10 Important Short Sale Tips

1. 10 Tips for
Efficient Short Sales
A Guide for Agents
May 21, 2012

2. 10 Tips for Efficient Short Sales
Guide Revisions
Updates to this guide are made on a regular basis.
Visit the Agent Resource Center to view the most recent version.
Guide updates
• Version 2 – released Nov 23, 2010
• Version 3 – released April 26, 2011
– Included technology releases
• Version 4 – released July 1, 2011
• Version 5 – released April 14, 2012
• Version 6 – released May 18, 2012
FHA and VA files cannot be processed in Equator at this time.
Call 1.866.880.1232 to initiate FHA and VA short sales.
Go to: Tip No. 1 Tip No. 2 Tip No. 3 Tip No. 4 Tip No. 5 Tip No. 6 Tip No. 7 Tip No. 8 Tip No. 9 Tip No. 10
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3. 10 Tips for Efficient Short Sales
Ten Tips to Remember
1. Get Educated About Bank of America Short Sales
2. Set Expectations: Short Sale Realities
3. Upload the Documents Required at Initiation
4. Get Outside Liens Released as Soon as Possible
5. Complete Assigned Tasks Quickly to Avoid Delays
6. Work to Sell the Property at Fair Market Value
7. Fully Execute Offers Before You Submit Them
8. Agree on Counter Offers Before Accepting Them
9. Know When and How to Submit a Backup Offer
10. Watch for Common Causes of Delays
Go to: Tip No. 1 Tip No. 2 Tip No. 3 Tip No. 4 Tip No. 5 Tip No. 6 Tip No. 7 Tip No. 8 Tip No. 9 Tip No. 10
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4. 10 Tips for Efficient Short Sales
Tip No.
Get Educated About Bank of America Short Sales
Experience shows that agents who are educated and experienced with
short sales have greater success.
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Take Advantage of Bank of America Become Familiar With Bank of America’s
Short Sale Resources Short Sale Programs
• Find everything you need to know on our • This will help you guide distressed homeowners to understand their
Agent Resource Center, including: best option for avoiding foreclosure.
– Important news and updates about the short • Understand the Two Paths to a Successful Short Sale.
sale process and enhancements
– Free webinar replays
– Education library of important documents, Engage Homeowners Early
forms, and guides
• Familiarize yourself with the Equator system. • Explain the available options to avoid foreclosure.
– Home Transition Services
• Communicate with your short sale specialist
in Equator to learn the process and discuss – Home Loan Assistance Center
issues. • Initiate the short sale in Equator even before you market the property
• Build a network with other agents and receive an offer. You and your homeowner will benefit from:
experienced in short sales so you can share – Bank of America’s guidance on a list price
insights and experiences regarding the – Potential foreclosure halt
process. – Some homeowners may qualify for enhanced relocation assistance up to
$30,000. Specific investor participation and eligibility criteria apply.
Go to: Tip No. 1 Tip No. 2 Tip No. 3 Tip No. 4 Tip No. 5 Tip No. 6 Tip No. 7 Tip No. 8 Tip No. 9 Tip No. 10
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5. 10 Tips for Efficient Short Sales
Tip No.
Set Expectations: Short Sale Realities
Help sellers and buyers understand that a short sale is a complex and highly
specialized type of real estate transaction.
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Short Sales Can Be Lengthy Foreclosure Works in Parallel to a Short Sale
• The wide array of parties, policies, negotiations and other • Investor/state policies pertaining to foreclosure
factors involved in a short sale make it a time-consuming postponement can vary and change over time.
procedure.
• Consider pending foreclosure dates before you initiate a
• The homeowner and the buyer should be committed to short sale.
completing the short sale process. – Foreclosure postponements are not guaranteed.
• Keep the buyer informed throughout the process. – Equator will not allow short sales to be initiated within two
days of a foreclosure date.
Note: If the homeowner has an executed Home Affordable
Cash and Financed Purchases Foreclosure Alternatives (HAFA) Short Sale Agreement, the
Are Treated the Same foreclosure process is put on hold.
• Cash buyers are not given preferential treatment.
• Investors are concerned about the loss, not the source of
the proceeds.
Go to: Tip No. 1 Tip No. 2 Tip No. 3 Tip No. 4 Tip No. 5 Tip No. 6 Tip No. 7 Tip No. 8 Tip No. 9 Tip No. 10
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6. 10 Tips for Efficient Short Sales
Tip No.
Upload the Documents Required at Initiation
For short sales initiated with an offer, required documents must be uploaded
for your short sale to continue.
3
Supply the Documents Upload Documents Review Documents
Required for Initiation Separately When Required Before Uploading Them
To initiate a short sale with an offer, the • HAFA documents are an exception • Documents should be readable, 100%
following documents must be uploaded and should be uploaded to the complete and in .pdf format.
at initiation: Equator Library under the Property
• Ensure documents are signed by all
File section as one combined .pdf file.
• Signed Purchase Contract – with relevant parties.
the Buyer’s Acknowledgment and • Reminder: Keep homeowner
• Be especially careful to avoid the
Disclosure Form * financials updated.
most common document errors
• Short Sale Addendum * – Generally, pay stubs expire after that will delay the short sale process:
30 days.
• Estimated HUD-1 (prorated for 60 – Incomplete or illegible documents
days)
• There is a 75MB total limit for all – Mismatched buyer/seller names
uploaded documents per property.
• IRS Form 4506-T * Once you reach the limit, the file will
close.
• Bank of America Third-Party
Authorization Form* – Upload only requested documents
to keep from exceeding the file size
* Forms available on the Agent Resource limit.
Center at – Upload documents in black and
bankofamerica.com/realestateagent. white to reduce the file size.
Go to: Tip No. 1 Tip No. 2 Tip No. 3 Tip No. 4 Tip No. 5 Tip No. 6 Tip No. 7 Tip No. 8 Tip No. 9 Tip No. 10
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7. 10 Tips for Efficient Short Sales
Tip No.
Get Outside Liens Released As Soon As Possible
The homeowner and the listing agent are responsible for identifying
all outside liens and obtaining their release.
4
Bank of America Liens Non-Bank of America Liens
There is a separate process for releasing a Bank of America does not run a title search to identify other liens, such as:
home equity loan/line of credit from
• Homeowners association fees and taxes
Bank of America.
• Seconds, such as:
• Send a message to your short sale specialist
about contacting Bank of America Home – Home equity line of credit or loan
Equity. – Medical
– Child support
or
– Mechanic’s liens
• Call the Customer Service number on the – Judgments
homeowner’s monthly statement.
Begin Discussions Early
• Begin discussions with outside lien holders as soon as possible.
• Resolve outside liens early in the process to prevent possible delays.
Go to: Tip No. 1 Tip No. 2 Tip No. 3 Tip No. 4 Tip No. 5 Tip No. 6 Tip No. 7 Tip No. 8 Tip No. 9 Tip No. 10
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8. 10 Tips for Efficient Short Sales
Tip No.
Complete Assigned Tasks Quickly To Avoid Delays
Some tasks can delay or even halt the short sale process until they have
been completed.
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Complete Tasks to Avoid Delays Promptly Upload All Required
Homeowner Documents
• Check your messages often and complete assigned
tasks as quickly as possible. • Your short sale specialist can tell you which homeowner
– Some tasks can delay or even halt the short sale process documents are required.
until they have been completed.
• Documents should be provided within 10 days.
• Completing tasks as soon as they are assigned will help
you avoid the foreclosure sale date and will help keep • The short sale process cannot move forward until all
your short sale moving. required documents have been uploaded.
• It’s essential that you communicate with your short sale
specialist using Equator messaging. Respond to Counter Offers by the Deadline
Tell Homeowner to Respond to HAFA Alert • Respond to counter offers via Equator before they expire,
which is three days.
• If it is determined that the homeowner may be eligible for – Expired offers will go to an Unavailable status.
the HAFA program, the short sale process cannot move • Check messages and communicate with your short sale
forward until the homeowner is contacted. specialist frequently during the entire short sale process.
• If requested, direct the homeowner to respond
immediately to any HAFA action alerts by calling Short
Sale Customer Care at 1.866.880.1232.
Go to: Tip No. 1 Tip No. 2 Tip No. 3 Tip No. 4 Tip No. 5 Tip No. 6 Tip No. 7 Tip No. 8 Tip No. 9 Tip No. 10
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9. 10 Tips for Efficient Short Sales
Tip No.
Work to Sell Property at Fair Market Value
Investors hope to recoup as much of their investment as possible, so
unreasonably low offers are more likely to be rejected.
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Submit the Highest and Best Offer Requesting a Reassessment
• Submit your highest and best short sale offer • If the buyer’s valuation differs significantly from the valuation we
the first time. obtained, we may reconsider the value.
– This makes it more likely that the short sale • To request reconsideration, send a message to your short sale
specialist will accept the offer and present it to
specialist, who will submit the request to the valuation company/
the investor for approval.
investor.
• Remember each time you submit an offer, all
supporting documents must reflect the current
• Your supporting documentation must include either:
offer details. A. An independent appraisal (dated within 60 days)
or
Keep Valuations Current B. Full agent MLS sheets for three comparables sales (providing
all characteristics) and three comparable active listings.
• Valuations can expire and must be valid – Comps should be:
through closing. • Recent equal or better indicators of subject value
• Some investors may require an updated • Similar in characteristic to the subject property
valuation every 90-120 days. • In the proximate vicinity of the subject property
– MLS sheets must accompany CMA-type reports.
• Reassessment is not guaranteed and adds considerable time (about
three weeks) to the short sale process.
Go to: Tip No. 1 Tip No. 2 Tip No. 3 Tip No. 4 Tip No. 5 Tip No. 6 Tip No. 7 Tip No. 8 Tip No. 9 Tip No. 10
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10. 10 Tips for Efficient Short Sales
Tip No.
Fully Execute Offers Before You Submit Them
Submit fully executed purchase offers with all appropriate addendums
signed by both the buyer and the homeowner.
7
Meet the Five-Day Deadline to Submit Your Offer Negotiate External Third-Party Fees
• Submit short sale offer within five calendar days or the system may • Negotiate third-party fees before submitting
decline the offer. the HUD-1.
• Accurately prorate taxes and insurance.
Submit Accurate and Complete Information
• These closing fees must typically be paid by
the buyer/seller:
• Properly transfer information to the Offer Worksheet in Equator.
– Document preparation
– All fees and relevant fields on the Offer Worksheet make up the final
offer submitted to the investor for approval. – Homeowners Association fees, liens,
judgments
– If the information isn’t accurately entered, the process may be delayed.
– Reconveyance fees
• Provide the necessary buyer information for arm’s-length and fraud – Recording fees, notary fees and surveys
checks. – Repairs and home warranties
– This includes name, first five digits of Social Security number, date of – Sub-escrow fees and SPO processing fees
birth.
– UPS/FedEx and wire fees (with some
• Ensure the homeowner fully discloses: exceptions)
– Actual hardship – Real estate administration fees
– Financial condition
– Home occupancy status.
Go to: Tip No. 1 Tip No. 2 Tip No. 3 Tip No. 4 Tip No. 5 Tip No. 6 Tip No. 7 Tip No. 8 Tip No. 9 Tip No. 10
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11. 10 Tips for Efficient Short Sales
Tip No.
Agree on Counter Offers Before Accepting Them
Your short sale specialist may counter offer in order to arrive at an offer that’s
more likely to receive investor approval.
8
Understand the Offer Analysis Phase Respond Before Counter Offers Expire
• In the Offer Analysis phase, your short sale specialist • Always note the expiration date of the offer and respond
may counter the offer you submitted in order to prepare accordingly.
an offer for investor review. – Agents must respond to offers within three calendar
days.
• Settling on an offer to present to the investor for review
does not constitute final approval. – Expired offers will go to a Reject status. Communicate
with your short sale specialist to avoid any issues.
– Once the offer has been submitted to them, investors
may also counter the offer as part of their approval – Up to two counter offers will occur at this phase of the
contingency. process.
• You will be notified via an Equator message when your
offer is submitted to the investor(s). Upload Updated Documents
• Counter offers should be approved by all parties and the
Adjust the Closing Date contract should be updated with new terms, including the
closing date, prior to acceptance.
• Remember to adjust the closing date as needed during • All supporting documentation must also reflect the
any counter offers. agreed-upon terms.
• In most cases, the system will use this date for your • If the purchase price has changed, upload an addendum
approval letter. to the purchase contract and an updated HUD-1.
Go to: Tip No. 1 Tip No. 2 Tip No. 3 Tip No. 4 Tip No. 5 Tip No. 6 Tip No. 7 Tip No. 8 Tip No. 9 Tip No. 10
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12. 10 Tips for Efficient Short Sales
Tip No.
Know When and How to Submit a Backup Offer
Unforeseen changes may occur during a short sale that would prompt you
to submit a backup offer to replace the original offer.
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When to Submit a Backup Offer Submit a Backup Offer
• The original buyer walked out during the process, but • You must complete these tasks within five calendar days:
you have a backup offer ready to submit from a different – Submit Short Sale Offer
buyer – Upload Initiation Documents
• The buyer’s name changed during the process • The short sale can proceed without repeating the initiation
or steps.
• The original offer was declined as insufficient, and you • You will continue working with the same short sale specialist.
have a backup offer that can be submitted.
• The short sale status in Equator will change to Marketing.
If a Backup Offer Is Necessary
If There Is No Backup Offer
• Contact your short sale specialist immediately.
– Let the specialist know if you have a backup offer to • The short sale will be declined and its record in Equator will
submit.
be closed by your short sale specialist.
• Be aware that any backup offer – regardless of how
similar it may be to the previous offer – will require • You should return to marketing the property.
analysis and investor approval, which adds time to the • Initiate a new short sale in Equator when you receive a new
short sale process. offer on the property.
For detailed information, see How and When to Submit a Short Sale Backup Offer.
Go to: Tip No. 1 Tip No. 2 Tip No. 3 Tip No. 4 Tip No. 5 Tip No. 6 Tip No. 7 Tip No. 8 Tip No. 9 Tip No. 10
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13. 10 Tips for Efficient Short Sales
Tip No.
Watch for Common Causes of Delays
Contact your short sale specialist as soon as possible if any of the following
events occur:
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A Change in Buyer There’s a Revised Closing Date
The short sale approval is buyer-specific. If there is a If there’s a delay in closing the buyer’s loan, an extension
change of buyer, notify your short sale specialist to discuss may be requested, however it is not guaranteed.
your next steps.
Homeowner Files Bankruptcy Changes After the Approval Letter Is Issued
• The bankruptcy court must approve the short sale. Any changes to the transaction after the approval letter has
been issued may delay the process even further, depending
• Depending on local jurisdiction, this may cause long
on the number of additional re-approvals that are required.
delays in the process.
Go to: Tip No. 1 Tip No. 2 Tip No. 3 Tip No. 4 Tip No. 5 Tip No. 6 Tip No. 7 Tip No. 8 Tip No. 9 Tip No. 10
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14. 10 Tips for Efficient Short Sales
Commitment to Continued Improvement
Bank of America is committed to identifying new and different ways to
make the Short Sale process more transparent and efficient.
New Approaches
Where to Locate Additional Information
To Reduce Processing Times
• Ongoing collection of feedback on Agent Resource Center
process, people and technology
bankofamerica.com/realestateagent
• Right-sized staff to meet service-level
expectations; dedicated team of short Dedicated Customer Care
sale professionals 1.866.880.1232
Monday – Friday 8 a.m. to 10 p.m.; Saturday 9 a.m. to 5:30 p.m. Eastern
• Enhanced our technology;
monthly upgrades ongoing For homeowners:
Bank of America Home Loan Assistance
• Resources for short sale education
bankofamerica.com/homeloanhelp
Go to: Tip No. 1 Tip No. 2 Tip No. 3 Tip No. 4 Tip No. 5 Tip No. 6 Tip No. 7 Tip No. 8 Tip No. 9 Tip No. 10
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