In short sale negotiations, we often run into a very difficult situation when there is a 1st and 2nd lienholder on a property: The 1st agrees to provide a small sum to the 2nd from the proceeds of the short sale, but the 2nd tells us that they will not agree to release the lien unless they get thousands more. The 1st refuses to provide any additional funds and tells us that they don't care where the money comes from for the 2nd, but it isn't coming from them. The seller is broke, the buyer wants a bargain, and consequently the property cannot be sold without the 2nd getting more funds. If the purchase price increases, the funds to the 1st increase, but the amount for the 2nd stays the same. No deal = Foreclosure.
These funds have to come from somewhere, and the 2 lenders are asking us to work within some very challenging and grey areas. We work for the seller and we need to get the home sold, so this requires creative solutions and, very often, financial sacrifices on our part to get it closed. If only the lenders could be cooperative and honest with each other to get these off their books.
Showing posts with label Realtor. Show all posts
Showing posts with label Realtor. Show all posts
Thursday, June 25, 2009
Friday, March 13, 2009
An introduction to Short Sales
Well? Here I go.
I'm a lot more of a face-to-face people person. Those who know me will report that I'm all about the hand-shake, the slap on the back, and so on. It's not that I dislike technology; I love it, in fact. It's just that this Internet blog stuff hasn't been my style...until I realized it was needed.
Regardless, this spring break I realized just how busy I am, and how that limits my ability to reach out and share all that I've learned. So here I am: blogging. Who knew?
For better or for worse I've elected to specialize, focusing on spending the past few years learning everything I can about just one topic (real estate short sales), and as a consequence, I'm today mobbed by people, across the US, seeking advice and assistance. We are saving families every single day.
In response I created a team, and expanded that team's ability to quickly answer inquiries, via web, phone, and email. That's a good thing, in that: we are able to help home owners develop a needed competency. Our Fridays are a real celebration, where the group hoops and hollers about how another week has elapsed without a single foreclosed home.
But being busy has proven a frustration in the way it's caused increasing difficulty for me to directly share all the little things we learn on a daily basis. And, like I said: I'm a real people person, who enjoys reaching out and touching people directly.
So here I am: blogging. A 21st-century solution for a fellow who enjoys doing business the 19th century way: face to face. We make the most with what we have.
Ok....where to start? How about at the beginning?
Let's acknowledge that short sales and loan modifications are very complex and confusing for many people. This blog will serve as a reference for those who seek a short-cut for becoming "short sales experts" in their own right, thus enabling them to better respond to challenges they may be facing.
The blog entries on this site will boast a language and style that reflects our most current understanding of how to maximize success while minimizing stress, based on our experience. However, as a person who enjoys learning, I warmly welcome your comments regarding how to streamline or improve upon some of the steps or recommendations. Even though people have taken a fancy to calling me an "expert," I know that one only remains so by keenly listening to others.
In other words: your feedback is valued.
The mission of my team (Short Sale Connections) is assist you (the home owner) in processing a request for a short sale or loan modification with the lenders. Please keep in mind that my team's employees are not real estate transaction coordinators, and your agent is responsible for obtaining documents from you, the homeowner, as well as any and all real estate documents from all parties. Just to make sure we are understood, assuming that at some point we decide to enter into agreement with each other.
That aside, let me tell you that your participation is critical in this process! Many people on the verge of foreclosure tend to procrastinate, and you know what? That's absolutely and completely understandable. I would bet that most people don't purchase a home, and get emotionally vested, only to lightheartedly let it go a year or two later.
More likely, you purchased your home, and life served a reversal, or a series of reversals, you didn't anticipate. At first the bills are paid late, then the mortgage gets behind, and you developed a coping skill of lending a blind eye to things that, normally, they'd assign proper attention. You're undoubtedly not proud of this behavior, but it's an extremely common byproduct of the financial situation responsible for the current situation.
It's extremely helpful to communicate that a short sale is a process where we work with the lender or lenders to accept a payoff for less than what you owe. This means that the lender, if they choose to approve, will accept a lower offer than what you owe on your mortgages. Explaining it in this way may help alleviate some stress, shame, and pressure you may be experiencing:
With as short-sale, we leverage current market data to demonstrate to their lender that the market may no longer bear what you owe on your home. From the lenders perspective, offering to pay them less what is owed, but still consistent with the property's real market value, is often a vastly more attractive option to foreclosure. In other words: we're facilitating a win-win proposition for all parties, taking into account contemporary market realities.
You will qualify for a short sale by demonstrating you have a financial hardship which has caused you to no longer be able to make the requisite monthly payments. In the event that you request a loan modification, we will work with your lender(s) to modify the terms of their existing loan(s) so that you could possibly keep your home. This is subject to the lender or lenders’ approval, but still: in most cases these few facts will make you feel a heck of a lot better. We are buying you time, and allowing you breathing room.
Currently, the industry standard to complete a short sale is 60-90 days from a complete short sale submission. A tight and functional relationship between you and my team enhances our success rates and expedites our ability to close.
Frequently, homes that are offered as short sales need repairs, and may have had the utilities shut off due to lack of payment, and again: this makes sense. The last thing a person decides to pay is their mortgage. Chances are, you've let your health insurance go, your utilities, and so on. It's not unreasonable to find a home that requires some repairs.
Please keep in mind that the reason why someone is requesting a short sale is due to a serious financial hardship. Accordingly, sellers will not have the funds to make repairs needed for the property, nor will they be able to turn the utilities back on, and in this regard these kinds of transactions are a little different than what most agents and buyers may be used to. It is therefore the buyer’s responsibility to turn on utilities and to make any necessary repairs to the property. Buyers need to be aware that the property is listed “as-is” and everything is “Subject to third party approval”.
It takes resourceful, committed, and caring Realtors to succeed at short sale negotiations. It can be a long and drawn out process! However, given the need of many clients, developing this market competency will greatly increase your business, because let's face it: from the buyer's perspective "short sale" properties represent a compelling alternative to "full retail" homes also on the market.
Hey, assuming this blog transitions you and I into colleagues, I sincerely appreciate your time, hopefully your business, and patience throughout this transaction. I look forward to working with you to obtain a positive result for you and your family.
Nick.
I'm a lot more of a face-to-face people person. Those who know me will report that I'm all about the hand-shake, the slap on the back, and so on. It's not that I dislike technology; I love it, in fact. It's just that this Internet blog stuff hasn't been my style...until I realized it was needed.
Regardless, this spring break I realized just how busy I am, and how that limits my ability to reach out and share all that I've learned. So here I am: blogging. Who knew?
For better or for worse I've elected to specialize, focusing on spending the past few years learning everything I can about just one topic (real estate short sales), and as a consequence, I'm today mobbed by people, across the US, seeking advice and assistance. We are saving families every single day.
In response I created a team, and expanded that team's ability to quickly answer inquiries, via web, phone, and email. That's a good thing, in that: we are able to help home owners develop a needed competency. Our Fridays are a real celebration, where the group hoops and hollers about how another week has elapsed without a single foreclosed home.
But being busy has proven a frustration in the way it's caused increasing difficulty for me to directly share all the little things we learn on a daily basis. And, like I said: I'm a real people person, who enjoys reaching out and touching people directly.
So here I am: blogging. A 21st-century solution for a fellow who enjoys doing business the 19th century way: face to face. We make the most with what we have.
Ok....where to start? How about at the beginning?
Let's acknowledge that short sales and loan modifications are very complex and confusing for many people. This blog will serve as a reference for those who seek a short-cut for becoming "short sales experts" in their own right, thus enabling them to better respond to challenges they may be facing.
The blog entries on this site will boast a language and style that reflects our most current understanding of how to maximize success while minimizing stress, based on our experience. However, as a person who enjoys learning, I warmly welcome your comments regarding how to streamline or improve upon some of the steps or recommendations. Even though people have taken a fancy to calling me an "expert," I know that one only remains so by keenly listening to others.
In other words: your feedback is valued.
The mission of my team (Short Sale Connections) is assist you (the home owner) in processing a request for a short sale or loan modification with the lenders. Please keep in mind that my team's employees are not real estate transaction coordinators, and your agent is responsible for obtaining documents from you, the homeowner, as well as any and all real estate documents from all parties. Just to make sure we are understood, assuming that at some point we decide to enter into agreement with each other.
That aside, let me tell you that your participation is critical in this process! Many people on the verge of foreclosure tend to procrastinate, and you know what? That's absolutely and completely understandable. I would bet that most people don't purchase a home, and get emotionally vested, only to lightheartedly let it go a year or two later.
More likely, you purchased your home, and life served a reversal, or a series of reversals, you didn't anticipate. At first the bills are paid late, then the mortgage gets behind, and you developed a coping skill of lending a blind eye to things that, normally, they'd assign proper attention. You're undoubtedly not proud of this behavior, but it's an extremely common byproduct of the financial situation responsible for the current situation.
It's extremely helpful to communicate that a short sale is a process where we work with the lender or lenders to accept a payoff for less than what you owe. This means that the lender, if they choose to approve, will accept a lower offer than what you owe on your mortgages. Explaining it in this way may help alleviate some stress, shame, and pressure you may be experiencing:
With as short-sale, we leverage current market data to demonstrate to their lender that the market may no longer bear what you owe on your home. From the lenders perspective, offering to pay them less what is owed, but still consistent with the property's real market value, is often a vastly more attractive option to foreclosure. In other words: we're facilitating a win-win proposition for all parties, taking into account contemporary market realities.
You will qualify for a short sale by demonstrating you have a financial hardship which has caused you to no longer be able to make the requisite monthly payments. In the event that you request a loan modification, we will work with your lender(s) to modify the terms of their existing loan(s) so that you could possibly keep your home. This is subject to the lender or lenders’ approval, but still: in most cases these few facts will make you feel a heck of a lot better. We are buying you time, and allowing you breathing room.
Currently, the industry standard to complete a short sale is 60-90 days from a complete short sale submission. A tight and functional relationship between you and my team enhances our success rates and expedites our ability to close.
Frequently, homes that are offered as short sales need repairs, and may have had the utilities shut off due to lack of payment, and again: this makes sense. The last thing a person decides to pay is their mortgage. Chances are, you've let your health insurance go, your utilities, and so on. It's not unreasonable to find a home that requires some repairs.
Please keep in mind that the reason why someone is requesting a short sale is due to a serious financial hardship. Accordingly, sellers will not have the funds to make repairs needed for the property, nor will they be able to turn the utilities back on, and in this regard these kinds of transactions are a little different than what most agents and buyers may be used to. It is therefore the buyer’s responsibility to turn on utilities and to make any necessary repairs to the property. Buyers need to be aware that the property is listed “as-is” and everything is “Subject to third party approval”.
It takes resourceful, committed, and caring Realtors to succeed at short sale negotiations. It can be a long and drawn out process! However, given the need of many clients, developing this market competency will greatly increase your business, because let's face it: from the buyer's perspective "short sale" properties represent a compelling alternative to "full retail" homes also on the market.
Hey, assuming this blog transitions you and I into colleagues, I sincerely appreciate your time, hopefully your business, and patience throughout this transaction. I look forward to working with you to obtain a positive result for you and your family.
Nick.
Monday, January 5, 2009
Short Sales: Frequently Asked Questions (FAQ)
1) "What should I do if I cannot find the homeowner after listing the property?"
You will need the FULL cooperation of the homeowner(s) to successfully negotiate the closing. In the event the homeowner(s) is unavailable or uncooperative, you may want to consider releasing the listing. This should be at your discretion and your broker’s.
2) "Can the seller just sign a Deed in Lieu (DIL)?"
The requirements for a DIL are similar to the short sale requirements and need much of the same documentation.
• In general, the lender will not accept a DIL on an investment property
• The property must be listed at least 90 days with no offers
• Clear Title/No second lien hold or other liens
• Full financial package (same as the short sale package)
• Foreclosure sale date cannot be within 30 days or request
3) "How long does it take to get a short sale closed?"
The lenders have asked us to give them 3-4 weeks after submitting the offer with the short sale package to make contact. Once submitted, the lender will contact my team (Short Sale Connections) for access to the property. A member of my team will notify you when we receive this call. The BPO takes 2-3 weeks to be returned to the lender and reconciled. Once the BPO has been returned and reconciled, please allow another 2-3 weeks for the lender to review the offer.
The industry standard, at this time (Q1 2009), is 60-90 days total.
4) "How is the seller’s credit affected?"
Completion of a short sale may appear on the Sellers/Borrowers credit report as: Settled, paid, short sale, or offer and compromise.
5) "What is a short sale?"
A short sale is a real estate transaction in which the lender allows a property to be sold for less than the amount owned on a mortgage and takes a loss.
6) "What is the difference between a foreclosure and a short sale?"
The negative impact for a foreclosure on a credit report is greater than the impact of a short sale. If the homeowner lets the property be foreclosed on they can be subject to a deficiency judgment. Generally, if the short sale is approved, the lender will not pursue a deficiency, although my team cannot guarantee that the lender will not pursue a deficiency.
7) "What are the tax implications on a short sale or foreclosure?"
Both can be a taxable event. This topic is currently subject to new legislation and therefore the homeowner should consult their tax professional for the most current, accurate information.
8) "Why can’t I call the lenders directly?"
We have our own contacts with the lenders, and to have more than one contact person on a file can further delay the process. It can also greatly anger any representatives of the lenders as they don’t have the time to relay the same information to multiple individuals.
9) "Can I send in a “Low Ball Offer” and have the lender counter?"
Unrealistic offers will be rejected quickly. Even worse and more likely, due to the outstanding work load that the lenders have, the offer will be ignored since the lender will feel that the buyers are not serious buyers and the negotiator will not respond at all for weeks or months. The lenders do not have the time or the man power in this market for “fishing expeditions” from the buyers.
10) "Why does OHS request up to 48 hours to return calls or emails regarding status updates?"
Each of our negotiators has up to 350 files at any given time. We request that we are given this time so that we can meet the needs of all agents on all of the files that we work on.
11) "Why do short sales take so long?"
A short sale requires the lender to review the homeowner’s financials in order to determine if the homeowner has the ability to pay any or all of the debt, similar to a buyer qualifying for a loan in reverse. The lender must determine the value of the property and weigh that against the amount owed. They compare what they think they would net from a foreclosure sale to the net proceeds of a short sale. The amount paid to the lenders is not always the determining factor. Sometimes an uncooperative second lien holder will cause the senior lien holder to foreclose just to clear the title.
12) "Why do lenders foreclose?"
Lenders are corporations driven to make money. They must answer to their shareholders just like any other company. These corporations do not want to own property. The only reason they foreclose is to gain control of the property or asset and recover as much of the principal loan balance, accrued interest, late fees, penalties, taxes they paid on behalf of the homeowner, as well as court costs and attorney fees. In most states, the laws are written so that the lender can only recover these widely accepted losses.
13) "Why does Your Team (Short Sales Connections, or more specifically: Oregon Home Savers, LLC) charge a fee?"
This fee is to pay for the services of a full time staff of negotiators. The seller has agreed to use its services. Oregon Home Savers, LLC is not a real estate company and does not engage in any professional real estate activities, e.g., the marketing or sale of the property, and solely works with the seller’s lender(s) with respect to outstanding encumbrances against the property. This is a professional short sale company that has one of the highest closing ratios of short sales in the industry. It has excellent personal relationships with lenders, and a wealth of experience in this field. Agents around the country use the services of OHS to get deals done that they otherwise would not have accomplished on their own.
14) "How is this fee paid?"
The buyer pays this fee and it is identified on the purchase and sale agreement. In the past, agents have done it one of two ways: They have asked for $3,999.00 from the seller to cover the cost, or they have lowered their offer by that amount, understanding that their buyer will pay the fee. Under no circumstances will my team agree to share in any agents’ fees in lieu of the Consultant Fee.
15) "How should I write that into the Earnest Money Agreement?"
If you are asking for the seller to pay the fee, on Page 1, Line 39, after describing the loan or payment option, include “Seller to pay $3999.00 in buyer’s closing costs.” And, in every case, on Page 2, Line 55, under Additional Provisions, include “Buyer to pay $3,999.00 to Oregon Home Saver, LLC.” If your buyers are obtaining an FHA loan please contact my team to discuss how the fee will be paid.
16) "If we do not close the transaction on this property, will my buyer be charged the fee?"
Absolutely not.
17) "How long will it take to obtain lender approval?"
This varies greatly according to each specific case. Each seller’s financial situation is different, and some are more complicated than others. A general estimate from the time you submit your offer would be 30-90 days to receive a response, either acceptance or counter, from the lenders. If your offer is not accepted by the lender, they generally do not provide a written response. Make sure your buyer understands this timeline so that everyone has reasonable expectations.
18) "Can more than one offer be submitted to the lenders?"
Frequently, multiple offers will be obtained on a short sale. Listings are kept Active in RMLS until there is written lender acceptance of an offer. Lenders will not provide a written rejection to your offer, only a verbal rejection. A written response is provided only in the case that your offer has been accepted.
19) "What are the steps in negotiating the short sale?"
It's illustrated here.
An offer is presented to the lender, and generally in the next 2-4 weeks a loss mitigation representative is assigned to the file. A BPO (Broker’s Price Opinion) is ordered by the rep. Once the BPO is completed, it normally takes 14-21 days for that to appear in the lender’s system.
If there is more than one lender, there may be more than one BPO, and sometimes more than one per lender. Once the loss mitigation rep has reviewed the completed file and done his/her’s due diligence, the lender will make a decision on that offer. This process needs to take place at each lender in order for them to make a final decision.
20) "There is an auction date next week, is the property being foreclosed on? What’s happening to our offer?"
Most short sales have auction dates, and if in the middle of negotiating the short sale, the auction date arrives, my team will make every attempt to postpone the auction while negotiations continue. Most lenders wait until the last minute to postpone auction dates, and this is very normal and typical. However, there is no guarantee that a lender will postpone the foreclosure sale, and my team does not warrant that a foreclosure sale will be postponed.
Whew!
Nick
You will need the FULL cooperation of the homeowner(s) to successfully negotiate the closing. In the event the homeowner(s) is unavailable or uncooperative, you may want to consider releasing the listing. This should be at your discretion and your broker’s.
2) "Can the seller just sign a Deed in Lieu (DIL)?"
The requirements for a DIL are similar to the short sale requirements and need much of the same documentation.
• In general, the lender will not accept a DIL on an investment property
• The property must be listed at least 90 days with no offers
• Clear Title/No second lien hold or other liens
• Full financial package (same as the short sale package)
• Foreclosure sale date cannot be within 30 days or request
3) "How long does it take to get a short sale closed?"
The lenders have asked us to give them 3-4 weeks after submitting the offer with the short sale package to make contact. Once submitted, the lender will contact my team (Short Sale Connections) for access to the property. A member of my team will notify you when we receive this call. The BPO takes 2-3 weeks to be returned to the lender and reconciled. Once the BPO has been returned and reconciled, please allow another 2-3 weeks for the lender to review the offer.
The industry standard, at this time (Q1 2009), is 60-90 days total.
4) "How is the seller’s credit affected?"
Completion of a short sale may appear on the Sellers/Borrowers credit report as: Settled, paid, short sale, or offer and compromise.
5) "What is a short sale?"
A short sale is a real estate transaction in which the lender allows a property to be sold for less than the amount owned on a mortgage and takes a loss.
6) "What is the difference between a foreclosure and a short sale?"
The negative impact for a foreclosure on a credit report is greater than the impact of a short sale. If the homeowner lets the property be foreclosed on they can be subject to a deficiency judgment. Generally, if the short sale is approved, the lender will not pursue a deficiency, although my team cannot guarantee that the lender will not pursue a deficiency.
7) "What are the tax implications on a short sale or foreclosure?"
Both can be a taxable event. This topic is currently subject to new legislation and therefore the homeowner should consult their tax professional for the most current, accurate information.
8) "Why can’t I call the lenders directly?"
We have our own contacts with the lenders, and to have more than one contact person on a file can further delay the process. It can also greatly anger any representatives of the lenders as they don’t have the time to relay the same information to multiple individuals.
9) "Can I send in a “Low Ball Offer” and have the lender counter?"
Unrealistic offers will be rejected quickly. Even worse and more likely, due to the outstanding work load that the lenders have, the offer will be ignored since the lender will feel that the buyers are not serious buyers and the negotiator will not respond at all for weeks or months. The lenders do not have the time or the man power in this market for “fishing expeditions” from the buyers.
10) "Why does OHS request up to 48 hours to return calls or emails regarding status updates?"
Each of our negotiators has up to 350 files at any given time. We request that we are given this time so that we can meet the needs of all agents on all of the files that we work on.
11) "Why do short sales take so long?"
A short sale requires the lender to review the homeowner’s financials in order to determine if the homeowner has the ability to pay any or all of the debt, similar to a buyer qualifying for a loan in reverse. The lender must determine the value of the property and weigh that against the amount owed. They compare what they think they would net from a foreclosure sale to the net proceeds of a short sale. The amount paid to the lenders is not always the determining factor. Sometimes an uncooperative second lien holder will cause the senior lien holder to foreclose just to clear the title.
12) "Why do lenders foreclose?"
Lenders are corporations driven to make money. They must answer to their shareholders just like any other company. These corporations do not want to own property. The only reason they foreclose is to gain control of the property or asset and recover as much of the principal loan balance, accrued interest, late fees, penalties, taxes they paid on behalf of the homeowner, as well as court costs and attorney fees. In most states, the laws are written so that the lender can only recover these widely accepted losses.
13) "Why does Your Team (Short Sales Connections, or more specifically: Oregon Home Savers, LLC) charge a fee?"
This fee is to pay for the services of a full time staff of negotiators. The seller has agreed to use its services. Oregon Home Savers, LLC is not a real estate company and does not engage in any professional real estate activities, e.g., the marketing or sale of the property, and solely works with the seller’s lender(s) with respect to outstanding encumbrances against the property. This is a professional short sale company that has one of the highest closing ratios of short sales in the industry. It has excellent personal relationships with lenders, and a wealth of experience in this field. Agents around the country use the services of OHS to get deals done that they otherwise would not have accomplished on their own.
14) "How is this fee paid?"
The buyer pays this fee and it is identified on the purchase and sale agreement. In the past, agents have done it one of two ways: They have asked for $3,999.00 from the seller to cover the cost, or they have lowered their offer by that amount, understanding that their buyer will pay the fee. Under no circumstances will my team agree to share in any agents’ fees in lieu of the Consultant Fee.
15) "How should I write that into the Earnest Money Agreement?"
If you are asking for the seller to pay the fee, on Page 1, Line 39, after describing the loan or payment option, include “Seller to pay $3999.00 in buyer’s closing costs.” And, in every case, on Page 2, Line 55, under Additional Provisions, include “Buyer to pay $3,999.00 to Oregon Home Saver, LLC.” If your buyers are obtaining an FHA loan please contact my team to discuss how the fee will be paid.
16) "If we do not close the transaction on this property, will my buyer be charged the fee?"
Absolutely not.
17) "How long will it take to obtain lender approval?"
This varies greatly according to each specific case. Each seller’s financial situation is different, and some are more complicated than others. A general estimate from the time you submit your offer would be 30-90 days to receive a response, either acceptance or counter, from the lenders. If your offer is not accepted by the lender, they generally do not provide a written response. Make sure your buyer understands this timeline so that everyone has reasonable expectations.
18) "Can more than one offer be submitted to the lenders?"
Frequently, multiple offers will be obtained on a short sale. Listings are kept Active in RMLS until there is written lender acceptance of an offer. Lenders will not provide a written rejection to your offer, only a verbal rejection. A written response is provided only in the case that your offer has been accepted.
19) "What are the steps in negotiating the short sale?"
It's illustrated here.
An offer is presented to the lender, and generally in the next 2-4 weeks a loss mitigation representative is assigned to the file. A BPO (Broker’s Price Opinion) is ordered by the rep. Once the BPO is completed, it normally takes 14-21 days for that to appear in the lender’s system.
If there is more than one lender, there may be more than one BPO, and sometimes more than one per lender. Once the loss mitigation rep has reviewed the completed file and done his/her’s due diligence, the lender will make a decision on that offer. This process needs to take place at each lender in order for them to make a final decision.
20) "There is an auction date next week, is the property being foreclosed on? What’s happening to our offer?"
Most short sales have auction dates, and if in the middle of negotiating the short sale, the auction date arrives, my team will make every attempt to postpone the auction while negotiations continue. Most lenders wait until the last minute to postpone auction dates, and this is very normal and typical. However, there is no guarantee that a lender will postpone the foreclosure sale, and my team does not warrant that a foreclosure sale will be postponed.
Whew!
Nick
Who's Who in the Short Sale Process
Just so you understand the players:
The Role of the Agent
The Real Estate Agent will act in accordance with the rules and regulations imposed on them through the Division of Real Estate and Board of Realtors in their area. The Agent/Broker is the one who contracts with the homeowner and requests all documents from the homeowner.
The Agent/Broker has the same fiduciary duty to the Seller/Buyer they would have with any other listing or transaction.
The Agent/Broker is responsible for meeting the appraiser or BPO agent.
It is the responsibility of the Real Estate Agent to advise the Seller to accept, counter or reject all offers presented on the property. All offers do not have to be presented to the lender. My team will then engage in the negotiation with the lenders.
Please provide the complete package as soon as possible to my team.
The agent is responsible for all communication with the buyer’s agents. Please DO NOT give other agent’s any contact information for my team, which includes phone numbers or email address without my team's expressed permission from my employees.
We do one thing, and we do it really, really well. The main focus of my team is to be constantly available to the lenders when they call without notice. If we miss a phone call from a lender to work on a file due to a call checking status, your file may be delayed by weeks. Note: my team, and their employees are not Real Estate Transaction Coordinators.
The Role of the Area Manager
The Area Manager has a general understanding of the Real Estate rules and regulations and specifically with short sale and modifications. He/She will work hand in hand with you to provide updates and to keep you aware of what stage of the process your file is currently in.
He/She will also notify you if the lender requests any updates as well as when the lender(s) make a decision on your file. He/She is the main point of contact for agents, though please allow for a 48 hour reply time in your request for updates. The Area Manager confirms that your package is complete, submits the initial package to the lender, and he is the person that you need to provide your entire complete package to.
The Role of the Loss Mitigation Department
The role of our most important department is to work with the lien holders to approve the short sale. This department calls on each and every file every few days to check for updates and to make sure that your file has not been placed at the bottom of the lender’s huge pile.
The Role of the Lender
The sole function of the lender in a short sale is to determine the amount that they will accept from the homeowner as a payoff on the loan or note secured by the subject property.
The homeowner must receive written approval of the lender’s order to deliver clear title on the contract they executed with the buyer.
The lender has no other authority or responsibility. They do not sign the listing or any other paperwork as the seller. They do not determine the listing price, except as to provide a minimum amount they are willing to accept in regard to the loan amount.
They do not make repairs or authorize repairs prior to closing. They will secure the property in order to protect the property from further deterioration through the foreclosure process.
Nick.
The Role of the Agent
The Real Estate Agent will act in accordance with the rules and regulations imposed on them through the Division of Real Estate and Board of Realtors in their area. The Agent/Broker is the one who contracts with the homeowner and requests all documents from the homeowner.
The Agent/Broker has the same fiduciary duty to the Seller/Buyer they would have with any other listing or transaction.
The Agent/Broker is responsible for meeting the appraiser or BPO agent.
It is the responsibility of the Real Estate Agent to advise the Seller to accept, counter or reject all offers presented on the property. All offers do not have to be presented to the lender. My team will then engage in the negotiation with the lenders.
Please provide the complete package as soon as possible to my team.
The agent is responsible for all communication with the buyer’s agents. Please DO NOT give other agent’s any contact information for my team, which includes phone numbers or email address without my team's expressed permission from my employees.
We do one thing, and we do it really, really well. The main focus of my team is to be constantly available to the lenders when they call without notice. If we miss a phone call from a lender to work on a file due to a call checking status, your file may be delayed by weeks. Note: my team, and their employees are not Real Estate Transaction Coordinators.
The Role of the Area Manager
The Area Manager has a general understanding of the Real Estate rules and regulations and specifically with short sale and modifications. He/She will work hand in hand with you to provide updates and to keep you aware of what stage of the process your file is currently in.
He/She will also notify you if the lender requests any updates as well as when the lender(s) make a decision on your file. He/She is the main point of contact for agents, though please allow for a 48 hour reply time in your request for updates. The Area Manager confirms that your package is complete, submits the initial package to the lender, and he is the person that you need to provide your entire complete package to.
The Role of the Loss Mitigation Department
The role of our most important department is to work with the lien holders to approve the short sale. This department calls on each and every file every few days to check for updates and to make sure that your file has not been placed at the bottom of the lender’s huge pile.
The Role of the Lender
The sole function of the lender in a short sale is to determine the amount that they will accept from the homeowner as a payoff on the loan or note secured by the subject property.
The homeowner must receive written approval of the lender’s order to deliver clear title on the contract they executed with the buyer.
The lender has no other authority or responsibility. They do not sign the listing or any other paperwork as the seller. They do not determine the listing price, except as to provide a minimum amount they are willing to accept in regard to the loan amount.
They do not make repairs or authorize repairs prior to closing. They will secure the property in order to protect the property from further deterioration through the foreclosure process.
Nick.
The Short Sale Process: The Demand / Approval Letter(s) / Closing
Once all approvals have been received from all lien holders, my team will review all approvals and submit them to escrow and agents. The approval letters will have an expiration deadline that the file must fund by. When you receive the approvals, please order the inspection (if buyers did not waive inspection) and appraisal.
Once the lenders issue the approvals there can be no changes to the HUD, or the lenders ALL have to re-approve the new numbers and issue a new approval. This is also true for a change in buyers. Expect further delays if either the numbers on the HUD change, or if the buyers decide not to proceed with the short sale.
The escrow officer will schedule a time for signing after the buyer’s loan documents have been received. Signings need to occur no later than 3 business days prior to the approval expiration date to allow enough time for the lenders to receive the final HUD and accept the wire.
Nick.
Once the lenders issue the approvals there can be no changes to the HUD, or the lenders ALL have to re-approve the new numbers and issue a new approval. This is also true for a change in buyers. Expect further delays if either the numbers on the HUD change, or if the buyers decide not to proceed with the short sale.
The escrow officer will schedule a time for signing after the buyer’s loan documents have been received. Signings need to occur no later than 3 business days prior to the approval expiration date to allow enough time for the lenders to receive the final HUD and accept the wire.
Nick.
The Short Sale Process: Negotiation
You know? I might just come back and create an illustration for this, just so you can better understand what happens.
Once the appraisal or the interior BPO is returned and reconciled with the lender, there is a 2-3 week review period that the lender will need to process the short sale package and review the offer. After the review period ends, there are three possible outcomes:
1) The lender approves the offer and issues approval letter(s) within a 1 week period.
2) The lender declines the offer, as they feel the offer is too low for the true market value and counters your offer to a higher offer.
If this happens the lender will give you a time frame to reply by (normally within 2-4 business days). Please respond quickly or lender may close the file and then file will need to be reassigned to a new negotiator, which delays the file by weeks.
If the buyers are willing to increase their offer, please draft an addendum and submit it to OHS with all parties’ signatures. My team will submit the buyers increased purchase price to the lender for the new decision.
- Please allow 1-2 weeks minimum to hear from the lenders if the buyer’s higher offer was accepted. (Please keep in mind that anything less that what lender counters needs to be approved by managers and investors).
- If the counter is accepted, lender will issue approval within 5 business days.
- At this point, lenders may reduce commissions or decline to pay fees, OHS will notify you if this occurs.
3) The lender declines your offer and does not counter you.
This happens when the offer was so low and the lender feels that this was a “low ball” or “fishing” offer. File is closed and you have to start the process all over. This is a perfect example why “low ball” offers should not be submitted to a lender.
We always requests that a full satisfaction of debt is approved, HOWEVER lenders have the right to allow a lien release only, require a promissory note be signed by the sellers, or not fully release the debt and charge the remaining balance off as a collectable balance.
If any of these items occur you will be notified. We tend to see that a full satisfaction of debt may not be approved for non-owner occupied properties or properties where the sellers have obtained a cash out refinance.
Always recommend to your client to contact a tax professional with regards to the possibility of adverse tax implications that might be associated with a short sale.
All of the negotiation will be handled exclusively by my team (in the event, of course that you elect to use our services).
AGENTS - DO NOT interfere with this process as it angers the lenders and make the lenders less likely to work with you on a file. Remember, lenders will only allow one main contact per file!
Node the bold and italics? Important stuff, that. In my experience, nothing gums up the works more than too many cooks in the kitchen....did I just mix my metaphors? Hope not.
This process of negotiation is the same process for EACH lien on a property. This means first, second, third mortgages, judgments, IRS liens, HOA back dues, etc.. The time frame may increase substantially as each lien must approve in writing the others transaction.
Nick.
Once the appraisal or the interior BPO is returned and reconciled with the lender, there is a 2-3 week review period that the lender will need to process the short sale package and review the offer. After the review period ends, there are three possible outcomes:
1) The lender approves the offer and issues approval letter(s) within a 1 week period.
2) The lender declines the offer, as they feel the offer is too low for the true market value and counters your offer to a higher offer.
If this happens the lender will give you a time frame to reply by (normally within 2-4 business days). Please respond quickly or lender may close the file and then file will need to be reassigned to a new negotiator, which delays the file by weeks.
If the buyers are willing to increase their offer, please draft an addendum and submit it to OHS with all parties’ signatures. My team will submit the buyers increased purchase price to the lender for the new decision.
- Please allow 1-2 weeks minimum to hear from the lenders if the buyer’s higher offer was accepted. (Please keep in mind that anything less that what lender counters needs to be approved by managers and investors).
- If the counter is accepted, lender will issue approval within 5 business days.
- At this point, lenders may reduce commissions or decline to pay fees, OHS will notify you if this occurs.
3) The lender declines your offer and does not counter you.
This happens when the offer was so low and the lender feels that this was a “low ball” or “fishing” offer. File is closed and you have to start the process all over. This is a perfect example why “low ball” offers should not be submitted to a lender.
We always requests that a full satisfaction of debt is approved, HOWEVER lenders have the right to allow a lien release only, require a promissory note be signed by the sellers, or not fully release the debt and charge the remaining balance off as a collectable balance.
If any of these items occur you will be notified. We tend to see that a full satisfaction of debt may not be approved for non-owner occupied properties or properties where the sellers have obtained a cash out refinance.
Always recommend to your client to contact a tax professional with regards to the possibility of adverse tax implications that might be associated with a short sale.
All of the negotiation will be handled exclusively by my team (in the event, of course that you elect to use our services).
AGENTS - DO NOT interfere with this process as it angers the lenders and make the lenders less likely to work with you on a file. Remember, lenders will only allow one main contact per file!
Node the bold and italics? Important stuff, that. In my experience, nothing gums up the works more than too many cooks in the kitchen....did I just mix my metaphors? Hope not.
This process of negotiation is the same process for EACH lien on a property. This means first, second, third mortgages, judgments, IRS liens, HOA back dues, etc.. The time frame may increase substantially as each lien must approve in writing the others transaction.
Nick.
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