Which documents should be included in a commercial short sale document list?

In Buying Property - Asked by Angel C. - Mar 21, 2013
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Michael C.
San Leandro, CA

If it is for the lender, contact the lender first to determine what they require. Many of the large institutional lenders have their own mitigation department & have a "short sale package" or a website to upload the required documents to. How many lenders are there? Contact each one and find out what are their short sale requirements are and whether they have a short sale package. You will have to negotiate with each one.
General items required: similar to a loan application if there is a hardship, proof of hardship.
reason the borrower is requesting short sale-why are they selling?
It is likely they will need financials on the borrower or entity that borrowed the funds.
find out when and how they will handle determining value of the asset.
You may be able to provide them with proof of current value but they will usually send someone out also to determine value.
A Settlement Statement showing net amount the bank(s) will receive
Do you have a purchase contract yet? if so, include a fully executed contract & buyers proof of funds and/or financing approval. Some banks will not talk to you until you have a purchase contract.
Is the existing loan in Foreclosure? What is the timeline? the closer to sale date the less likely they are to negotiate.
For the buyer: Disclose that the contract is subject to existing lenders approval of the short sale.
If you are a member of an association, there may be residential disclosure that you can use or adapt to commercial use.
This is basic information but will get you started. Good luck

Mar 21, 2013
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Cliff P.
Corte Madera, CA

While each lender will vary as to the required documents that they may require in a short sale situation, typically I would include the following, as a minimum:
1) Copy of the accepted purchase agreement with short sale addendum
2) Verification of Buyer's funds needed to close escrow
3) Buyer's pre-approval letter, if financing is involved
4) Letter of Authorization to Release Information (authorizes the listing agent to negotiate with lender)
5) Personal Financial Statement of borrower/seller
6) P&L on the property for the last year, plus year-to-date
7) Preliminary title report on the property
5) Preliminary HUD-1, showing no net to seller/borrower
6) Hardship letter from Seller/Borrower explaining why the short sale
7) Bank Statements from Borrower/Seller for the last 3 months
8) Copies of Borrower/Seller's last two years federal tax returns
9) Copy of the listing agreement on the property
10) Copy of the MLS or Loopnet printout on the property, showing that the property has been exposed to the market
11) Copies of all inspection reports & estimates of damage on the property
12) Current market statistics and comparables
13) Cover letter that summarizes the short sale, marketing efforts and any showings or other offers that were presented, but not accepted.
There you go.

Mar 22, 2013
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