Selling Poinciana One Property at a Time.: Becoming a better "short sale" expert. A series by Broker Bryant

Becoming a better "short sale" expert. A series by Broker Bryant

I've been spending a lot of time this week thinking about short sales. My market, Poinciana FL, is going to have a bunch of them this next year so I figure it's time to brush up on my short sale skills to see what I can do to help some folks out.

The first thing I have decided is that I'm going to be very picky with who I work with. My last post touched on that a little. The percentage of getting short sales closed is very, very low. I hear 25% to 30%, if you're lucky.

My goal is to up that number substantially. If I can't close better than 1 in 4, well.....I have better things to do with my time. My target is to close 3 in 4.

So, with that in mind, I will be doing a series of posts sharing my thought process as I try to figure this out. Your suggestions are welcomed.

Here is a rough outline of my thoughts thus far:

  • The Seller has to have a legitimate hardship.
  • The Seller has to be motivated to work with me and the Lender in providing all the documentation we'll need to get the job done.
  • The Seller will need to provide me with full financial information prior to me placing the property on the market i.e. 2 years tax returns, bank statements etc.
  • I will need a signed "authorization to release info" letter and a hardship letter at time of listing.
  • The Seller will need to sign a disclosure stating that I have suggested they seek legal advice and that they understand the negative ramifications of being granted a short sale.
  • And finally, I want to make sure the Seller did NOT purchase the property in a fraudulent manner.

Folks, this last one is very, very important and the one I want to expand upon today. Over the last few years there were many homes purchased using stated income, low doc loans. There were also many homes purchased as "second homes" that were in fact not second homes but properties bought to flip.

Sellers need to understand that even though they didn't have to prove their income when purchasing the home they WILL have to prove it in order to apply for a short sale. If they lied on their initial loan application this can be opening up a big ole' can of worms.

What is the Lender going to say when the Seller provides a tax return for when they bought the property and it doesn't match up with what they "stated" on their application? Have you thought about that? Have you been counseling your potential Sellers about this? If not, you need to start. These folks do NOT qualify for a short sale and could very well be opening themselves up to a fraud investigation by applying for one. They don't need a REALTOR® they need an Attorney.

My point is, a short sale is not for everyone. As REALTORS® we need to do our due diligence prior to taking on a short sale listing. If we can be smart in our approach, to working with short sales, we can surely do better than a 25%-30% closing percentage. I know I plan to.

OK, so that's it for today. Did I give you any food thought? Do you have any suggestions for me? Let's think this through together. I want to do this right so please help if you can.

First post in the series:

A "short sale" is an option, NOT an entitlement!

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Comment balloon 50 commentsBryant Tutas • January 13 2008 02:02PM


Reserved Parking For "The Lovely Wife"...TLW...ROAR!

Blog Boy...

That last one is going to help fine tune this project.

I would imagine a hardship is not really a hardship when it's time to compare those applications :)


Posted by "The Lovely Wife" (Broker Bryantnulls Wife) The One And Only TLW. (President-Tutas Towne Realty, Inc.) almost 12 years ago

Good Post.


Posted by William J. Archambault, Jr. (The Real Estate Investment Institute ) almost 12 years ago
Bryant this is a great short sale primer. I'll send you an email and you can download may training manual - not that I know more than you do but it's always good to compare notes. Like you I have seen so many people just jump into short sales, lose at the game and then never try it again. Worse yet go around bad mouthing the process. I have been doing short sales training for years, as you know, and it's amazing how many new gurus there are out their - you can even get "certified" as a "loss mitigation specialist" these days!
Posted by Ken Cook, Content Marketer/Creator (Content, coding, marketing, host.) almost 12 years ago
Should be plenty of them for you to practise on !   More and more agents and buyers are steering clear of these for the very reasons you mention.
Posted by Bill Gillhespy, Fort Myers Beach Realtor, Fort Myers Beach Agent - Homes & Condos (16 Sunview Blvd) almost 12 years ago
You make a very good point.  Not everyone would think to advise their clients of this.
Posted by Christi Stewart, Prudential Calif. Realty (Prudential California Realty) almost 12 years ago

I am very picky about short sales and do about 1-2 per year.  I think your second bullet is the most important one.  It's a mistake I made in not getting some of the docs up front, and the seller, who is in bankruptcy, is not particularly co-operative.  Have the offer, just trying to get to the end...

I think the points you are thinking of are good strategies.  I would also get the monthly income and expense report upfront as well. That has been my stumbling block. I mean I see the sellers point that the bankruptcy Judge has gone over it with a fine tooth comb, why does the lender need a different one?

Gotta love it...

Posted by Melina Tomson, Principal Broker/Owner, M.S. (Tomson Burnham, llc Licensed in the State of Oregon) almost 12 years ago
Thank you for outlining basic things to think about, ask for and consider before listing a home that is a short sale.  The more information the better, thanks!
Posted by Deborah Burns ~ Seattle Real Estate Agent (Realty Executives -BRIO) almost 12 years ago

Excellent.  I'd add one more requirement.  The seller has to have a signed permission to the lender and the lender has to agree to speak with YOU. 

You should do well with short sale listings because you deal with facts. 

Posted by Lenn Harley, Real Estate Broker - Virginia & Maryland (Lenn Harley,, MD & VA Homes and Real Estate) almost 12 years ago
Definitely food for thought BB.  It is not something I have seen much of recently, but I think it is really important to know exactly what you are getting into if you take it on.  It can be a lot of work with no financial compensation at the end if you don't take precautions.  Thanks for the list.  Bookmarked!
Posted by Ginger Wilcox (Sindeo) almost 12 years ago
I have not done a short sale...and there are only a few on the MLS here. I can't offer any suggestions although everything I'm learning here from you and others is surely getting me edumacated on what takes place. Bottom line here is making sure everyone is honest with how they purchased it and what's been going on to lead the seller to this point, right?
Posted by Celeste "SALLY" Cheeseman, (RA) AHWD CRS ePRO OAHU HAWAII REAL ESTATE (Liberty Homes) almost 12 years ago


I have done short sales in the past as well. I as well have not been interested in pursuing them because of the low conversion rate.

Your intial analysis is a great start. I would also contact the assets manager of a local lender and ask them what additional items that they may suggest would be neccessary.

When you get to the negotiation part or your series I will have some more info.

Great start, I look forward to future installments.

Posted by Herb Hamilton, Real Estate Broker ,CDPE, Downtown Portland (RE/MAX Preferred Inc. Realtors) almost 12 years ago

My advice is to get the completed hardship package back from the seller prior to the listing appointment otherwise you'll be at a listing appointment for 90 days versus 90 minutes.  I've heard stories over the phone before that would just break your heart but when it comes to providing proof, some stories just fall apart.  The hardship package helps with this.  If they say they had a car wreck, ask for the police report and to see the scars.  If they say it was job related, ask for the pink slip.  The bank certainly will ask them to prove every detail of their story and then some.  If only the lenders had been so thorough in the first place... 

All the best, BB.  I opted to refer short sales out when I found I was spending too much time debunking the stories I was hearing. It's part of my personal COE that I can't fight for what I know is BS. Of the ones that are legit, it's hard to emotionally distance myself so I am becoming the expired queen instead.


Posted by Amanda Evans, Real Estate Broker - Fort Worth Texas (DFW Living) almost 12 years ago

Hi guys. Thanks for stopping by. I am working a short sale right now and have been in direct contract with a lady at the Mortgage Insurance Company. She has been awesome!!!! She's been doing this for years and enjoys talking to me about the ins and outs of short sales.

I also met with a seller yesterday about listing his home as a short sale but I turned him down. His "hardship" is he broke up with his girlfriend and can no longer afford the payments. Even though she wasn't on the loan when he purchased it he included her income in his "stated" income. He will be foreclosed on. And rightfully so.

Posted by Bryant Tutas, Selling Florida one home at a time (Tutas Towne Realty, Inc and Garden Views Realty, LLC) almost 12 years ago

Good list.  If agents plan on working with consumers, they are going to need a full understanding of this process.

Posted by Rich Kruse (Gryphon USA, Ltd.) almost 12 years ago
That last point is absolutely critical.  Lenders are definitely not going to forgive debt that was obtained through fraud.  There's no such thing as a free ride... some buyers are finding that out now.  Great list, btw. 
Posted by Jesse & Kathy Clifton, Retired (Jesse Clifton & Associates, REALTORS®) almost 12 years ago


The potential seller was a good one to drop. I love stated income loans, but people need to realise despite common practice, they are not lie to the lender loans! If this guy attempts a short sale he's likely to get charged with fraud.

The fraud can also include the LO, and rightfully so. I always keep a statement in file on how the applicant determined his stated income, preferably backed up with bank statements. Stated income is fine when you can't prove income, Unfortunately most stated income is determined by how much income do I need to qualify.

Despite all the information the banks want, short sales are accepted because they are best for the lender! Not because of any hardship to the borrower!


Posted by William J. Archambault, Jr. (The Real Estate Investment Institute ) almost 12 years ago

BB, I have not done a short sale, I'm not sure I want to either. Your post, however, is very timely.

I  understand that short sales are a less severe hit on the credit report, hence attractive to sellers, but just yesterday I was talking to a lender who had contacted two of the three credit reporting companies. They both said the FICO score hit was the same, short sale or foreclosure. If this is true, it would affect the willingness of sellers to subject themselves to the short sale process.

Does anyone know if this is true?

Posted by Jim Little, Your Sun City Arizona Realtor (Ken Meade Realty) almost 12 years ago
BB, your area in terms of pre-foreclosures (based on what you've shared) is likely THE market.  Your problems are going to go more smoothly due to the stats, I would think- everyone is already at the party.  Banks don't have to be "convinced" as much anymore there as they need (due to the large number of issues) correct paperwork, timely action, and persistent communication.  Your "new employer" needs efficiency and diligence, I would think.  I hope everyone makes it to the party in other areas soon so that it can be dealt with, as you will most certainly do.
Posted by Laurie Mindnich almost 12 years ago


Where were you when I took my short sale listing?  I have found out that everything you have said is exactly what I will do next time.  Good advice.

Posted by Fran Gatti, Managing Principal Broker - RE/MAX Integrity (RE/MAX Integrity) almost 12 years ago
If you want to get deep into doing short sales, there are people at the local Realtor and Investment associations that teach in depth info about short sales.  I delegate most of my short sale work out to the agents in my office that specialize in short sales.  It is a very time consuming process, and I honestly don't want to be the one working with the mitigators.
Posted by Rob Arnold, Metro Orlando Full Service - Investor Friendly & F (Sand Dollar Realty Group, Inc.) almost 12 years ago
Your series on short sales is excellent. Personally, I don't pursue them...too depressing!
Posted by Kelly Sibilsky (Licensed Through Referral Connection, LTD.) almost 12 years ago

Insight into these kinds of transactions is always helpful.  Being knowledgeable and motivated are key to surviving in today's more difficult market conditions.  Don't you agree that putting both of these halves together is the ingredients of success??

Posted by Tim Harris http:\\ almost 12 years ago
BB - Bravo!!!

My point is, a short sale is not for everyone. A "short sale" is an option, NOT an entitlement!

Because of ignorance, the system is glutted with short sales that will never be!

Posted by Marlene Bridges, Laguna Homes|Laguna Condos|Laguna Real Estate (Village Real Estate Services, Inc.) almost 12 years ago

This should be a great series, BB.Obviously with respect to #2 it won't get approved by the lender if there is no real hardship. I wonder if making sure the lender has the paperwork, etc. and has made a decision FIRST makes sense? Not how it seems to be done here but why waste the time? I thin understanding the process the bank follows and getting to know the players there is critical.


Posted by Jeff Dowler, CRS, The Southern California Relocation Dude (Solutions Real Estate ) almost 12 years ago

Broker Bryant, There is one city in our county in particular that has a phenomenal number of short sales compare to the rest of our county. Unfortunately (I know this will get me into trouble and you type of loans, many took advantage of minorities who did not speak English really well. Not all of those people were told of the implications of what they were getting into. I feel sorry for those types of short sales where at the time of purchase, the homeowners put all of their trust in the hands of their lenders and realtors.   

Posted by Mana Tulberg, Real Estate Agent - Camarillo CA (805 County Real Estate) almost 12 years ago

Cool BB, and we like that little graphic. We're taking a short sale class this week. Have not done one yet.


Posted by Gary Bolen, CRS - Lake Tahoe Real Estate Information (McCall Realty) almost 12 years ago

Bryant- Lenders are doing short sales on properties here that are not even in hardship, they are relocating, etc and need to sell. They can't get what they paid for so the lender would rather do a short sale than foreclose. 

Your point about making sure they did not lie on their original application is huge because if you take the listing and they lied and you advise them to short sale or it looks like you advised them, they get in trouble with the lender, see an attorney and guess what the attorney asks! Yep, who advised you to do a short sale, and there you go, getting sued because of someone else's lie. IT is like the burglar who slips and falls while he is stealing your household items and gets to sue you for your home being unsafe for him to steal! There have been agents sued over this issue. Katerina 

Posted by Katerina Gasset, Get It Done For Me Virtual Services (Get It Done For Me Virtual Services ) almost 12 years ago

Good for you Bryant and way to step up! I've closed 4 out of 4 short sales to this point and I hope to keep those numbers up. I think the reason I've done so is the exact reasons you have listed. I've gotten the short sale package filled out and in the banks hands one day after the listing, they know I want to help.

Posted by Respect Realty LLC, Brokers - Oregon / SW Washington Real Estate (Respect Realty LLC) almost 12 years ago
BB, I look forward to your series.  I am focusing on short sales because of the condition of my market.  With each sale I am improving my system, checklists, and practices.
Posted by Dan Forbes almost 12 years ago
The process starts by figuring out if it even makes sense to pursue one...we fill out the short sale package along with the hardship letter...then the bank takes the submission and they go through all the process such as appraisals and etc. It really depends on the bank and whether or not the gap is worth also doesn't hurt when the buyer has a good amount % down. I do tell my clients that even though the deal will go through that I'm not an attorney or tax consultant but depending on the bank ...they might receive a 1099 for the gain or the difference and have to pay the tax on it...this issue is debatable and i beleive they are trying to change this ...but some banks do not send them. I still tell them to consult an accountant on reporting it. I was able to save 2 weeks because I had delivered all the documents and sat there as my clients filled them out and signed them...and then delivered to the other side...we just closed on one in 47 days about a month ago so that wasn't a bad amount of time.
Posted by Neal Bloom, Realtor CRS-Weston FL Real Estate (Brokered by eXp Realty LLC) almost 12 years ago
The hardship letter is indeed the crux of the short sale application - medical bills or disability issues are the most compelling to a bank.  Are you handling some sales now, Bryant?
Posted by Jeff R. Geoghan, REALTOR, Marketing Manager (Coldwell Banker Residential Brokerage) almost 12 years ago
BB,  Great post and I look forward to the ensuing ones.  Definitely gave me something to think about when you wrote "that even though they didn't have to prove their income when purchasing the home they WILL have to prove it in order to apply for a short sale."  WOW!  Didn't think of that, but so true.  I guess if I get into that situation I'll want to see there closing docs and the 1003.
Posted by Marc Grossman, GRI, Greater Orlando Real Estate Broker (Marc It Sold!) almost 12 years ago
I'm sure TLW will forgive me but have I told you lately how good looking you are?
Posted by Rick & Ines - Miami Beach Real Estate (Majestic Properties) almost 12 years ago

Thanks Ines!!!!

Great comments everyone. As always I appreciate you stopping by and participating. Short sale is certainly the buzz word right now. It will be interesting to see how the lenders handle this avalanche of short sales. My market is saturated with them right now. Anytime you do a MLS search and see a good deal you can be sure it's a short sale. I'd be hesitant to waste a good buyer on a deal that may or may not close.

Posted by Bryant Tutas, Selling Florida one home at a time (Tutas Towne Realty, Inc and Garden Views Realty, LLC) almost 12 years ago
Thanks for doing this series.  It is really helpful and stated so clearly. I don't think we have many short sales in our area but it does give me food for thought.
Posted by Diana Corcoran, Rhinebeck Real Estate (Berkshire Hathaway Home Services Hudson Valley Properties) almost 12 years ago
Thank you for this and I'm bookmarking this for future reference.  Have you ever had a client not admit that was what they wanted until you were involved already?  Just wondering and I know someone who said that happened to her.
Posted by asdf zcxv, Ann Arbor Area Real Estate (Keller Williams Realty) almost 12 years ago
BB- Yep, you just verified exactly why I don't do Short Sales......too much liability, and we are dependent on people actually telling us the truth.....yep too much liability :)
Posted by Kathy McGraw, Riverside County CA Real Estate (CELLing Realty) almost 12 years ago

BB  - Be prepared for a lot of emotional stress, because ANYTHING can happen!  I have had to tell sellers they have to move in two days (even though they KNEW it was coming for MONTHS)... still doesn't make any of it easier.


                                    Anyone else know what I am talking about and agree????????

Posted by Katrina Madewell, Tampa FL Homes for sale | Tampa Bay - (813) 777-1196 (Charles Rutenberg Rlty- More than 5,000 agents(813) 777-1196) almost 12 years ago
A short sale is not an eject button although most borrowers in trouble would like to think so. It is a risky proposition for Realtors as well.  Your advise is very good and it should be given serious consideration before entering into an agreement knowing in the end youmay not get paid for all of your efforts. Well done Broker Bryant!
Posted by Allison Stewart, St. Cloud Fl Realtor, Osceola County Real Estate 407-616-9904 (St.Cloud Homes ) almost 12 years ago
The one short sale that I did....I didn't!  I kept waiting to hear from the lender.  VA called since it was a VA guaranteed loan.  Contract expired.  I couldn't get anyone on the phone at the bank that seemed to know anything about it.  A few weeks later, an appraiser calls me and asks me about a property that a bank had sent an appriasal request on and had been laying on her desk for weeks. . . . and had me as the contact person.   
Posted by 1~Judi Barrett, BS Ed, Integrity Real Estate Services -IDABEL OK (Integrity Real Estate Services 118 SE AVE N, Idabel, OK 74745) almost 12 years ago

Katrina, I don't know what you are talking about but would be interested in hearing the story. Write a post about it and come back and leave me a link.

Judi , That's sounds about right!! Very frustrating.

Karen, I haven't but I'm sure it happens. I am very thorough when interviewing my sellers prior to listing. If I have any doubts at all about their honesty I either walk from the listing or have my title company do a preliminary search for me.  I don't like surprises.

Short sales are certainly opening up the REALTOR(R) to liability. That's why it's so scary to see some of the listings out there where it is obvious the agent doesn't have a clue of what they are doing. I'm hoping that over the next few weeks we can all learn together. We either need to know what we are doing or we need to walk away from listing a short sale. This is a serious issue and we are doing the consumer a great disservice by not being prepared. The best way, in my opinion, is to work hand in hand with an Attorney who specialises in short sales. I'm looking for one right now to partner with. Of course the seller will have to dish out some money up front to cover attorney fees. But that is a very good way to see how motivated they really are.

Thanks everyone for stopping by. I'm a little busy today but wanted to stop by and at least answer the questions that were posed.

Posted by Bryant Tutas, Selling Florida one home at a time (Tutas Towne Realty, Inc and Garden Views Realty, LLC) almost 12 years ago

BB - once again you have raised some very potentially dicey issues that can arise in the short sale process, and some liability for the agents involved. This is a great series.


Posted by Jeff Dowler, CRS, The Southern California Relocation Dude (Solutions Real Estate ) over 11 years ago


That is EXACTLY who I am dealing with on my current short sale deal.  I mean the woman is in bankruptcy over 5 properties. I GAVE them the bankruptcy paperwork and they still want her to prove her income. the bankruptcy JUDGE's opinion not good enough. 

Posted by Melina Tomson, Principal Broker/Owner, M.S. (Tomson Burnham, llc Licensed in the State of Oregon) over 11 years ago
Very valid point ... a short-sale in some respect is the opportunity for the lender to re-examine the loan that was initially written and see if the borrower deserves the opportunity to SHORT-SALE
Posted by Allen C. Wright, NS, AHS, REPS (RealtyU) over 11 years ago

WOW - I never would have thought of checking the whole "fraud" point you made.  What a waste of my time if I invested a bunch of time; only to find out they lied from the start and will never be able to do a short sale.

Posted by James Downing - Metro DC Houses Team REALTORS®, CRS, GRI, ABR,MRP, MilRes, When Looking to Buy or Sell - Make the Right Move (Real Living | At Home) over 11 years ago

Sorry somehow I logged out before the post. 

There was an article entitled "5 Short Sale Myths" in today's Broker Agent News that for the most part hit the nail in the head in regards to Short Sales.  However Tim Harris's "Myth #5 Short sales are HARD..." would lead agents to believe that Short Sales are somehow a piece of cake.  While I understand Tim Harris is trying to sell his "Short Sale Class", by implying that this process is no big deal, this sort of idea posses great dangers for the poor seller who may be facing a looming foreclosure.

I have been conducting Short Sales for almost for years (obviously as most markets there were very few going on until the last 1-2 years) and my problem with implying that the short sale process is easy gives the impression that all agents should be doing them.   Remember that as an agent (or REALTOR if applicable) we are hired to protect the best interests of our clients. In a short sale situation, protecting the best interest of the client mean helping them avoid foreclosure.  I would highly recommend that no agent attempt conducting a short sale unless they have a Short Sale experienced agent from their office, or some other sort of mentor, be along side them through at least their first short sale transaction, if not through several of them, before attempting them on their own.  I was lucky to have an agent friend who had a great deal of expertise walk me through the process and be right by my side for my first 2 short sales.

If you are not experienced in this sort of transaction and are thinking of "trying your hand at short sales" without an experienced Short Sale agent coaching you, consider this...If your seller later finds out that you did not have the expertise to handle such a transaction you could later find yourself in court standing before a judge explaining your actions.  Do you really want to stand before a Judge and explain to him/her that you wanted to make money and that you thought you would "take a stab at short sales".  Just some food for thought, I am just simply highly recommending finding a highly experienced Short Sale agent to help you learn, and guide you through the process the first few times.  There is more to a short sale than just simply filling out the Short Sale package.

Posted by Goad Team (Vertical Realty) over 11 years ago

I like short sale. My success rate is 100%. They take time, but in this market the banks will take what you offer most of the time.

The owner of very large company that does has 6,000 short sales under contract right now told me they have about a 90% success rate.

Posted by Don Wenner (DLP Realty) over 11 years ago

I like short sale. My success rate is 100%. They take time, but in this market the banks will take what you offer most of the time.

The owner of very large company that does has 6,000 short sales under contract right now told me they have about a 90% success rate.

Posted by Don Wenner (DLP Realty) over 11 years ago

you are such a great wealth of telling it like it is knowledge - thanks

Posted by Thesa Chambers, Principal Broker - Licensed in Oregon (Fred Real Estate Group) about 11 years ago


You've written so many of these. I'm started to get confused :)

TLW...ROAR@the other side of the room :)

Posted by "The Lovely Wife" (Broker Bryantnulls Wife) The One And Only TLW. (President-Tutas Towne Realty, Inc.) about 11 years ago

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