Renaissance Realty Group’s Blog: The Short Sale Process

The Short Sale Process

1. The first step in the short sale process is to obtain all the information including 2 years tax returns, bank statements, a hardship letter, listing agreement, net sheet, and contract, and submit it to the first lien holder.  In our office we use an attorney to handle this for our clients and it really helps in the negotiating process.
2. The second step is banks typically will not look at the file for 3-4 weeks.  They are so inundated with files, that they prioritize the files that are urgent first.  The urgent ones would be those close to a sale date or in foreclosure.  Once you have been served foreclosure papers banks tend to speed up the process and your file moves up to the top.  So in this 2nd step you must be patient.  
3. Once the file gets to the top of the stack than they will order at least 1 BPO (Broker Price Opinion).  An independent realtor will go ahead and look at the value of the property.  Sometimes it is a drive by BPO and sometimes they will request to come in the house.  A BPO is more of a realistic Comparable Market Analysis. 
4. As soon as they have the BPO they will look at the value of that BPO and the price of the contract, and make a determination on whether to order a full appraisal, another BPO or just use the existing BPO. 
5. Once they have the BPO they assign what is called a Negotiator.  The Negotiator is responsible in making sure everything looks correct, and he reports to the Investor.   The Negotiator also knows what the Investor is looking for as far as documentation, and what the lender wants to net.  The bank does not care how much the seller owes.  He cares about what percentage the bank is going to net from the BPO or appraisal.  The last lender I dealt with said they look for netting 81% of the value determined by the BPO or appraisal.  In this one they did not reduce commissions at all, but in some cases they will.  Usually the rule of thumb is that they will pay 5% with 2 realtors and 4% if one realtor has both sides.  In this one however, we got the full 6%. 
6. SO now the Negotiator has it, and he will send it off to the Investor.  The Investor will underwrite it and send it to a committee meeting, and they will make a determination if the offer is under their guidelines, and will either approve, decline, or counter.  Typically when they counter, they will just mention we need to net this amount.  They do not care how one gets there.  Realtors can kick in their commissions.  The buyer can come up or whatever else may work, but the bank will usually give a final counter number they want to net.