Got Short Sales? What you need to know…

House 2 
We had another outstanding training on Friday, this time on short sales.  Jane Clawson and Sara Rodriguez put on an informative meeting that went over 1.5 hours on how to increase the chances of your short sale getting to settlement. 

First thing to know is that although short sale/distressed property inventory is down locally and has been decreasing over the last several weeks, they are going to be a part of our residential landscape for the next 3 to 5 years.  So whether you like to deal with them or not, you need to learn how to deal with them appropriately to get the best results for your clients whether they are buying or selling houses.

First things first, set the right expectations for your sellers.  In today’s market, short sales are taking a very long time to complete, banks are not necessarily releasing people of their liabilities, they are providing 1099’s at closing, they have been asking for interest free loans for a portion of the balance owed and most importantly, they need to be upfront with you.  Are they current with their payments – if not, when was the last time they made a payment.  Also, how many loans are on the property, are there any judgments against the property, and are they current on their HOA or condo dues.  Just so you don’t have any complications at the last minute, ask them to speak with a reputable bankruptcy attorney to make certain this is or is not an option for them.  Speak with the bank about a potential loan mod as well.  Lastly, speak with an accountant about potential tax liabilities of the short sale. 

In order to give yourself the best shot, fill out the owner’s bank paperwork –not forms you develop or others that you may have picked up at a seminar.  The best way to expedite this part of the process is to go to  They have every bank’s short sale paperwork readily available or get the paperwork directly from the lender.  Every page needs to have the owner’s name and loan number on them – bar none.  Have your title company do a preliminary HUD-1 with all charges that apply – past due association fees, well/septic fees, home warranty, agent fees, etc. because bank will push back on fees so it is better to give them the worst case scenario dollars wise upfront and provide them with a title search as well.

Follow up 24 -48 hours after you send it to ensure it was received.  The process only begins once the entire package has been received.  Ask if they have a complete package.

Harassment works – call two to three times per week.  Ask if foreclosure date is set – if so, when.  Has a negotiator been assigned?  Have they ordered the BPO yet – if not, can you call and order while I am on the phone?  Where are we in the process…whatever it is just call regularly.  Remember the person on the phone doesn’t think outside the box so work within their guidelines.

The bank is not always the investor so you need to find out who the investor is and who will be making the decisions.  Also, all banks handle short sales differently so you need to know the bank and their process – some only answer emails, some only answer phones in the morning, and others the afternoon.  Get into their routine and know how to work with them.

Other notes of interest – foreclosures can be stopped with a contract but all hands need to be on deck and work expeditiously to get it done.  Short sales can hurt your credit for 2-4 years, bankruptcy and foreclosure are both longer.  For more details on the credit situations, go to  Remember, the title company represents the transaction and not the seller so title companies will not do seller only closings.  Also, it is best to have the seller directly negotiate the outstanding condo, HOA or IRS judgments with the appropriate party as they will have the most leverage.  They are less likely to negotiate with an attorney because they will say if they can pay for an attorney, they can pay their bill.

For additional questions or concerns, feel free to call Jane or Sara at 703-448-3556 or me at 703-652-5777.  Again, keep up with trends, numbers, and processes and you will get results.  Get it?  Got it?  Good!

Now, go sell something!


It’s good to know!

We had another great real estate exchange yesterday at Clyde’s in Ashburn sponsored by Jane Clawson at Ekko Title and Josh Burruss at Potomac Mortgage Group.  We discussed the Loudoun housing market as well as the Northern Virginia housing market and how inventory is up due to the time of year but distressed property inventory is down.  This trend has been occurring for the last few weeks throughout the region. 

New home sales are more and more prevalent as the houses that are for sale are not priced right or are not in the right condition and if they are, they are receiving multiple offers with escalation clauses.  In addition to lack of acceptable housing in the resale market, builders are now priced right and are offering a viable option. 

A few agents are experience appraisal issues and as prices escalate, we anticipate seeing even more as underwriters are not in sync with the market and appraisers want to be conservative and not be too far ahead of the curve in pricing like we saw from 2004-2006 – stay tuned!

Josh mentioned that rates remain great – 4.75% with no points on conforming/FHA products and just 5% on conforming jumbo products.  One reason we continue to see great rates is that inflation is came in lower than expected on Friday despite the fact that gas prices and food prices are on the rise.  On Monday, Standard and Poor’s downgraded the US debt which resulted in a slight uptick in rates.  It is the first time since 1995-1996 that they have downgraded the debt, if this trend continues, we will see rates rise and rise quickly – keep an eye out for further announcements.  Loan applications continue to roll in for purchases – 86% of applications were purchase apps and 75% of those were for new homes.  Again, new homes are having an impact in the Northern Virginia housing market.

Jane discussed the importance of utilizing reputable partners when buying or selling houses.  They have seen recent trends when researching titles that there are rampant defects in title.  This is because previous title companies have not gone back 40 years when looking at the title history, they just went back an owner or two. Jane and her team will go back and contact the banks to get liens released or indemnify the parties so they can move forward with the transaction, receive their title insurance and move forward. Lately, they are seeing unreleased liens, mistakes made with the wrong substitute trustee selling the properties, issues with previous second trusts and more.  Be sure you work with a reputable team to handle these issues and protect your clients.   Also, remember that you cannot put “owner of record” as seller on your contracts.  Call Ekko and they can do a quick title bring down and let you know who is the owner of the property – you need to know who has the authority to sell the house. It’s good to know and to work with people in the know.

Next, we discussed our listings and reviewed buyer needs.  Activity on listings is up which means buyers are out in the marketplace – get your house in the right condition and price it right to get a sale!  Investors are still hungry for properties in the lower price points as the rental market remains strong and rents are brining great returns.

It is imperative to stay on top of the market, review trends, and network with other professionals to inform your clients of what to do when buying or selling real estate.  Get it?  Got it?  Good!

Now, go sell something!