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Short Sales Simplified Presented By: The REO Institute of Colorado

Short Sales Simplified Presented By: The REO Institute of Colorado. James A. Browning MRE,CEC,FSP,CREO, SFR, REO Certified, Short Sale Certified. Masters in Real Estate Certified Commercial Education Broker/Owner Browning Group LLC Liquidated 115+M REO Properties/last 3 years

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Short Sales Simplified Presented By: The REO Institute of Colorado

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  1. Short Sales SimplifiedPresented By:The REO Institute of Colorado

  2. James A. BrowningMRE,CEC,FSP,CREO, SFR, REO Certified, Short Sale Certified • Masters in Real Estate • Certified Commercial Education • Broker/Owner Browning Group LLC • Liquidated 115+M REO Properties/last 3 years • 25 years of Commercial Real Estate Experience • Commercial Director for CB NRT-17yrs • National Trainer/CREOBA • CEO/The REO Institute of Colorado

  3. The Distressed Market,Short Sales, &Pre-Approved Pricing

  4. 2014, 2015, or Longer Many banks, lenders, & outsourcers are looking for solutions to our current market problems.

  5. Unknown Quantity REO, Pre-Foreclosure, Foreclosure, and/or Short Sale What is the solution?

  6. Pre-Approved Pricing • Increase residential sales • Spur recovery • Complete submission package

  7. The Short Sale Prospect • Distressed market has the potential of continuing into 2013-2015 • The Broker with education & training can succeed. • Have compassion. • Ask the right questions.

  8. Property Profile • O & E • Understand the financing on the property. • Additional liens on the home. • NED, NOD, NOI filed? • Sale or Auction date? • Order a payoff- either from the mortgage company or the foreclosure attorney (10 days)

  9. UNDERSTANDING THE SELLER’S FINANCIAL CONDITION OR STATUS

  10. Is the Seller in financial distress? • Request the most recent mortgage statement. • What are the other financial stressors?

  11. Seek Tax/Legal Advice • Recommend the Seller obtains Tax/Legal Advise • You are not the expert! • Provide the client with a letter stating these recommendations, and have the Seller receipt for a copy

  12. Acquisition Indebtedness = • Is incurred by acquiring a property • Is secured by the residence • Is secured by the property resulting from a refinance, but not to exceed the original indebtedness

  13. Example: • A borrower refinances an original note, and then takes a vacation, or purchases a vehicle • Answer: This indebtedness is taxable

  14. Negative Credit Reporting • The Seller’s thought process may only be survival today • Armed with knowledge, the Seller can take steps to improve his/her credit

  15. Credit Basics • FICO- 35% is made up of payment history • Negative public record information • Severity of delinquency • How recent is the delinquency, and the number of items on file • Number of accounts paid as mutually agreed upon

  16. Late Payments • It is possible to negotiate a short sale without late payments, however it is more difficult • Both HAFA and FHA require that the seller be delinquent, and display a negative cash flow

  17. Short Sale Listing

  18. Documents • State or Division required listing contract • Short Sale Addendum • Seller Authorization Letter

  19. Approaching the Lender – What’s Next?

  20. Is the lender open to a short sale? • What will the conditions be? • Fannie Mae or Freddie Mac are more motivated then private lenders • Discuss and negotiate what the seller wants from the lender

  21. LOSS MITIGATION DEPARTMENTS, WHO? What department? Who? What? Wrong number… “Who’s on first base?”

  22. Get past the call center! • Loss Mitigation Department • Default Managers • Persistence • Objective- Where do I need to send the short sale package?

  23. GETTING ALONG WITH THE LOSS MITIGATION DEPARTMENT AND PREPARATION OF THE SUBMISSION PACKAGE

  24. Submission Package • One time, with all required docs • Installments = rejection • What should be included?

  25. Listing Agreement • Listing Agreement • Short Sale Addenda • MLS • Website Advertising, Flyer, and any other marketing or advertising

  26. MARKETING THE SHORT SALE LISTING

  27. Accurately Market • Listing Broker – your responsibility to accurately represent your listing! • Continue your education and designations!

  28. Timeframe for Lender’s Response • Could be the most frustrating aspect • One week… Six or seven months… • What is the requirement for the lender? • The property may have to be listed for a period prior to acceptance of short sale • Your expertise can make the transaction much smoother!

  29. Problems and Pitfalls • Loss mitigation departments are overwhelmed with loan modifications, short sales, & foreclosures • Subject to final senior management approval • Private mortgage insurance • When your negotiator is no longer employed there…

  30. Lender Takeovers and Merging • Reasons – Government influence, cost cutting, bank failure, contract issues, etc • Decisions are now delayed, who has the file now • Be prepared to re-submit all docs!

  31. This is everyone’s main concern What’s the loss and deficiency?

  32. Buyer Cooperation • Is the Buyer serious? • Is the Buyer going to be patient? • Is the Buyer going to complete inspections and appraisals?

  33. Education • Laws, programs, & regulations are changing constantly • Be familiar with state regulations • Knowledge, disclosure, compliance

  34. Thank you!The REO Institute of Colorado Congratulations on becoming Short Sale Certified

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