1) The document discusses sample letters developed by REALTOR Marki Lemons for sellers and cooperating agents to use in short sale transactions. 2) It provides an overview of the short sale process including gathering documents from sellers, submitting offers to lenders for approval, and educating buyers about the lengthy approval timeline. 3) Real estate agents are advised to educate themselves on short sales through training and experience closing transactions as the process can take several months and requires coordination between multiple parties.

1. Illinois REALTOR®: Short Sales | Illinois Association of REALTORS® http://illinoisrealtor.org/illinoisrealtor/May2009_shortsale
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Illinois REALTOR®: Short Sales
Get 'Em on the Same Page
Sample letters for sellers and cooperating agents in a short sale
Illinois continues to make top 10 lists for states severely affected by
foreclosures. REALTOR® Marki Lemons with Rubloff Residential
Properties in Chicago has been working the foreclosure market since
2002 and has closed hundreds of successful short sales and
represented buyers of REO properties.
“Traditional sales are down, foreclosures and REO properties are
increasing, so agents really need to learn about the process,” says
Lemons, who used her background as an Illinois certified education and
pre-license instructor to develop a short sale designation program.
For the Chicago Association of REALTORS® she developed a short sale
training class and sample letters to get everyone on the same page:
seller, buyer, listing agent, buyer’s agent.
“Step one is sending the ‘Dear Seller’ letter by e-mail or mail to the
homeowner after a phone interview and before the listing agreement
so they can get all their paperwork together,” says Lemons. “This can
take some time and before you spend marketing dollars on the listing
you want to evaluate it to be sure it’s something a lender will
consider.”
She uses the “Dear REALTOR®” letter to make sure the REALTOR®
representing the buyer in a short sale—and the buyer—understands
the process and to “put everyone at ease.” Buyers should expect that
the process can take about three to four months after the acceptance of
an executed contract, according to Lemons, and patience is required by
all.
“Basically education is the key but a REALTOR® who wants to get in
the short sale business needs to learn by doing,” says Lemons.
“Educate yourself but you have to practice. That’s the only way to get
better and for the process to appear simple.”
Dear (SELLERS NAME):
I am glad you called me earlier because maybe we can resolve this
issue together. I am a licensed real estate agent with __________.
After I completed a CMA of your property I believe you may be a
candidate for a short sale.
I will need the following information from you in order to analyze
whether or not your short sale will be considered by your mortgage
company:
1. I need a letter from you (called a quot;HARDSHIP LETTERquot;) stating what
has changed since the purchase of your house that has left you unable
to pay the mortgage.
2. Tax Returns for 2006 & 2007
3. Last two paycheck stubs (or if self employed) last two bank
statements from your company.
4. Last two bank statements for you personally.
5. Settlement package from purchase of home (to review your situation
when you purchased).
6. Last mortgage statement (date, 2007) for all mortgages on property.
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2. Illinois REALTOR®: Short Sales | Illinois Association of REALTORS® http://illinoisrealtor.org/illinoisrealtor/May2009_shortsale
After you have gathered the above information, I can meet you at your
convenience.
After our meeting:
1. I will need your signature on the enclosed form authorizing me to
speak to your lender. This is a third party authorization form.
2. I will contact the bank to see if they are interested in working out
the terms of the loan or a short sale.
3. I will list your home at market value. We will have a listing
agreement that I will have you sign (the bank will ask for a copy of the
listing agreement).
4. Forms - (Mortgage company will send you via facsimile through me,
after I speak to them) asking for a financial analysis of your entire
situation including all expenses, including bills you have and income to
see if you qualify. They may require other things depending on the
company. Each lender has its own rules.
5. We will need to attract a ready, willing, and able buyer and enter
into an executed contract.
6. We will submit the contract to the bank for their approval.
7. The buyer must have a pre-approval letter from the mortgage lender
he/she will be using, disclosing that he/she can afford to purchase this
house and move forward in the purchase of the home and can close
within 30 days of the contract.
8. The buyer will move forward in the purchase as we wait for approval.
9. Once your lender gives us an approval will set new closing date
(generally within 30 days of lender approval).
10. We will move forward with closing to occur at the title company.
Let me know if you want to proceed and we will set up an appointment
to go over everything. You can reach me at ________.
Sincerely,
Jane Smith, REALTOR®
REALTOR® Company Name
Dear (REALTOR®):
Thank you for your offer on my short sale listing. I will do everything in
my power to insure a smooth transaction.
This letter is an overview of the short sale process. If you have any
questions, please give me a call. The two most important aspects of the
transaction will be cooperation and patience.
What is a short sale?
A short sale occurs when a lien holder is willing to accept less than the
full mortgage pay off. They short the loan to allow the homeowner to
sell the property. A property is a candidate for a short sale when all
liens, plus costs of sale, exceed the market value. These liens include
mortgage liens, mechanics liens, tax liens, unpaid judgments, and
unpaid HOA fees.
What are the steps in a short sale?
There are many steps to successfully complete a short sale. A short
sale transaction takes an incredible amount of time, effort, and
expertise to negotiate with the lender and get the job done.
Why would a lender agree to accept a short sale?
Studies have shown that the cost of a foreclosure to the lender is an
estimated $60,000 and takes 18 months. You can understand why the
loss of a short sale may be less than the cost of foreclosure.
As the seller's REALTOR®, I will perform or coordinate the following:
• Establish contact with the lender's loss mitigation department.
• Obtain a signed authorization from the seller that allows me to speak
with the lender on their behalf.
• Obtain mortgage information from the seller.
• Order a title search on the property to research liens and judgments.
• Order payoffs to know the exact numbers for the settlement
statement.
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3. Illinois REALTOR®: Short Sales | Illinois Association of REALTORS® http://illinoisrealtor.org/illinoisrealtor/May2009_shortsale
• Order an estoppel letter from the Home Owner Association because
many times there are back HOA fees due.
• Order a short sale package from the lender.
• With the seller's assistance put together the short sale package and
submit it to the lender.
• Provide access for the BPO or appraisal. Provide comps if needed.
• Assist the seller/buyer in obtaining repair estimates.
• Negotiate, negotiate, and negotiate. Negotiation skills are a must.
• Stay in touch with the lender throughout the process.
To insure a smooth transaction these are items a buyer's
REALTOR® can perform:
• Educate the buyer about the short sale process. Short sales require
patience. It may take 2-4 months to complete the transaction.
• Assist the buyer in obtaining a mortgage pre-approval before
submitting an offer.
The borrower's lender is going to require proof of funds if it's a cash
deal or a commitment letter if there is financing involved.
• Counsel the buyer to expect to buy the home in its quot;as isquot; condition.
The seller doesn't have any money to make repairs and the lender is
going to require an as-is offer.
• If you are inexperienced with short sales, let me know.
• The seller's lien holder(s) is primarily in control of the process as they
are the decision maker.
• Be patient and counsel your buyer to be patient. This cannot be
emphasized enough.
How long will a short sale take?
Short sales can be very time consuming and require patience from
everyone involved: seller, buyers, REALTOR®, and lender.
Approval may take two days to two weeks to two months or more.
Some short sales may take as long as three to four months from
beginning to end. As of 2008 the average time is 8.1 weeks, according
to the National Association of REALTORS®.
The lien holder(s) has the final say. Remember, the lender is the one
who approves the short sale 100% of the time. If there is more than
one lender, I will have to negotiate with each of them separately.
What buyers need to know
Buyers of short sale properties need to understand what they are
getting into. Some buyers believe that they are going to be able to
quot;stealquot; a property and make a killing by reselling it. They have heard
the stories that investors tell and think it's a piece of cake to buy a
property 50 cents on the dollar.
While that may be the case in some instances it is not the norm and
should not be expected. Remember, the lien holder(s) want to sell the
property as close to market value as possible. In fact, most lenders
have pretty rigid guidelines as to how far below market value they will
sell for. Beyond that point, they will take the house back in foreclosure.
Again, if you have any questions, please give me a call. I look forward
to working with you and to a successful transaction.
Sincerely,
Jane Smith, REALTOR®
REALTOR® Company Name
REALTOR® Marki D. Lemons, ABR, CRB, CRS, SRES, MBA, is a national
trainer and broker with Rubloff Residential Properties in Chicago. She
developed and teaches the Certified Distressed Property Representative
(CDPR) designation and the quot;Short Sales Results Nowquot; guide to
transacting short sales (www.shortsaleresultsnow.com
(http://www.shortsaleresultsnow.com) ).
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4. Illinois REALTOR®: Short Sales | Illinois Association of REALTORS® http://illinoisrealtor.org/illinoisrealtor/May2009_shortsale
Editor’s Note: These are letters used by Marki Lemons in her practice.
Per IAR legal counsel, REALTORS® are encouraged to seek specific legal
advice and assistance in their own practices that might include short
sales.
ONLINE ONLY
Find in the IAR Legal Center (/Member/legal/short.asp) ,
www.illinoisrealtor.org: (http://www.illinoisrealtor.org:)
• downloadable PDFs of the short sale letters
• legal Q&A related to short sales
• a free one-hour short sale webcast with Chief Legal Counsel Steve
Bochenek and Legal Hotline attorney Betsy Urbance
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