Who are the players in a short sale?
It is important to understand who is involved in a typical short sale.
Seller(s). They are also referred to as the Borrower or Homeowner.
Lender(s). These are the banks or investors with liens against the property. In many cases, the loan may have been sold from one lender to another. In other cases, a loan servicer may be handling the collection of payments for the lender.
Loss Mitigation Officers. The loss mitigation specialists of a lender or servicer help determine what constitutes an acceptable payoff.
Real estate agent(s). Typically the property will be listed with a real estate licensee. Another agent may represent the prospective buyer.
Short Sale Consultant or Negotiator. There are many legitimate and experienced short sale consultants who act as a third party negotiator to help sellers and agents. There are also many illegitimate or inexperienced people claiming to be short sale consultants. Having a professional consultant work the short sale is what can make or break a deal.
Contractor(s) and Inspector(s). Many distressed properties face deferred maintenance or neglect. An estimate from a licensed contractor and a report from a certified inspector may be powerful negotiating tools in convincing a lender to accept less money.
Appraiser or BPO Agent. In the latter stages of a short sale, the lender or servicer will likely pay for an appraisal or a Broker’s Price Opinion (BPO) from an agent. The lender will determine a payoff based upon the valuation established by the appraiser or BPO agent. It is imperative that the listing agent and/or short sale consultant meet the appraiser or BPO agent when they visit the property.
Attorney(s). The lender or servicer will hire a law firm to represent them in the foreclosure action. The seller is strongly encouraged to have legal representation too.
Accountant(s). The seller is strongly encouraged to consult with their accountant in any short sale or potential short sale transaction.
Credit Restoration Specialist or Counselor. The seller is strongly encouraged to speak with a credit counselor prior to a short sale transaction. After a short sale, it may be a good idea for the seller to hire a credit restoration service to help clean up their damaged credit record.
Private Mortgage Insurer. If the seller was required to pay for mortgage insurance, that company may pay some or all of the deficiency to the lender, which can influence the lender’s decision to permit the short sale.
Federal Government Agencies. Some loans may have been guaranteed or insured under a federal program. The Department of Housing and Urban Development (HUD), the Federal Housing Administration (FHA), the Veterans Administration (VA), and the United States Department of Agriculture (USDA) are agencies that may have some approval authority on a loan they guaranteed or insured. Fannie Mae and Freddie Mac may also have approval authority on certain loans.