Short Sale Specialist

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lyndonchiu_IHB

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What exactly does a short sale specialist do? It seems like these people are paid ~1% of purchase price in commision if bank approves the short sale.



I have recently encountered a short sale, and the listing agent claims that they have hired a short sale specialist, have gotten a "verbal approval" from the bank, and all they need is the official approval letter which can come any time between 3-6 weeks. Why would it take so long for the bank to type up an approval letter if it is already verbally approved?



Back to the original question, is getting an early "verbal" approval what short sale specialists do? If so, I don't see how their work is worth 1% commission...
 
[quote author="AlmostThere" date=1257353501]What exactly does a short sale specialist do? It seems like these people are paid ~1% of purchase price in commision if bank approves the short sale.



I have recently encountered a short sale, and the listing agent claims that they have hired a short sale specialist, have gotten a "verbal approval" from the bank, and all they need is the official approval letter which can come any time between 3-6 weeks. Why would it take so long for the bank to type up an approval letter if it is already verbally approved?



Back to the original question, is getting an early "verbal" approval what short sale specialists do? If so, I don't see how their work is worth 1% commission...</blockquote>




Hi AlmostThere,



I have gone through the short sale wringer a few times already and had stopped even looking at short sales a while before I found the home I want (regular sale!). From my experience, verbal approvals mean nothing and when someone says it will take 3-6 weeks, you should replace the word 'weeks' with 'months'. There will be countless delays and lost weeks where absolutely NOTHING was done with the property or the offer. Prior to finding my home, I was in first position on a court ordered short sale due to a divorce. I was told it was going to move quick (2 months or less to get keys) because the bank knows it is court ordered so there is no chance of a loan mod or BK to hold up the process. Well, I jumped out after 1 month and a half because instead of taking 5 days to get a negotiator assigned, it took 4 weeks. Then I was told it will take 30-60 days for the negotiator to even look at the file, etc., etc. During that time, we kept looking and found the home we are in escrow on now.



So basically, if you want a short sale, make sure you:

1) Have a lot of spare time to wait for the process

2) Keep looking at other houses

3) Get a good inspector when you do your inspections because the house is 'AS-IS' and they will fix nothing.



I had another short sale I was in on and found out there was a slab leak and a lot of black mold growing in the walls. I got out of that right when I found out.



Three more things. If there is a first and second on the short sale, just walk away. If BofA is one of the lenders, just walk away. Even if you get through the entire process and have reached the home stretch, the rug can be pulled out from under you if the bank does a loan mod for the borrower or if the owners file for BK at the last minute to stay in the property longer.



Short sales are a minefield and you should not get attached to the house until you actually have the keys in hand.
 
[quote author="AlmostThere" date=1257353501]What exactly does a short sale specialist do? It seems like these people are paid ~1% of purchase price in commision if bank approves the short sale.



I have recently encountered a short sale, and the listing agent claims that they have hired a short sale specialist, have gotten a "verbal approval" from the bank, and all they need is the official approval letter which can come any time between 3-6 weeks. Why would it take so long for the bank to type up an approval letter if it is already verbally approved?



Back to the original question, is getting an early "verbal" approval what short sale specialists do? If so, I don't see how their work is worth 1% commission...</blockquote>


The poster above is right. Verbal approvals mean nothing. You can't feel even a little secure until you get the written approval from the bank(s). As for how long it takes, it really depends on the bank you're working with. Some banks, like BofA, have done a fairly decent job handling all their short sales and have done well assimilating the banks they acquired into their system. While, at the same time, other banks like Wamu (chase) can take forever, especially if there is more than one bank involved. Or even a second with the same bank as the first loan.



A few months ago, I was involved in a deal where it took 5 months to get written approval. Less than two weeks ago, I wrote an offer on a property for another client, and we received approval last monday.



My opinion on short sale specialists is that they do not do much. Their job is to constantly hound the banks and make sure the bank(s) do not keep putting the property at the bottom of the pile. Their job can easily be done by the real estate agent, and once in escrow, a good escrow company acts just the same as a short sale specialist.
 
The term "Short Sale Specialist" is starting to become the new "Loan Mod". Unfortunately the ex-loan modders are jumping into the short sale pool and muddying up my waters.



I am a listing agent and I specializes in short sales and I will be the first to admit that it is a very scary transaction and you will get devoured if you do not know what you are doing. Furthermore if it were not for my team that I was fortunate enough to put together I would not have nearly the success I am having today.



We are a team that consists of Realtors (only me for now), a Real Estate Attorney, and two Bank Negotiators; one of which is a former investor who flipped short sales out of state for the last 7 years. We are NOT attorney based. Our attorney is retained by us in order to get involved if we need a trustee sale postponed or to deal directly with the banks attorneys. We do not stop or prevent foreclosure and we do not do loan modifications. We are not investors and we do NOT flip homes or require a double escrow. My whole team and I are adamant that we sound nothing like a loan mod company or some of these other shady short sale negotiating companies. We are simply an extremely skilled group who are very successful at processing and closing short sales.



Furthermore there is no cost to the client (seller) or either agent for our service. We will never ask for a percentage of either the buyer or selling agents commission. How do we get paid? Well that is our secret sauce. We basically get paid by the bank and if we don?t we will still in good faith finish processing the file until close.



I can not speak for anyone other than my group but, my two negotiators have a very specific skill set that makes them invaluable to the transaction. Each lender has a specific formula on how they want their deals structured, what they will accept, what they will pay for 2nd liens, and what they will pay for outstanding debts (back HOA, back property tax, etc...). This knowledge is not out in the open. It is learned from years of experience. Having is knowledge is key is getting a faster approval and NOT having to go back and worth with the lender.



One the other hand I totally agree with Rolar_USC... some short sale specialists are nothing more than a glorified paper-pusher.
 
To anyone who has attempted the short sale process themselves, they know it?s tedious, frustrating, complex and sometimes, a complete misallocation of precious time. For the novice, this is all too well understood.



In essence, the short sale is a re-underwriting of the loan though for the obvious reason of understanding the borrowers qualitative and quantitative reasons for default. Ideally, this process is understood best through the mortgage origination example and finds strongly aligned parallels in that origination process. For example, the borrower?s pay stubs were likely (though not in all cases) used as one method to underwrite income and demonstrate affordability. In the short sale, the pay stubs play a role in establishing, quantitatively, that the borrower cannot support the mortgage any longer, thus underwriting ?unaffordability?.



As with mortgage origination, the skill sets, time requirements, processes, systems and paperwork to ?originate? a short sale are completely different and separate from the ?traditional? real estate agent work requirements. That agents have taken on both sets of work is only the result of necessity, not the proper alignment of skills to the multipart tasks at hand.



The frustrating though inevitable result born from this ?transaction on top of a transaction? is that agents unavoidably jump into the deep end and produce an atrocious close ratio for short sales. This is absolutely avoidable.



In economic circles, there?s a theory called Division of Labor. The idea here is that in a group of people, person A will do something better, faster, smarter, etc. than person B in the group, who in turn will do something better, faster, smarter, etc. than person A. Instead of everyone doing everything, it makes more sense for the production of everyone that person A specializes in their particular skill and person B specializes in theirs. When everyone works together, the group and individual enjoy greater productivity.



Why hasn?t this been done with regard to real estate agents and short sales? The answer is that agents have a long history of doing everything themselves. They?re marketers, accountants, office administrators, managers, dish washers and bus boys all at once. But this doesn?t work; short sales are too demanding of your time, resources, emotional energy and focus. To get the most out of short sales and the current real estate market, there must be an intelligent and purposeful division of labor.
 
Thanks to all for the valuable information. Unfortunately, the seller has two loans both to Wamu or JPM Chase now, one of the slowest banks. Even with verbal approval, I think it will still be quite a wait. The only good thing seller is paying the shortsale specialist at his own expense, but I guess whoever he hired is kind of useless as it's already been 3 months into the process.
 
[quote author="AlmostThere" date=1257417881]Thanks to all for the valuable information. Unfortunately, the seller has two loans both to Wamu or JPM Chase now, one of the slowest banks. Even with verbal approval, I think it will still be quite a wait. The only good thing seller is paying the shortsale specialist at his own expense, but I guess whoever he hired is kind of useless as it's already been 3 months into the process.</blockquote>
There are just way to many variables to give my assessment of the situation. Are you the buyer or realtor or what?



Typically a verbal approval can be made once a BPO has been completed by the 1st lien holder or the listing agent could just be blowing smoke. The 1st lien holder can not issue the written approval until the 2nd lien holder issues its approval and the 1st lien holder is willing to agree to the terms. So the waiting game continues.
 
[quote author="sugarspunZ" date=1257419808][quote author="AlmostThere" date=1257417881]Thanks to all for the valuable information. Unfortunately, the seller has two loans both to Wamu or JPM Chase now, one of the slowest banks. Even with verbal approval, I think it will still be quite a wait. The only good thing seller is paying the shortsale specialist at his own expense, but I guess whoever he hired is kind of useless as it's already been 3 months into the process.</blockquote>
There are just way to many variables to give my assessment of the situation. Are you the buyer or realtor or what?



Typically a verbal approval can be made once a BPO has been completed by the 1st lien holder or the listing agent could just be blowing smoke. The 1st lien holder can not issue the written approval until the 2nd lien holder issues its approval and the 1st lien holder is willing to agree to the terms. So the waiting game continues.</blockquote>


I am the buyer. From what I was told, the 1st lien holder agrees to provide the 2nd lien holder some money, and both have reached an agreement "verbally" with the short sale specialist... but what is missing is the formal approval in writing which the listing agent says would take 4-5 weeks.
 
[quote author="AlmostThere" date=1257430845][quote author="sugarspunZ" date=1257419808][quote author="AlmostThere" date=1257417881]Thanks to all for the valuable information. Unfortunately, the seller has two loans both to Wamu or JPM Chase now, one of the slowest banks. Even with verbal approval, I think it will still be quite a wait. The only good thing seller is paying the shortsale specialist at his own expense, but I guess whoever he hired is kind of useless as it's already been 3 months into the process.</blockquote>
There are just way to many variables to give my assessment of the situation. Are you the buyer or realtor or what?



Typically a verbal approval can be made once a BPO has been completed by the 1st lien holder or the listing agent could just be blowing smoke. The 1st lien holder can not issue the written approval until the 2nd lien holder issues its approval and the 1st lien holder is willing to agree to the terms. So the waiting game continues.</blockquote>


I am the buyer. From what I was told, the 1st lien holder agrees to provide the 2nd lien holder some money, and both have reached an agreement "verbally" with the short sale specialist... but what is missing is the formal approval in writing which the listing agent says would take 4-5 weeks.</blockquote>


from my experience once the 2nd lien holder gives a verbal approval it usually takes at most a few days to issue the written approval then once the 1st lien holder gets the 2nd lien holders written approval it usually takes at most 2 weeks usually 5 business days to issue the formal written approval.

what you are saying sounds fishy to me. it usually takes 4 to 5 weeks for the file to be processed by the lien holders and to complete the BPO.

how long has the whole process been going on? do you know if your offer is the only offer that was submitted to the lender?
 
[quote author="sugarspunZ" date=1257431427][quote author="AlmostThere" date=1257430845][quote author="sugarspunZ" date=1257419808][quote author="AlmostThere" date=1257417881]Thanks to all for the valuable information. Unfortunately, the seller has two loans both to Wamu or JPM Chase now, one of the slowest banks. Even with verbal approval, I think it will still be quite a wait. The only good thing seller is paying the shortsale specialist at his own expense, but I guess whoever he hired is kind of useless as it's already been 3 months into the process.</blockquote>
There are just way to many variables to give my assessment of the situation. Are you the buyer or realtor or what?



Typically a verbal approval can be made once a BPO has been completed by the 1st lien holder or the listing agent could just be blowing smoke. The 1st lien holder can not issue the written approval until the 2nd lien holder issues its approval and the 1st lien holder is willing to agree to the terms. So the waiting game continues.</blockquote>


I am the buyer. From what I was told, the 1st lien holder agrees to provide the 2nd lien holder some money, and both have reached an agreement "verbally" with the short sale specialist... but what is missing is the formal approval in writing which the listing agent says would take 4-5 weeks.</blockquote>


from my experience once the 2nd lien holder gives a verbal approval it usually takes at most a few days to issue the written approval then once the 1st lien holder gets the 2nd lien holders written approval it usually takes at most 2 weeks usually 5 business days to issue the formal written approval.

what you are saying sounds fishy to me. it usually takes 4 to 5 weeks for the file to be processed by the lien holders and to complete the BPO.

how long has the whole process been going on? do you know if your offer is the only offer that was submitted to the lender?</blockquote>


It went into escrow with the previous buyer in late August, but the buyer fell out of escrow, so the house went back to the market with description "bank-approved" short sale. After asking the listing agent about the details, they said it was verbally approved and takes 4-5 weeks to get the actual letter. We went ahead and submitted the offer at 5K above the verbally "approved" price, and opened an escrow to secure the house. So I would imagine after the approval, it will take some more time for the bank to accept my offer, but hopefully will be quick since it is higher than the approved price.



So back to my original question; since it's been ~2.5 months waiting period already, what exactly is that short sale specialist doing in this period as it does not seem to expedite the process.
 
^

it sounds to me that the listing agent and the "specialist" really are not on the ball.



verbally approved is not approved and it should not be advertised as such. i wish there were some sort of rule or checks and balance as to what can be written on the MLS regarding the status of a short sale. if it were truly approved or even verbally approved the listing agent should have instructed your agent to make the offer for the approved price NOT for anything above what was approved verbally or written. then it is as simple as changing the name of the buyer and verifying the financing is in place for the already approved short sale. 2 to 3 weeks max. when an approval is made the lenders all of a sudden start working very fast and are very eager to close.



i am guessing what happen was the listing agent and or the "specialist" screwed around for far to long, the bank stopped working on the file then when they got your offer they had to resubmit everything and start the process all over again.



again this is just my $0.02 and there are way to may variables that could have come into play.
 
[quote author="sugarspunZ" date=1257436264]^

it sounds to me that the listing agent and the "specialist" really are not on the ball.



verbally approved is not approved and it should not be advertised as such. i wish there were some sort of rule or checks and balance as to what can be written on the MLS regarding the status of a short sale. if it were truly approved or even verbally approved the listing agent should have instructed your agent to make the offer for the approved price NOT for anything above what was approved verbally or written. then it is as simple as changing the name of the buyer and verifying the financing is in place for the already approved short sale. 2 to 3 weeks max. when an approval is made the lenders all of a sudden start working very fast and are very eager to close.



i am guessing what happen was the listing agent and or the "specialist" screwed around for far to long, the bank stopped working on the file then when they got your offer they had to resubmit everything and start the process all over again.



again this is just my $0.02 and there are way to may variables that could have come into play.</blockquote>


I hope that is not the case, but I am afraid what you have described is very likely. Welps, there is nothing much I can do. Boy I wish I can just go to the bank directly and ask them what the real status is on this case instead of relying on the listing agent & specialist's words, which are more or less along the same line of "the banks are so busy these days due to the heavy workload resulted from the first-time buyer credit, so they need more time"
 
[quote author="AlmostThere" date=1257437221][quote author="sugarspunZ" date=1257436264]^

it sounds to me that the listing agent and the "specialist" really are not on the ball.



verbally approved is not approved and it should not be advertised as such. i wish there were some sort of rule or checks and balance as to what can be written on the MLS regarding the status of a short sale. if it were truly approved or even verbally approved the listing agent should have instructed your agent to make the offer for the approved price NOT for anything above what was approved verbally or written. then it is as simple as changing the name of the buyer and verifying the financing is in place for the already approved short sale. 2 to 3 weeks max. when an approval is made the lenders all of a sudden start working very fast and are very eager to close.



i am guessing what happen was the listing agent and or the "specialist" screwed around for far to long, the bank stopped working on the file then when they got your offer they had to resubmit everything and start the process all over again.



again this is just my $0.02 and there are way to may variables that could have come into play.</blockquote>


I hope that is not the case, but I am afraid what you have described is very likely. Welps, there is nothing much I can do. Boy I wish I can just go to the bank directly and ask them what the real status is on this case instead of relying on the listing agent & specialist's words, which are more or less along the same line of <strong>"the banks are so busy these days due to the heavy workload resulted from the first-time buyer credit, so they need more time"</strong></blockquote>
if that is literally what they are telling you then they have absolutely no idea what they are doing and are totally blowing smoke. when processing a short sale the listing agent or "specialist" deals with the loss mitigation department of the bank which has nothing to do with first time buyers credits. if the listing agent was told this by the "specialist" then the listing agent has no idea what he/she is doing. this sounds like the blind leading the blind.

in all honesty i would start looking for another home and maybe even another agent. a good buyers agent has a very specific list of questions that should be asked of a listing agent when dealing with a short sale and if the listing agent can not properly answer the questions then i would find another house or ask if you can take over the negotiating process. it is very rare but my team has processed the short sale for the buyer however most listing agents are to proud to give up control.
 
[quote author="sugarspunZ" date=1257438644][quote author="AlmostThere" date=1257437221][quote author="sugarspunZ" date=1257436264]^

it sounds to me that the listing agent and the "specialist" really are not on the ball.



verbally approved is not approved and it should not be advertised as such. i wish there were some sort of rule or checks and balance as to what can be written on the MLS regarding the status of a short sale. if it were truly approved or even verbally approved the listing agent should have instructed your agent to make the offer for the approved price NOT for anything above what was approved verbally or written. then it is as simple as changing the name of the buyer and verifying the financing is in place for the already approved short sale. 2 to 3 weeks max. when an approval is made the lenders all of a sudden start working very fast and are very eager to close.



i am guessing what happen was the listing agent and or the "specialist" screwed around for far to long, the bank stopped working on the file then when they got your offer they had to resubmit everything and start the process all over again.



again this is just my $0.02 and there are way to may variables that could have come into play.</blockquote>


I hope that is not the case, but I am afraid what you have described is very likely. Welps, there is nothing much I can do. Boy I wish I can just go to the bank directly and ask them what the real status is on this case instead of relying on the listing agent & specialist's words, which are more or less along the same line of <strong>"the banks are so busy these days due to the heavy workload resulted from the first-time buyer credit, so they need more time"</strong></blockquote>
if that is literally what they are telling you then they have absolutely no idea what they are doing and are totally blowing smoke. when processing a short sale the listing agent or "specialist" deals with the loss mitigation department of the bank which has nothing to do with first time buyers credits. if the listing agent was told this by the "specialist" then the listing agent has no idea what he/she is doing. this sounds like the blind leading the blind.

in all honesty i would start looking for another home and maybe even another agent. a good buyers agent has a very specific list of questions that should be asked of a listing agent when dealing with a short sale and if the listing agent can not properly answer the questions then i would find another house or ask if you can take over the negotiating process. it is very rare but my team has processed the short sale for the buyer however most listing agents are to proud to give up control.</blockquote>


I agree with SugarspunZ. Even if you do want to keep this property in your back pocket, keep looking aggressively as if you did not have anything in the pipeline. It will keep you from wasting time waiting for a deal which may/may not not happen. You never know, you may find something you like better!



SugarspunZ,

Have you seen any correlation of how fast a property moves through the short sale process based on the gap between what is owed and what the submitted offer is? In other words, does it take much longer if the debt owed is much larger than the value of the property compared to a home where the debt to property value gap is small?
 
[quote author="davenlei" date=1257461932][quote author="sugarspunZ" date=1257438644][quote author="AlmostThere" date=1257437221][quote author="sugarspunZ" date=1257436264]^

it sounds to me that the listing agent and the "specialist" really are not on the ball.



verbally approved is not approved and it should not be advertised as such. i wish there were some sort of rule or checks and balance as to what can be written on the MLS regarding the status of a short sale. if it were truly approved or even verbally approved the listing agent should have instructed your agent to make the offer for the approved price NOT for anything above what was approved verbally or written. then it is as simple as changing the name of the buyer and verifying the financing is in place for the already approved short sale. 2 to 3 weeks max. when an approval is made the lenders all of a sudden start working very fast and are very eager to close.



i am guessing what happen was the listing agent and or the "specialist" screwed around for far to long, the bank stopped working on the file then when they got your offer they had to resubmit everything and start the process all over again.



again this is just my $0.02 and there are way to may variables that could have come into play.</blockquote>


I hope that is not the case, but I am afraid what you have described is very likely. Welps, there is nothing much I can do. Boy I wish I can just go to the bank directly and ask them what the real status is on this case instead of relying on the listing agent & specialist's words, which are more or less along the same line of <strong>"the banks are so busy these days due to the heavy workload resulted from the first-time buyer credit, so they need more time"</strong></blockquote>
if that is literally what they are telling you then they have absolutely no idea what they are doing and are totally blowing smoke. when processing a short sale the listing agent or "specialist" deals with the loss mitigation department of the bank which has nothing to do with first time buyers credits. if the listing agent was told this by the "specialist" then the listing agent has no idea what he/she is doing. this sounds like the blind leading the blind.

in all honesty i would start looking for another home and maybe even another agent. a good buyers agent has a very specific list of questions that should be asked of a listing agent when dealing with a short sale and if the listing agent can not properly answer the questions then i would find another house or ask if you can take over the negotiating process. it is very rare but my team has processed the short sale for the buyer however most listing agents are to proud to give up control.</blockquote>


I agree with SugarspunZ. Even if you do want to keep this property in your back pocket, keep looking aggressively as if you did not have anything in the pipeline. It will keep you from wasting time waiting for a deal which may/may not not happen. You never know, you may find something you like better!



SugarspunZ,

Have you seen any correlation of how fast a property moves through the short sale process based on the gap between what is owed and what the submitted offer is? In other words, does it take much longer if the debt owed is much larger than the value of the property compared to a home where the debt to property value gap is small?</blockquote>
from our experience it takes about the same amount of time regarding of what the difference is of what is owed and what the offer is for. as long as the offer is a fair offer that is. again there are a ton of variables to give a definitive answer.
 
[quote author="awgee" date=1257463178]And ...

Do you think the bank will make a quicker decision if the offer is a cash offer?</blockquote>
from submitting the deal to getting an approval will take about the same amount of time even for a cash offer however once the offer is approved then the time to close is obviously much faster. however the lenders will usually take a much lower offer if it is all cash. i have heard some of the larger REO agents in my office that the cash discount is getting smaller is most OC markets and is Zero in a few.
 
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