Any one of these will kill your short sale deal! Get Short Sale Certified and learn how to deal with all of them.
1) Training
a) No seller negotiation training
b) No lender negotiation training
c) No training to deal with buyer’s agents
2) Buyer Never Found
a) Priced too high
b) Agent letting bank dictate pricing
c) Redemption shortened to 30 days
3) Lender/Investor will not short during redemption
4) Offer Too Low
a) Lender BPO/Appraisal came in too high
i) Lender wants certain percentage of that BPO
ii) Offer is below this number
b) Appraisal does not meet guidelines (loss too high)
5)Preliminary HUD-1
a) Purchase price on HUD-1 does not match buy/sell agreement
b) Seller/Buyer names do not match buy/sell agreement
c) HUD-1 shows proceeds going to seller
d) HUD-1 has too many or unapproved fees on the seller side
e) Seller closing costs are excessive
f) Commissions are excessive
g) Seller Concessions Are Excessive
h) Too Much Going To Junior Liens
i) Closing date too far away
6)Buy/Sell Agreement
a) Certain language unacceptable to lender
b) Certain language needs to be added for lender
c) Buyer must by arms-length (unrelated third party)
d) Buyer must be individual vs. company (for some lenders/investors)
7) Short Sale Package
a) Incomplete
b) Out of Order
c) Missing Loan Number on Each Page
d) Uses “Generic” forms vs. lender-specific forms
8) Junior Liens
a) Will not discount to amount required by senior lien holder
b) Want contribution prior to closing to meet senior lien holder’s requirement
c) IRS liens can be difficult & time consuming to remove
9) Property Listing
a) Certain language unacceptable to lender
b) Certain language needs to be added for lender
c) Commissions more than lender willing to approve
10) Unsecured Note / Deficiency / 1099-C / Seller Contribution
a) Note: Lender may require seller to pay back all of the loss
b) Deficiency: Lender may not agree to settle account
c) 1099-C: Lender may issue 1099-C; Seller may (or may not) be liable for paying taxes on this phantom income (see H.R. 3648, Mortgage Forgiveness Debt Relief Act of 2007)
d) Seller Contribution: If show assets or cash flow
11) Bankruptcy
a) Seller files bankruptcy in middle of listing
b) Lender refuse to discuss file during bankruptcy
c) Bankruptcy adds 3-4 months to the short sale process
12) Miscommunication
a) Seller does not cooperate with showings
b) Agent does not communicate with seller
c) Agent over promised and under delivered
13) FHA Specific Loan Issues
a) Appraisal comes in too low
b) Appraisal shows too many repairs
c) Property must be owner-occupied
d) Seller must be at least 30 days late
e) Seller must attend counseling
f) Seller must apply for short sale program
14) Seller Frustrations
a) Seller backs out and decides to pursue other options due lack of communication with agent
b) Seller backs out because process takes too long
c) Seller does not close due to unacceptable terms in lenders acceptance (see point 10)
d) Seller wants investor/buyer to let stay in house (loan fraud)
15) Lender Frustrations
a) Seemingly impossible to reach decision maker at lender to work with
b) Lender gets tired of working on file and having its closings delayed or fall through
c) Agent doesn’t communicate with lender affectively
d) Agent’s lack of knowledge about process frustrates lender and gives up on agent
e) Lender closes file unexpectedly
f) Lender changes deal at the closing table
16) Buyer Frustrations
a) Buyer not willing to wait for short sale approval
b) Buyer’s agent not educated about process and discourages buyer
c) Buyer’s agent not confident in seller’s agents abilities to negotiation short sale
d) Buyer’s agent not kept in the loop during the short sale process
17) Deed in Lieu
a) Lender convinces seller to do a “cash for keys” program
18) Repayment Plan
a) Seller decides to keep house and try a repayment plan, or
b) Forbearance, or
c) Loan modification
19) Hardship Not Proven
a) Positive cash flow on financial worksheet
b) Too many assets
c) No hardship