LOTUS REALTY GROUP How buyer's lenders are holding up a short sale closing Realtors, have you experienced a situation where: you accepted an offer on your short sale listing, an approval is issued by the short payoff lender with a deadline to close in 30 days; your buyer's lender promised that everything was looking good, there should not be any issues and you can expect to close on time; however at the 11th hour documents that should have been addressed from day one but were not able to be drawn for various reasons throw the closing off its tracks? Just recently, I had a transaction I negotiated for a realtor where we got the approval in less than two months. The buyer's lender promised that everything was moving forward however, when we needed documents drawn we found out there was a possibility that the buyers were in fact NOT qualified AND they were putting buyers receiving the tax credit in front of ours. That news was not even communicated to me until two days prior to the approval expiration. Unacceptable. I barely had time to ask for an extension which could quite possibly have been denied. As a professional short sale negotiator I have run into this numerous times. I have had to take control of this issue because experience has taught me that once an approval is issued the short sale payoff lenders want to close within 30 days. However, some escrow companies and buyers lenders are under the misconception that extensions are freely given. This is NOT the case. It is a battle. Lenders are tightening up and they are not giving them as often. They want to close on schedule. We cannot risk this any longer. We work too hard and too long for these approvals. We are not just trying to get a home buyer into a home; we are trying to avoid foreclosure for a seller who is going through one of the biggest financial stresses of their life. Obviously we cannot force a buyer to use a specific lender however, I believe that if a buyer is going to put an offer in on a short sale listing they need a team of professionals that is able to close the sale. If it is the house they want and they are serious then it has been my experience they will do whatever is necessary. You want serious, qualified buyers because at the end of the day all of this hard work is for nothing if the deal falls apart. By following the proper procedure between a buyer and buyers lender "UPFRONT" will ensure an ONTIME closing in a short sale transaction: a) Have your buyer get DU APPROVAL with their lender. Have them give all of their income documentation up front with loan type they are looking for. Make sure they are in fact qualified and committed. If they are not cooperative I would move on. b) If you are dealing with a Condo, find out up front what the occupancy rate is. c) Is the Condo building in Litigation? d) Is the Condo building FHA or VA approved? e) Verify all assets for down payment and or gift funds. f) Keep all paperwork updated throughout process. g) Buyers must allow a new credit report to be run so that you can look out for an increase in liabilities and to verify FICO scores are updated and correct. h) Appraisals need to be ordered ASAP when approval comes in, paid for by the buyer. ( HOA Certs) i) Make sure that the sale price does not change after the lender receives the purchase contract. j) Lines of communication need to remain open between buyer's lender, Escrow and the Third party negotiator. These are all the things a buyer's lender should be doing from day one. Unfortunately, this usually takes place somewhere in the middle , in some instances towards the end, leaving us little time to put out fires and putting us at high risk of losing the approval thereby driving the seller into foreclosure. Scary thought, isn't it? I believe, if we can follow these guidelines and set these boundaries and parameters with our clients we will eliminate some of the biggest issues and frustrations in short sales today. LOTUS REALTY GROUP PROFESSIONAL SHORT SALE NEGOTIATORS At Lotus Realty GROUP, helping people ethically succeed is at the forefront of who we are..... Don't miss our radio program on AM 1000 KCEO "Financial Talk " with Craig Brock. Our special guest is #1 Real estate attorney "David Bright" Thursday morning July 8th 8:00 am.