Here are a few of the possible mistakes you might find in the financial worksheet:
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Numbers don’t add up – that’s right, simple math mistakes adding up income and expenses.
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Monthly gross income used, not net income
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Annual gross income used, not monthly
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Bonuses from last year are included in current year
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Current year commission or P&L is based on last tax year, not recent income
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Rental income listed when tenant is moving out
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Gross rental income is not adjusted for expenses
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Listing the same military base housing allowance when it is changing upon relocation
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Incorrectly assuming property value when listing assets
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Not including current mortgage and associated expenses for short sale property
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Not including anticipated rent and expenses upon relocation
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Spending money on frivolous items, like tennis lessons, skydiving, vacations, etc.
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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!
Wendy,
Thank you for posting. Financial statments are just as important as net sheets. Having a past life as a settlement/escrow agent I absolutely know that the agents who "really" understand these reports, provide a more complete service to their sellers.
Wow!! Very cool Wendy. I thought our class today was awesome!!! Not that I'm biased or anything :)
Who would think such a simple document as a financial worksheet could have so many potential problems?
Wendy it looks like you and Broker Bryant are doing a heck of a job. Keep up the great work!
Great points to remember .. It doesn't take much to get kicked out .. anything you can do to stay in the game is a must
When there is way tooo much personal and miscellaneous we sit down and look at where did the money REALLY go....looking at checks usually finds the hole that holds the key....great blog !
This is such great information. Thank you for sharing. Have a great Sunday. :-)
Cathy - Financial worksheets tell a story, don't they?
Bryant - That's what we are good at, problem solving!
Bill - Thank you!
Eric - Preparation before the package is key.
Sally & David - It's like being a detective, right?
Pat - You are welcome.
Hi Wendy, Great job in teaching your short sale class and thanks for passing the info along on mistakes on financial worksheets. We have seen some that are riddled with errors. Great reminders!
Wendy from what I have read so far from the blogs you and Bryant have posted, the two of you have provided a lot of valuable information on a topic that we continue to see more and more of, and better learn how to deal with it.
Your right with the mistakes on the financial statement. It's also the hardest thing to figure out for me. But obviously, there must be hardship. Good examples on what to watch out for.
Great points. I recommend getting a credit report as well to see:
1. if they have home loans in other states that they did not disclose
2. To see what gets paid and what doesn't. Is everything being paid on time except the mortgage?
3. To see what the lenders see. So far I had two different clients decide to buy or lease luxury vehicles just before they decided to stop paying the mortgage. Maybe it's a Southern California thing?
Sandy - Thank you!
George - Thanks, the information IS endless.
Lyn - I think the paperwork is overwhelming to some sellers, thus the mistakes.
Satar - Oh my, buying luxury cars then defaulting, WOW
Wendy, Thank yo for directing the light on a topic that has most of us agents scratching our heads.
This is an awesome post. I would love to re-blog it, and think I will, class solicitation and all.
Good info Wendy! It's nice to see there are a few short sale experts out there!!
Best,
Dan
Wendy - Those are the same pitfalls homeowners run in to when trying to negotiate note modifications with their lenders. A good financial statement clarifying the financial hardship claim is critical to their chance of success with gaining lender approval.
We have short sales close without hardships. This is frequently more of a business decision than a hardship issue.
Wendy, thank you for the great post. This information is very valuable for all of us.
Happy selling!