Short Sales from  the perspective of the Seller, Lender, Listing Agent, Buyer, Investor, and Buyer's Agent.

Buyer's Agent Perspective:

The buyer's agent is at the mercy of the listing agent.  He or she cannot negotiate directly with the lender, unless somehow he or she can get an authorization letter from the sellers.  That is very doubtful.

However the buyer's agent can make sure the listing agent is doing everything that is necessary to allow the short sale to go through, by making sure the listing agent completed the tasks covered in Part IV.

Keep on top of him or her. Do not have your client spend money on home inspections and an appraisal until the listing agent gets written confirmation on the acceptance of the offer from the lender.  If the deal falls apart, as it may, this will only cause hard feelings on the buyer, as they have lost money.

Other than that, make sure your client knows this is a short sale and the lender may want to negotiate the price and that the escrow could be drawn out.

Not all buyers will want to put up with this, but if the deal is good at least it is worth the effort.

Lenders Perspective:

Nobody likes to lose money, however lenders have loss mitigation departments or whatever they call them.  See the previous blogs about this.

First they want the loan to be current.  Often they will renegotiate payment terms to help someone from going into default.

Second, they do not want to own residential property.  It ties up their reserves, preventing them from loaning monies to other qualified borrowers.

Third they want to minimize the time and expense of foreclosures.

Fourth they want to avoid the foreclosure route, as a bankrupty can delay the foreclosure and cost them substantial lost interest.

They do not want to give the property away.  They will hire appraisers or to save money solicite broker PBOs (Broker Price Opinions).  Based on this and other evidence submitted by the listing agent they will determine a minimum price.  Of course based on days on the market, they may consider a lower price.

These loss mitigation people are difficult to deal with, but remember:

• Lender saves the cost of foreclosure.
• Bankruptcy can delay the foreclosure.
• Attorney fees accumulate.
• Property damages or vandalism can occur.
• Resale cost.
• Required banking reserves.

In the end they want a short sale deal as well!

I will continue with other perspectives in Part VI.

*It should be noted that lending and foreclosure practices and laws vary from state to state.  This posting is based on the laws and practices of the State of California.  Although they are similiar throughout the United States, there are differences.  There are also differences between Trust Deeds and Mortgages, although we collectively all refer to them as mortgages.  In California we use Trust Deeds and do not use Mortgages.  Most of the western states use Trust Deeds, however the eastern states generally use Mortgages.  The redemption period during a forclosure is different with Mortgages.  Also the lenders ability to collect delinquencies varies with the type of loan and the choice of the foreclosure process.  To collect delinquencies the lender must use a judicial foreclose.  Few lenders do as this takes more time and involves additional legal expenses.  Most use the non-judicial forclosure method.  Also with purchase loans taken out at the time of purchase, delinquencies cannot be collected.  They can be collected on refinance loans.  On a short sale the delinquency is waived by the lender. Thus there are differences even in California.  Please consult with a real estate attorney and CPA in your state for specific details.

Mike Stankewich, Realtor, Huntington Beach, Orange County, California

ZipRealty, Inc.

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