“I don’t need another short sale seminar”. That’s what you’re thinking, right?
Let’s see how you do on this Short Sale IQ Test. Email your (true/false) answers to me and find out just how well you can serve your clients in need of a short sale.
Are you up for the challenge?
1) For a given house on 12 acres that was purchased 4 years ago, if it’s not abandoned, and has no equity, the redemption period is 12 months.
2) If a house is listed and utilities are on, the foreclosing bank can not change the locks prior to the foreclosure sale.
3) The vast majority of lenders will consider short sales during the redemption period.
4) Receiving a short sale approval letter also means the account is settled and there is no longer a balance owed.
5) Your short sale fax needs to include a CMA as the foreclosing lender is expecting your help in determining the value of the house.
6) If a house is listed and utilities are on, it can still be deemed abandoned; therefore the redemption period can be shortened to 30 days.
7) If the Sheriff’s Deed is recorded after 20 days, it’s still valid, but the redemption period “clock” doesn’t start until it’s recorded.
8) Lenders will order a BPO or Appraisal only if the house has not been listed for 90 days. Otherwise, they’ll likely use your CMA and the listing history to determine value.
9) Assume this is true (it is): When submitting your short sale package, you need to submit a preliminary HUD-1 so the lender can see how much they will net with the offer.
Question: You also should to submit a spreadsheet that shows what they might net after an REO sale so they can compare the two numbers.
10) If a seller is in good standing with payments, their lender will not consider a short sale.
11) Lenders may try to reduce your commission on a short sale. As a seller’s agent, since your obligation is to the seller, to reduce your risk of being sued by your seller, you’ll want to give in and take whatever commission the lender approves.
12) Assume this is true (it is): The “Mortgage Forgiveness Debt Relief Act of 2007”, may not apply to your client as it doesn’t apply to everyone.
Question: If it does apply to your client, your client will not get a 1099 for the tax year the house is sold.
13) Receiving a short sale approval letter showing the account is settled also means that a 1099 will not be issued since the debt was forgiven. This creates an incentive for the seller to sell.