urgent advice needed on a short sale - Posted by Richard Burton

Posted by LeonNC on March 20, 2003 at 01:27:36:


I’m reading an old post of yours wondering if this will even get to you. I’m looking at doing my first short sale. I’ve got some quick questions if you don’t mind.

Here’s the scenario. My used to be next door neighbor (now out of state) is a don’t wanter with a vacant house. He has a 1st only for $143k and is three months behind but the bank has not started to foreclose. The house is worth about $135k ARV approxiamately with $10k needed in repairs.

Is this a good candidate for a short sale/flip? I’m thinking of asking for a $72k buying price and flipping it for maybe $5k. Does this sound like I’m in the ballpark?

Also, what’s with the listing agreement in your package? Is this to show that the seller is at least trying to sell? His is not for sale and will not sell for what he owes. I know my neighborhood. There are others like his that will not sell right now and they are listed for less than $143k and in better shape.



urgent advice needed on a short sale - Posted by Richard Burton

Posted by Richard Burton on July 17, 2002 at 22:58:11:

I am meeting with a seller to sign a purchase and sale agreement on a short sale with an out of state bank. The property is due to foreclose on August 6. I spoke to the bank and they are interested in looking at my offer. I plan on putting the package together this week end and will Fed Ex the package on Monday.

Included in my package are: Comps, photos of all damage, a hardship letter, signed purchase and sale agreement.

My questions are: Is $1 earnest money to the Seller sufficient to satisfy the bank? The bank does not want the Seller to receive any money out of the deal, but I believe I need to give $1 to make it a valid contract.

what is a Net Sheet? I have been told that I need a Net Sheet as well.

I am planning on putting all damage photos in a Powerpoint slide show with somber music in the background and burning it into a CD rather than sending photos. Would this be the way to go?

Is there anything else I am missing



Re: urgent advice needed on a short sale - Posted by Carmen_FL

Posted by Carmen_FL on July 18, 2002 at 14:03:25:

Oops, I responded under Bob H - please look there for a long response, including a net sheet! :slight_smile:

Re: urgent advice needed on a short sale - Posted by HD

Posted by HD on July 18, 2002 at 13:58:29:

There is no legal requirement to give an earnest money deposit. Also consideration for a contract to be valid does not have to be cash or money. It could be the fact that you are willing to buy his property to save the sellers credit, that should be consideration enough specially in a short sale situation. I never give even a dime to the seller when I lock up a property.
I am not an attorney these are just my views and how I do things. You may want to check with a local attorney on my views.

Re: urgent advice needed on a short sale - Posted by gerald-dc

Posted by gerald-dc on July 18, 2002 at 10:28:12:


I think sending only a deposit is a mistake. You want to be taken seriously, at least put up a $100.00. If I were you and the deal is a good deal, I’d put up even more at least $500.00 to $1,000.00.

The more you put up, the more credibility you get.

Of course you want to put up as little as possible, but I think putting up $1.00 will not be in your best interest.

Re: urgent advice needed on a short sale - Posted by Bob H

Posted by Bob H on July 18, 2002 at 01:27:13:


A net sheet is simply an itemization of all of the anticipated selling expenses. Many lenders prefer a HUD 1, which is a standardized settlement statement used across the country. Ask the title company you are planning to use in this transaction to prepare one for you, or just do a simple two-column debit/credit spreadsheet.

Also, while I admire your creativity, I’d forget the CD and just send them photos. Your offer will get passed up the food chain at the bank, and you want to keep it in a format they are familar with.

Good luck

Bob H

Re: urgent advice needed on a short sale - Posted by Carmen_FL

Posted by Carmen_FL on July 18, 2002 at 14:02:27:

  1. Send them pictures. Usually these are not high-tech people. They have too many files to look at to take time to look at your CD (and many workstations don’t have CD players)

  2. Deposit - do NOT give the deposit to the seller, and do NOT give it to the bank!!! I don’t often have banks questions how much/little is given as deposit; they’re looking at their bottom line. But give whatever deposit it is to the TITLE COMPANY who will be closing the deal and let them hold it in escrow!

  3. Net Sheet: Here is a net sheet I use often for the banks. This shows that the seller is not getting anything (the last line, CASH TO SELLER, should always be $0 or negative) and you can figure out exactly how much the bank is going to be making (their only concern) based on what you are offering.

Closing costs may differ by state/area, so figure out what your “normal” costs are. I always add 1 year’s worth of back taxes, just in case; I also add as many other fees as I can think of, because a lot of the times they will come back and “disallow” certain ones for whatever reason. I always add a realtor commission (i’m a realtor, so I get it, but if you’re not, maybe one of your friends is). In certain counties, the seller usually pays the Title Insurance fees, so add those as well. State doc stamps vary by state, so find out what yours are. All these numbers are for South Florida. I’ve had good results with this Net Sheet, so here it is. Mine is in Excel so it calculates automatically.


Property Address:
Loan Number:





Contract Sale Price…$

Reductions in Amounts Due to Seller:
Real Estate Commissions - Listing Agent 3.00%…$
Real Estate Commissions - Selling Agent 3.00%…$
State Documentary Taxes (0.70%)…$
City/County Tax/Stamps…$150.00
Recording Fees (Deed, Mortgage, Release)…$110.10
Closing Costs (to Buyer)…0.00%…$
Settlement or Closing Fee…$250.00
Abstract or Title Search…$135.00
Document Preparation Fee…$
Utility Search…$45.00
Lien Search…$45.00
Escrow Holdback for Water…$200.00
Courier Fees…$42.50
Release of Mortgage…$25.00
Other Fees (Describe):…$
Other Fees (Describe):…$
PALM BEACH COUNTY ONLY (Seller Paid Title Ins.):
Title Insurance (Palm Beach County)…$
Release of Mortgage…$
Prorated City/Town Taxes (incl. Delinquencies)…$




Re: urgent advice needed on a short sale - Posted by jerry

Posted by jerry on July 19, 2002 at 19:41:48:

I’m a newbie learning from your post. Thanks. Can you give (us) an idea how long, on average, it will take a lender to get back to you on whether or not you have a deal? If you’re tieing yourself up waiting, it seems like a problem. How is that handled? Do you dare make two offers at once? Do they take three weeks or what?

Re: urgent advice needed on a short sale - Posted by Carmen_FL

Posted by Carmen_FL on July 20, 2002 at 12:04:48:

As always, the answer is: it depends.

Depends on the property; the market; the bank; the state of the property; the sellers’ financial status; how close the foreclosure sale is; how long the payments have been delinquent; the day of the month (they tend to act quicker toward the end of the month); if/whether the sellers have tried to work something out before; and many other things.

Rule of thumb: at least 2 weeks. It’s taken as little as 1 day and as long as 45 days. For FHA loans, the bank will normally accept NET of 82% of the amount of the loan. Other banks could be higher or lower.

In general, the steps are:

  1. if you can find the seller, they fill out all the financial information and submit pay stubs, etc. if you can’t find the seller or can convince the bank that they can’t be found or won’t be able to contribute, you may be able to skip this step. this can take from 1 minute to 30 days
  1. the bank will more than likely want to do a BPO/Appraisal, and won’t make a decision before they get it. this can take from 1 day to 1 month, depending on the bank and their appraiser

  2. the bank will require you to furnish some information such as: listing agreement; purchase contract; pre-approval for the buyer. the faster you get this to them, the faster they can answer you.

what I do is furnish them a 14-page “package” to expedite their research process. that includes:

  1. Authorization to release information
  2. Listing Agreement (they like to see those)
  3. Contract on property for the proposed sale amount (make sure you add up all your costs on the net sheet first before determining the purchase price!)
  4. Buyer’s Approval from lender/proof of funds if cash deal
  5. Net Sheet showing exactly what the bank will get at the closing
  6. Comparative Sales in the neighborhood (low comps)
  7. Proof of any other liens on the property, especially those that may come before theirs. All these would be included in the Net Sheet as well.
  8. In my case, I usually also have a Trust Document and a Power of Attorney from the Sellers

If they want anything else, they’ll ask. Can’t think now what that might be.