But does anyone really know how to do a short sale? Sure you could run to a professional short sale agent, but how would you even know what to look for?

To really get the most out of your short sale deal, you need to be as informed as you can be. So check out my list of the top 7 things you need to keep in mind.

Armed with this information you’ll be up there with the pros finding the best deals with the least hassle. Just keep these tips in mind while entering your negotiations and you’ll do fine.

Tip #1: The price is set by the agent and seller, not the bank.

Never forget that one. Sure, the bank will need to approve the sale, but they may not have all the info on current market values. So make sure the seller understands how reasonable your offer is. If you’re the seller, don’t be afraid to ask for your home’s real value.

Tip #2: Loans owned by 1 bank are better than those owned by 2.

You’ll need to convince 2 lenders instead of 1 to go along with your bid for the property. So make sure you keep that in mind when you look for a new prospect.

Tip #3: Lowball offers get slow responses.

Banks may reject an offer without even considering it if it looks too low. So don’t expect them to get back to you quickly since they’ve got lots of lowball offers to wade through. Instead, cut through the pack and make your offer stand out. Move a drop higher and you’ll save yourself lots of time.

Tip #4: Buyers should look at multiple properties.

Well all know the “short” sale process can sometimes take a “long” time. So keep your options open. Look at a few possibilities at a time and you’ll increase your odds of closing.

Tip #5: Sellers with assets may need to pay back the difference.

This might weigh in on the seller’s decision to opt for a short sale, so keep that in mind when making your offer. Thoroughly research the seller and make sure he’s really committed to the process.

Tip #6: “Approved” prices by the bank move quickly.

If you know a previous offer was already approved, make your move and bid for the property at the same price. The process will move pretty swiftly since the bank already knows the amount is reasonable. You’ll still get a great deal, you’ll jump ahead of the pack, and you’ll save yourself a lot of aggravation.

Tip #7: Banks vary in what they want: highest price, most cash up front, all cash, etc.

The bank is eager to get the property off its hands, but it still wants its loan back. So gauge what would make your offer most attractive. If you know they want all cash, make your offer lower but sweeten the deal for them. If they want the most they can get for it, arrange your financing accordingly.

These tips are really just the tip of the iceberg. There is a lot more to know so keep learning and watching these articles. You’ll become a short sale pro in no time.

Short Sale Tips Part 1 is a post from: Turning Leaf Advisors, LLC Turning Leaf Advisors' siblings: Short Sale Builder - Your turn-key short sale solution Srtongbridge Funding - Transactional funding for Short Sales and REOs

HAFA was designed to work in hand in hand with the HAMP (Home Affordable Mortgage Program) program and it is set up fir borrowers who despite being eligible for HAMP can’t afford to keep their homes.  So the question is, will HAFA achieve its goal and help turn around the housing market?

There are many problems with HAFA starting with the fact that the banks are not required to participate. This means that the bank will be giving up the opportunity to collect the debt that is owed to them or sell the debt to a collection agency. It doesn’t appear that the banks will be able to avoid losing money in this scenario which doesn’t bode well for the future of HAFA.

There are, of course, some monetary incentives for the banks to participate in HAFA, so they won’t just say no to every case, they will have to judge each case on it own merit in order to decide if they are going to participate.

Sadly, that is not the end of the issues with HAFA, the program is designed so poorly that I would question why homeowners would opt to participate. Some of the problems with HAFA, from the homeowners’ perspective are:

1. The lender will decide what to list the house for. This isn’t done through any appraisals or knowledge of the house, it’s a decision that is made, and the homeowner must live with it.
2. The homeowner must continue to make pay make mortgage payments every single month. The payment needs to be 31% of their current gross monthly income.
3. At the time of closing, all junior liens on the house must be settled. They either need to be paid in full, or negotiated down, and paid, with the lien holders. The first lien holder will allow the junior lien holders to be paid 3% of the loan amount for a maximum of $3,000 combined, or 6% or $6,000 according to Bank of America. Why the Junior Lien holder will agree to receive such a percent is beyond me.
4. One may not list the home for sale for the first 90 days, and it cannot be sold to family, friend or known business associates.
5. One has 120 days to sell the house at the price that was determined for them. At the end of this period one can request additional time, but that will not exceed 360 days.
6. The person who buys the house must sign a contract stating that they will not sell the house for 90 days.

These are just some of the problems that HAFA is, and will continue, to encounter. If someone has done everything properly and still can’t sell the house, then the bank will give them a deed in lieu of foreclosure and they will receive 1,500 dollars for their trouble.

Those who are in favor of HAFA cite a standardizing of all documents; which will bring out less confusion, the obvious benefits to the homeowners, and the ease of use for the Realtors.

The program is set to end on December 31^st 2012 if HAFA accomplishes it goals, namely, bringing awareness to short sales as a viable alternative to foreclosure, and thus helping to fix the housing market, it’s safe to assume that the program will be extended.

HAFA Explained is a post from: Turning Leaf Advisors, LLC Turning Leaf Advisors' siblings: Short Sale Builder - Your turn-key short sale solution Srtongbridge Funding - Transactional funding for Short Sales and REOs

# 1  Unemployment

# 2  Reduced Income

# 3  Divorce

# 4  Separation

# 5  Medical Bills

# 6  Too Much Debt

# 7  Death of my Spouse

# 8  Death of a family member

# 9  Payment Increase

# 10 Business Failure

# 11 Job Relocation

# 12 Illness

# 13 Damage to Property

# 14 Military Service

# 15 Incarceration

Or any other reason that creates a negative financial situation for the seller, as long as you can justify that the seller has suffered financially.

Please feel free to suggest any others in the comments.  Thanks!

15 Ways To Prove Hardship In A Short Sale is a post from: Turning Leaf Advisors, LLC Turning Leaf Advisors' siblings: Short Sale Builder - Your turn-key short sale solution Srtongbridge Funding - Transactional funding for Short Sales and REOs

Strategic defaults are typically described in black and white: either you pay your mortgage or you foreclose on the property.  Now with a short sale thrown in the mix things get a bit more complicated, particularly when it comes to proving hardship.  This issue separates the ones who default strategically in an absolute sense, a borrower who has ample assets, yet makes a business decision to default on the mortgage because it is no longer a good investment and it is time to cut their losses.  On the other hand, there are borrowers whose income is barely sufficient to cover the mortgage of an underwater property and with no significant assets.  This is the most common type of borrower facing this decision.  Phoenix realtor Bob Stahl weighs the moral and economic aspects in this blog post “Strategic Mortgage Defaults: Is It a Financial Issue? Is It a Moral Issue? Or Is It Both?”.

So at what point does a home owner decide to walk away from their home and their mortgage payment?  In other words just how much negative equity can a home owner live with?  While the numbers vary, the range in between 10% and 25%.  The Wall Street Journal article “Debtor’s Dilemma: Pay the Mortgage or Walk Away” is full of stats that answer these  questions for us.

Turning Leaf Advisors position today is that we do not negotiate strategic default files.  That is if the clients sole reason for doing a short sale is to avoid having to utilize current assets to make a mortgage payment on a property that is currently under water.  We decided not to jeopardize the integrity of all of our short sale negotiations by refusing to  negotiate strategic default files.  What typically occurs in these situations is that the seller tries to hide assets and our company as a whole does not want associate with fraudulent activities that would jeopardize our ability to help millions of homeowners that really need our services.  Although strategic defaults seem to be a very hot topic these days; there is only a small fraction (less than 1.00%) of our current $60,000,000 of short sales in our pipeline, even attempt to do this.  I am sure that there have been some sophisticated sellers who have disguised their assets prior to sending us a short sale package; but if we get any suspicion of this behavior we immediately bring it up with the seller.

Strategic (Short Sale) Default is a post from: Turning Leaf Advisors, LLC Turning Leaf Advisors' siblings: Short Sale Builder - Your turn-key short sale solution Srtongbridge Funding - Transactional funding for Short Sales and REOs

1. Transparency of all negotiation related activities – with all parties having access to the details.  Active involvement creates a self-policing environment when both sellers and buyers can follow the transaction. It helps build a team approach to the transaction and instills confidence to all parties that the right things are being done to secure short sale approval. This is important if additional funds are required to secure a short sale approval.   For this very reason we developed and refined our software, Short Sale Builder (www.shortsalebuilder.com) to facilitate transparent communication and streamline the process.
2. Know the laws in your state in regards to short sales and creditor collection rights.  Accurate legal information helps negotiators determine when a bank is asking for more than they could recover if the property went to foreclosure.  This is a key negotiation strategy.
3. Stay in the loop, know what your successful peer groups are doing as well as keep up with the current trends in short sales.  The latest information will give you and edge you need in establishing yourself as a successful short sale negotiator.
4. Set realistic expectations with everyone involved in the process, do not over promise anything, you will lose the transaction when the short sale does not transpire the way you expected.  Under promise and over deliver.
5. Do not take files that belong to investors who are low balling offers.  You will only jeopardize your reputation as well as your other transactions by increasing scrutiny on your retail files you’ve worked hard to get approved.
6. Do not submit a file without having verified all liens and judgments.  You will lose these files at closing when there is no money to pay them.  Always have escrow pull a  title report prior to submitting short sale packages. It will save you a lot of headaches.
7. Incorporate a call center to make your initial calls on a systematic basis.  The call center will get the file set up with the lender and then pass it over to your negotiator once the bank representative has been assigned.  This will allow your negotiators to fully focus on closing the file and not get burned out with the mundane aspects of negotiation, such as submitting missing documents.  This will also allow you to recruit and retain the highest level of negotiators.
8. Inform all brokers and agents you work with that 6.00% commission will not be paid on every single transaction.  Some banks and servicers simply do not allow for 6.00% commissions and there is nothing that you can do to change this.  No matter what you read, there is nothing out there that mandates that’s investors have to pay 6.00% commissions on short sales.  There are guidelines that urge investors to pay realtor’s commissions, but nothing that mandates this.
9. What if your clients are real estate brokers and they do not want to pay your fee out of their commissions? We had success having the buyer request the seller to cover the negotiation fee as part of their closing cost. This  is an effective tactic that will save buyer or the broker any part of the negotiation fee. The key is to You just need to fully disclose this information in the purchase agreement.
10. Do not alienate the bank by being confrontational or mislead them with false statements, it will only hurt your future negotiations.  If you are respectful, and have all of your negotiations conversations documented – you will be able to escalate the file to a supervisor if your short sale is stalled or not going they way you had intended.  Ensure that you have the facts correct when making a case with the negotiator.  If your facts are incorrect and you are acting on emotion, you will effectively ruin all chances of getting any kind of escalation approved.

Top 10 most important items for successful short sale negotiation is a post from: Turning Leaf Advisors, LLC Turning Leaf Advisors' siblings: Short Sale Builder - Your turn-key short sale solution Srtongbridge Funding - Transactional funding for Short Sales and REOs

The process is very simple:

TLA will work with all parties of the transaction to gather the information needed; build and submit the package to the bank using its proprietary submission software Short Sale Builder, http://shortsalebuilder.com. TLA will then make all of the phone calls and negotiate with the lender to obtain the short sale approval for the seller. All parties will be able to access information from one central access point with individual log-ins to provide transparency to the transaction 24 hours a day.

To increase the effectiveness of the negotiation process, TLA utilize The ValueSure™ AVM from Valuation Solutions http://hanqual.com, to derive the most comprehensive and precise residential property valuations available today and to determine the actual costs of a property becoming an REO. This allows TLA to submit offers that will be within range of the servicers requirements and allow for faster approval times.

Most importantly “Done for You Negotiations” allow brokers and agents to continue to gather listings and continue to focus on their normal business activities without having to allocate large blocks of time learning the lengthy negotiation process that took TLA years to perfect. By outsourcing short sale files to TLA, brokers and agents are able to run their business more efficiently and make more money.

The cost for “Done For You Negotiations” is very straight forward: 1.00% of the value of the property value at closing. This fee can be paid as a referral fee or the buyer can pay the fee so as not to reduce commissions. The seller is not responsible for any fees in the transaction and the agreement can be canceled at any time prior to approval.

Turning Leaf Advisors is one of the largest and most successful Short Sale negotiation firms in the country. They have closed hundreds of millions of dollars of loss mitigation transactions contributed in part to its dedicated and experienced staff and a streamlined business model. TLA anticipates closing over 200 short sales in 2009 valued at over $65,000,000. Please see our website for more information, http://turn-leaf.net. References are available upon request.

Done For You Negotiations is a post from: Turning Leaf Advisors, LLC Turning Leaf Advisors' siblings: Short Sale Builder - Your turn-key short sale solution Srtongbridge Funding - Transactional funding for Short Sales and REOs

Our new and improved short sale package is up on turn-leaf.net.
Some key updates include:

Even more user-friendly clear layout
Editable fields for paperless implementation

DOWNLOAD OUR SHORT SALE PACKAGE

Here at TLA we encourage environmentally conscious business practices and we lead the industry by example.  Much like our software, shortsalebuilder.com our negotiation process is paperless from start to finish.

New Short Sale Package Ready for Download is a post from: Turning Leaf Advisors, LLC Turning Leaf Advisors' siblings: Short Sale Builder - Your turn-key short sale solution Srtongbridge Funding - Transactional funding for Short Sales and REOs

Even more favorable development in the industry comes from Washington, DC.  The federal Home Affordable Foreclosure Alternatives Act (HAFA) will become effective on April 4, 2010. This companion legislation to the Home Affordable Mortgage Plan (HAMP) enacted last March will duplicate most of the guidelines of HAMP for short sales and fix many of the problems that have become evident with HAMP. Lenders are going to increasingly feel the heat of this legislation as time passes from now on.  Most notably, lenders will be required to respond to short sale offers in a timely manner.  Anyone experienced in short sales can cite lenders’ tendency to not respond to short sale purchase offers as the biggest reason for failed short sale property sale closings. Motivated bargain property buyers regularly tire of the lack of response and abandon their purchase efforts.

Agents are also guaranteed the standard 3% listing and 3% buyer’s commission. The other often-cited complaint by real estate agents is that lenders typically low-ball the agents for their sales commissions.  Homeowners are promised to be fully released from future liability for the first mortgage debt (no cash contribution, promissory note, or deficiency judgment is allowed).

With that said we’re excited to join many of our industry peers and declare 2010 the year of the short sale.  Turning Leaf Advisors is uniquely positioned to leverage our experience, relationships, and tools to respond to the market demands.  We encourage everyone in the business to prepare and adjust their business model whether with the help of our services or any others.  As any industry, ours is evolving and becoming more streamlined and focused on efficiency.  Indeed, as more and more realtors find the majority of their business driven by short sales, their ability to effectively guide their clients through the process will determine their survival in the business.

We are proud to have pioneered the professional service of short sale negotiations.  It’s our goal to continue to help keep you abreast of this ever changing industry with clear, easy to understand interpretations of the regulations and guidelines to help you close more short sales.

Short Sale Legislation and Our 2010 Outlook is a post from: Turning Leaf Advisors, LLC Turning Leaf Advisors' siblings: Short Sale Builder - Your turn-key short sale solution Srtongbridge Funding - Transactional funding for Short Sales and REOs