What to Do on the Weekends to Increase Business??

Well if you are the typical short-sale negotiator, you probably only work Monday through Friday. That is fine because most of your calls and short-sale submissions will happen during the weekdays.

Since most of your short-sales that you start today will not close for a couple of months, it is a good idea to continuously fill your pipe-line. You can do this by hitting the streets and talking to people to see if you can generate more short-sale leads. You can also talk to friends and family to see if they know anyone who is having problems with their making their monthly house payment. Finally, you can research other local real estate agents to see if they need help with their short-sales. To be successful and profitable in today's short-sale market, you need to ensure that you know what you are doing as well as continuously picking up new clients. Clients can be sellers or agents.

Stay tune this week for more info. Have a great weekend!!

Mortgage Insurance & Fannie Mae Loans

Find out if your file has MI (mortgage insurance) and if Countrywide has the final say on the file’s short-sale approval. If it does have MI, then the MI company may have to approve the file before Countrywide's management can approve it.

Also find out if the loan you are negotiating is a Fannie Mae loan. On a Fannie Mae loan a lender cannot force you to lower your real estate commission to less than 6% so long as your listing agreement is at 6%. If you have it for 7% or more, then they can cut your commission to no less than 6% of the purchase price.

Make sure you find out if the loan you are negotiating has MI and if it is a Fannie Mae loan.

Have a great day!

Countrywide Short Sales & Communication with Lender Tips

As the servicer of more than half of the mortgages in the United States, Countrywide is definitely one of the lenders that you need to be familar with if you are working in the short-sale business. Recently, Countrywide has streamlined their process a bit and is working on making the process even easier. Their recent merger with Bank of America has become official, but it is not clear how much of two companies short-sale systems and guidelines will overlap.

As a matter of fact, I am on the phone with Bank of America (15 business day turn around time) right now and they just recently created a distinct short-sale department (phone number 1-866-413-3757). Sitting on hold for more than 10 minutes reminds me to let you know that you should try to get your calls to lenders done as early in the morning as possible. Write down the loss mitigation/short-sale departments phone numbers, fax numbers, and business hours to ensure that you are prepared everyday to call your lenders.

Back to Countrywide (short sale department phone number 1-866-880-1232 fax 1-888-491-4947) the very first thing you want to do is to fax your authorization to the short-sale department and expect 3-5 business days for the document to be uploaded.

The next important step will be to update Countrywide with your client's financial information. They can take this information over the phone. You will need to have a list of all of the income and monthly expense information before speaking to the representative.

The representative will tell you to send in:

1. Authorization

2. Purchase Contract (signed by all parties)

3. Buyer's Pre-qualification Letter

4. Listing Agreement

5. HUD-1 (prepared by your escrow officer, more on techniques for preparation later).

6. Two months of bank statements.

7. Two previous years of Federal Tax Returns (Just send form 1040, signed)

8. Two recent pay stubs (If self-employed, last quarter's profit/loss statement & later years Schedule C (Profit/Loss Statement for year).

You will send that complete package with loan numbers on top of each page to 1-888-491-4947. Do not exclude any of these items. It will delay the assignment of a negotiator.

The negotiations process is divided into three phases. The phase one negotiator has 15 days to review the file and is responsible for reviewing the file make sure that it has all of the documentation and to ask for any clarification on the file. The phase two negotiator will order a BPO (broker price opinion) to determine the current market value of the property. If it appears that the BPO and the current purchase price are within 10 to 15% of fair market value, the phase two negotiator will move the file to phase three. The phase three negotiator is responsible for putting the final touches on the file and submitting it to management for review and approval.

Now you must be aware if your file has MI (mortgage insurance) or if Countrywide has the final say on the file. If it does have MI, then the MI company has to approve the file before Countrywide's management can approve it.

Bank of America 2nd Lien/HELOC Short-Sale Negotiation

I recently negotiated a short-sale on a HELOC (Home Equity Line of Credit) with Bank of America and I wanted to share with you my experiences with old policy versus their new policy.

There was a lot of buzz about Bank of America's new policy that they would now allow for the short-sale lien release to be approved at 5% of the net proceeds rather than 10% of the net proceeds. The net proceeds means the amount of money that is left over once closing costs, commissions, and concessions are subtracted from the purchase price.

Well the first approval that I got in March 2009 was for 10% of the TOTAL BALANCE owed by the seller, which was $9,540.00. That varied from what they had told me about their old policy. Perhaps someone got it wrong when they approved it the first time. This, at first, seemed like a lot to pay for a 2nd lien release. Typically, most 1st lien holders only offer $1,000 to $3,000 to all junior lien holders. The remaining amounts must come from the real estate commissions, seller, buyer, or a combination of those three.

The surprise came when I was looking to get an extension on the short-sale approval. The newly created short-sale department at Bank of America (Their phone number is 1-866-413-3757) gave me a two week extension and stated that if I did not close by that time that I would have to resubmit the file and it would fall under the new guidelines. That now increased my short-sale lien release amount to $18,880.00!! Now that was a lot of money to bring to the table. I tried to get the 1st to increase their offer amount, but they wouldn't. I also tried to get the second to lower the amount of money they wanted.

They wouldn't...so what was I supposed to do??

Well the reason I am writing this is to tell you what I did. After searching the web and asking others what to do I finally came to this conclusion, and I asked myself, what are all of the variables in this transactions?

The most exciting result was to find that the buyer had a 10% downpayment and was not asking for closing costs. As a result, I asked the buyer's agent if the buyer would be willing to put 3% of the purchase price towards the 2nd lien release. With the 1st offering $3,000 and the $11,880 from the buyer we were only $4,000 short. We ended up getting the buyer to bring in the extra $4,000 to spare our commissions, but we were ready to give up commission if necessary.

The important lesson learned is that some times you have to think outside of the box when you are dealing with 2nd lenders. You can go back and forth for months trying to work them down, but why not look around and see what you have before doing all of that work and wasting time.

Remember for future reference that before taking on any short-sale with a Bank of America 2nd lien keep in mind that they want 5% of the net proceeds and you will need to take that into consideration when you are negotiating with potential buyers.

I hope this has been help. Please come around again to see more tips on real estate short sales.

Short Sale Negotiations for Real Estate Agents 101

Welcome to Success in Real Estate Short Sale Negotiations!!

This is Ken Edwards and I am a licensed real estate broker in California and Idaho. I have tons of knowledge and experience that I would love to share with you.

I would like to invite you to join me in my journey to provide to you the most effective and efficient way to negotiate a short-sale with any lender that you encounter. Yes, there are going to be general procedures and techniques that you should use with all lenders. There are, however, some very specific things that you will want to pay attention to with certain lenders to ensure that you do not delay your short-sale or get recycled back to the beginning of the submission or negotiation process.

One of the interesting things that you will notice in your negotiations is that once you build momentum with the lender that your deal will appear to go more smoothly. Your file must become the most important file in front of a short-sale negotiator. If you do become important to them, they will work on your file more because they simply want you to get approved so they don't have to hear your voice nagging them everyday. :-) More on how to do this later.

Once you understand how the short-sale process works, the guidelines for submission and approval, the days that your lender is allowed to take (depending on company policy) to review a particular part of the file, and how to properly escalate a file if things are not moving a quickly as needed, you will feel more comfortable and confident in your abilities as a short-sale negotiator.

As with most processes in life, you will have a tendency to break the rules every now and then. You will forget to pay attention to detail. You will forget to make sure the lender realizes that your file is the most important file in the world. There are a million and one things that I can tell you to do and not to do. We are human and can only do so much. This blog will be dedicated to keeping you focused and on track as well as to motivate and inspire you to work harder.

We are working hard not only to close a deal and help our clients out, but also to help our neighborhoods and economy to stabilize and grow again.

Best of luck and please check back daily for new information and updates. They could be the ones that help you close another deal!!