Broker Bryant and Wendy Rulnick just finished teaching Short Sale Basics: Session 2, part of our 5-session webinar series about short sales. Today we covered qualifying the seller and short sale documents. There was a lot of material, in fact we went over time! Part of our in-depth analysis included dissecting the financial worksheet (one of my favorite things to do). We provided a made-up example and found “errors” for discussion.
Here are a few of the possible mistakes you might find in the financial worksheet:
- Numbers don’t add up – that’s right, simple math mistakes adding up income and expenses.
- Monthly gross income used, not net income
- Annual gross income used, not monthly
- Bonuses from last year are included in current year
- Current year commission or P&L is based on last tax year, not recent income
- Rental income listed when tenant is moving out
- Gross rental income is not adjusted for expenses
- Listing the same military base housing allowance when it is changing upon relocation
- Incorrectly assuming property value when listing assets
- Not including current mortgage and associated expenses for short sale property
- Not including anticipated rent and expenses upon relocation
- Spending money on frivolous items, like tennis lessons, skydiving, vacations, etc.
- Not itemizing “miscellaneous” expenses
Finally, when monthly net income is more than monthly expenses- there may not be a hardship at all!
The financial worksheet is one of the most problem-ridden parts of a short sale package. In a questionable hardship case, you can use the financial worksheet as part of your seller pre-qualification.
Want to learn more? Our next Short Sale Basics webinar is Saturday, July 18, at 11:00 Eastern. All five sessions will be available on MP3 if you cannot attend live or miss any. Session 3 we will be covering the short sale listing, price reductions (one of Bryant’s favorite subjects) and more. See you then!