1. A Real Estate Agents Guide to Short Sales RE78R13 Presented by Linda Kody Kody & Company, Inc. 978-686-1954

2. What is a Short Sale By definition, a Short Sale is a situation where the Seller owes more on the house than they can sell it for in today’s market.

3. The REALTORS® Role 1. Educating our clients & customers to the market 2. Educating our clients & customers to their options. 3. Being a resource in our communities 4. Assisting Buyers & Sellers through the process!

4. Recognizing the Short Sale candidate  Is there an extreme sense of urgency to sell?  Was the house purchased In the first part of the 2000’s  Is there a hardship: divorce, job loss, illness  Why & Where are they moving?  Do a Net Sheet with the CMA

5. Why do a Short Sale?  Avoid Foreclosure Control the circumstances  Minimize damage to credit report  Manage financial life  Stop depleting assets  Gain the ability to start over!

6. Qualifying a Short Sale Seller  Are they in default? If yes, how far behind?  Is there more than 1 mortgage?  Do they have a Home Equity loan?  Do they have PMI on their loan?  Are they motivated and realistic?  Are they facing financial hardship?  Do they have other assets?  How cooperative will they be? Sellers must be vested in the process!

7. Preparing the Seller  Have they spoken to an Attorney and/or Accountant  Explain Alternatives, Options, Resources  What are the benefits of the Short Sale Option We Are Not Attorneys or Accountants ! Do not give Legal or Financial Advise.

8. Home Owner Options Forbearance Loan Modification (HAMP) Reinstatement Refinance (HARP) Bankruptcy Chapter 13 Deed in Lieu (DIL) Non Profit Programs HOPE Local Non Profits - CHAPA Federal Debt Relief Act

9. Preparing the Seller for Short Sale  Advise there is no guarantee  What happens to the deficiency? Non secured loan Federal Debt Relief IRS  Deed in Lieu of Foreclosure  Auction Foreclosure Sale

10. Short Sale Package/Sellers portion  Authorization to release information or POA  All contact information for lenders  Who owns the loan?  Hardship Letter  Financial Statement  Supporting information (include bank statements)  Most recent pay stubs  2 years tax returns

11. Listing a Short Sale  Strategy for Pricing  Prepare a property condition report  Offer of Compensation in MLS  Disclosure of Short Sale  Having a Short Sale Addendum Disclosure Options Authorizations Duties

12. Presenting an Offer & P&S  Have a complete package Offer/ P&S, proof of funds or pre approval, copy of Earnest Money, Short sale addendum Addendums: Title V, Lead, Smoke/CO Cert Updated CMA with condition report or repairs Net Sheet, preferably on a HUD 1 (don’t forget MLC) Sellers paperwork as previously described

13. Offers & P&S  3 rd Party Negotiator  Getting to the Authority  Outline the story every time.  The BPO Agent  Keep an eye on the foreclosure sale.  Learn the specific lenders requirements & guidelines  Communicate responses quickly. They may counter an offer.  The Deficiency!  Get Approval in writing!

14. Why a Short Sale may be Rejected  Offer is too low.  Mortgage Investor is not willing to participate.  Seller has assets or money.  The Short Sale package is not complete.  The BPO came in Higher!

15. A Buyers Guide to Short Sale  Set Realistic Expectations upfront!  Give Buyers the facts about Short Sale  No Guarantee  Constructing Offers  Time Issues: for response to their offer, for closing dates.  Home Inspection, Financing, Appraisal  What about market changes

16. Concerns & Challenges  3 rd party approval  Seller cooperation  Seller “abandoning” the property  Utilities  Expiring Financing  Condition Issues  How many loans???  Foreclosure Auction

17. Concerns & Challenges  Where will the Seller go?  What about commission?  Don’t forget smoke certs, fuel, etc…  Closing on time once approved  Will the Buyer wait?  More than 1 offer  How should offers be presented  Bankruptcy  WISP & the Paperwork

18. Resources  Know Your Options HomePath- Fannie Mae HomeSteps- Freddie Mac HUD-FHA  Bank Of America Equator  Most large lenders have policies & procedures. Check their websites.

19. ACRONYMS HOPE  HAMP Home Affordable Modification  HAFA Home Affordable FC Alternative  HARP Home Affordable Refinance  PMI Private Mortgage Insurance