Our Bradenton, Florida real estate market has seen a rise in foreclosures and short sales. A short sale occurs when a lender is willing to accept less than the loan balance in order to avoide taking the home back in foreclosure.

Many investors work the pre-foreclosure market and have an interest in buying property by means of a short sale.

A few days ago I sat in on a conference call with a bank Loss Mitigator who answered questions about SHORT SALES. He has worked 11 years in the Loss Mitigation Department for a major lender. The call was an opportunity for a group of investors to ask questions. Here's the questions and answers:

1. Why might you ignore a Short Sale Package that you received?

Answer: Incomplete packages are set aside. For example if someone doesn't include a HUD-1 Settlement Statement that package is set aside. The Borrower must supply financial information, tax returns, hardship letter and more. (If you have questions about what documentation is required, please contact me.)

2. How many Short Sale files are you working on?

Answer: I am currently working on 400 files. Of those, I would say only about 100 files are workable. This is why it's important to submit a complete packages and to know what you are doing.

3. Does it matter if the Buyer in a Short Sale deal is an LLC or an individual? Do you look at them differently?

Answer: It doesn't matter. We want to know that the buyer is qualified. We look at the market value of the property, the loss we are going to take, and what's owed on the loan.

4. Does the type of hardship the Borrower is facing make a difference?

Answer: Not really. It's a financial decision to the bank. However, it doesn't look good for the bank if we foreclose on a sick, elderly couple. Of course, we do want the Borrower to prove hardship, but the type of hardship doesn't matter.

5. How long does it take for you to conduct the Broker Price Opinion?

Answer: We try to have the BPO completed within 10 days of ordering it. Right now we are backlogged and it is taking quite a while to get the order out. The first step is to receive a complete short sale package. We don't order the BPO until then. Once the BPO is completed it is then reviewed and approved by our valuation department.

6. Do you simply reject low offers?

Answer: Not really. We do have certain targets we are trying to reach. (I've heard around 83% of the BPO.) We also have a certain dollar amount of loss we might accept. (I've heard around $75,000.) Sometimes it's a matter of pointing out repair issues. Tell me why the offer is low and why it should be considered.

7. If the foreclosure sale date is at hand, will you postpone it?

Answer: If it looks like we are close to accomplishing a short sale, we might postpone the foreclosure sale. We need a good reason to do that.

8. Do you ever change the BPO once received?

Answer: No. Once the BPO has been received and approved by our valuation department we will not change it. Why would we? The value is what it is.

9. Do you require a home to be listed before accepting a short sale?

Answer: No the home doesn't have to be listed. We will talk directly with the buyer/investor. We don't usually talk with the borrower.

10. Will you disclose the BPO results?

Answer: No, we don't disclose the BPO. However, we will talk in ranges of price when negotiating. Our job is to get as close to the BPO as possible.

If you are considering a short sale, be sure your Realtor is experienced and knowledgeable!

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