a requirement by the lender. You also want a strong negotiator in your corner.

As a buyer, it isn’t required to hire your own buyer’s agent. However, if you don’t then you’ll end up using the listing agent as your agent… I strongly recommend you hire your agent that way you have someone looking out solely for your best interests, especially when it comes to negotiating.

Let's Keep In Touch!

New ORC Form Lead

"*" indicates required fields