Short Sales...
Buyers are paying additional money because sellers can't or won't pay it.
Yes,
it is happening more and more these days on Short
Sales. In negotiations the bank
is demanding more money before they will approve the short
sale. Is this fair? Well, fair
or not.. it is happening.
Finally,
yeah... 4 months and the bank is finally willing to settle this short sale. That is
exciting, the sellers
have been waiting, patiently and frustrated.
The news comes...,
the 2nd lien holder will not accept the settlement of the $3,000 that the first lien
holder will give them. That's right, they want an additional $10,000 or
it's no deal. Well the Sellers
don't have $10,000, will you take a note? NO, we want $10,000 period or
we will turn over to collections and move on.
What to do... no choice...
Give the buyers
the bad news,The bank wants $10,000, the sellers
don't have it. They have also been waiting, patiently and frustrated while
they wait out the process. They love the home, they want the home and
stuck it out for months waiting for their dream home.
Now...The Good, The Bad and the
Ugly. Either the buyers
need to come up with the $10,000
or the home has to go back on the market looking for a
buyer who will bring an
additional $10,000 to the table. What a shame. The sellers
did their part by trying to short
sale and buyers
did their part by sticking around and waiting it out.
Luckily,
the buyers
were able to come up with the additional $10,000 and buy the home. So, it is a happy
ending, sort of. The great news that everyone got what they wanted and
needed here but how fair is it that the buyers
had to pay $10,000 over the price that was agreed upon. It is the
nature of the beast in this market because this is a repeated story on
many of the transactions these days.
The good news is,
it was still not a bad deal because if it was a bank owned, it would
have sold for at least that amount anyway. They were a VA so their
options in this crazy market were more limited. More often
than not, short sale
homes are maintained a little nicer so that is also a bonus.
So... I guess the question for
me is, are the banks taking
advantage of the fact that they know buyers will get the tax credit and
trying to steal it away from them?
Knowing they will step up if the sellers don't. I understand
the banks are taking a big hit but In my humble opinion that is a risk
they took when taking on the loan and that is why the interest charges
help Cover their behinds. When you think about it you pay waaay more
than double the price of the house when all is said and done (paid
off). I am not saying that the banks are totally responsible for this
big mess, there is enough blame to go around table. And now it is being
compounded by bringing on the some of the cost onto the new buyers,
another ramifications of this crazy market.
A
little grumbling but all in all,
I still think it is a great deal, affordable price, 50% off sale, their
mortage will be less than the cost to rent. When was the last
time that was a possibility? Sellers
have moved out, Buyers
moving in and another home behind us and out of trouble.
Ready for the next,
what? You want the buyers to come in with $2000 on the second and $6300
on the first... here we go again!
Being in the position to buy is
a good thing today, just a
little frustrating. You will be grateful for this opportunity years
from now even if you feel a bit jaded by the process today.
The
Grapevine for Temecula Valley
The photos in this blog were compliments from dcmetrova from photobucket
Home Jane Realty - Los Angeles, CA
Los Angeles real estate concierge services
Doesn't the second lose everything if the house is foreclosed on? They are taking quite a risk playing that game. Because the longer it goes on the bigger the chance of that happening.
Dec 14, 2009 11:23 AM
Realty ONE Group - Poway, CA
James -Amen
Troy - great idea foresure, let the banks say what they want and then negoiate like a reg sale. Sounds good to me, will it happen... remains to be seen but I doubt it.
Dec 14, 2009 11:43 AM
Realty ONE Group - Poway, CA
Carra my friend, first thanks so much for your email (grinning), that was a nice surprise for me. You have a great amount of wisdom to share not to mention some new abbreviations that I never would have figured out (lol). I will say I echo your opinion, seems dead on and thank you so much for everything!
Dec 14, 2009 11:48 AM
Realty ONE Group - Poway, CA
Catherine - So right and all ended well as I suspect the next will too. It comes from both ends buyers and sellers. Time to switch sides cuz the one that is on the table now is we are on the buyers side.
Jane - Thank you so much! Yes, every short sale seems to have at least one thing different, some smoother than others and some make our heads spin. I learn something new from just about every one of them.
Ken - Carra is great and don't ya just love SWSWSWN, now say that 10 times real fast.
.
Dec 14, 2009 11:55 AM
Realty ONE Group - Poway, CA
Bryant - I am honored, the King of Short Sales. Thanks so much for your comment. It was just a thought because they seemed to be stepping up the settlement at times. Good to your thoughts were exactly what we did and it all worked out the way it was meant to be. Thanks again!
Jane - In most cases they loose everything however they have the right to pursue the sellers if it is not original purchase money. Even if sellers refinanced just to get a better interest rate some can interpret that as no longer original purchase money. So they could end up being pursued for years and years to come after they have lost the house. They may wait a while for seller to get back on feet but they will track them down. That is what I wish some homeowners would understand when they just walk away and let the house be foreclosed on, think they are free and clear. Even when we get past this mess, we will still be seeing some ramifications that rooted from it!
Dec 14, 2009 12:09 PM
Brookville, NY
"The Rose Lady"
Dianne - I know of a short sale where the 1st lienholder will only give $3000 to the 2nd lienholder and the homeowner owes $290,000 on the second and a $1 million on the first. I have a funny feeling this house will never sell.
Dec 14, 2009 03:14 PM
Donovan Blatt Realty - Costa Mesa, CA
Broker/Attorney 714-319-9751 DRE01267479 - Costa M
I think the lenders, especially the seconds, who are getting small sums, are simply trying to limit their losses.
Is it fair that the buyer should have to pay cash to the second? No, but they have the choice to move forward or to walk away.
What's unfortunate are the buyers who would if they could but don't have the cash that the bank wants on top of their down payment and their closing costs.
Dec 14, 2009 03:15 PM
Bethesda, MD
Dianne,
Short sales usually turn into real adventures. At least in this case everyone more or less benefited from the outcome, even the buyer got a nice deal. Good luck with all the new ones.
Dec 14, 2009 04:08 PM
Conifer Builders LLC - Canyon Lake, TX
Screw the banks -- this is highway robbery and will not be allowed for much longer. A savvy short-sale agent needs to call the second lien-holder's bluff -- take your $3000, or get nothing when your position is wiped away at foreclosure.
Dec 14, 2009 05:28 PM
HomeSmart Elite Group - Scottsdale, AZ
CRS, GRI, SFR
Hi Dianne! Super relevant post for today! I've been preparing my buyer's/seller's with all types of scenerios recently! The one that is striking a nerve with me is the $80.00 a month HOA that has turned into a $3500.00 mess because of late fees/attorneys...that the bank will not pay! All the best this holiday season!
Dec 14, 2009 10:07 PM
Realty ONE Group - Poway, CA
Rosalinda - Thank you for the contact and I think you might be right but you never know, the craziest things happen.
Christine - Costa Mesa is where I grew up. Yes, there are many buyers than can not contribute. That is why people are flying so many offers at the same time here.
Esku - I like that... an adventure. That is how I look at it.
Aaron - I wish it was that simple. The sellers could have been on the hook for collections. We have to do what is in the best interest for our clients.
Stephan - Thank you. I would approach the HOA and negotiate it down myself if possible. I know HOA's can be negotiated down, try to get them down to $500, present the benefits of getting someone new in there.
Dec 15, 2009 01:30 AM
Keller Williams Realty - Roseville, CA
Negotiation skills are paramount these days, that's for sure! It just makes it that much more of a challenge and we can feel that much more of a sense of accomplishment when we get them approved!
Dec 16, 2009 04:00 PM
Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL
Selling Florida one home at a time
Dianne, Thanks for the nice comment but I am far from being the king of short sales. I am good at getting short agents together to help each other though. I surround myself with short sale experts that make me look better. :)
Dec 17, 2009 09:51 AM
Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL
Selling Florida one home at a time
Dianne, Thanks for the nice comment but I am far from being the king of short sales. I am good at getting short agents together to help each other though. I surround myself with short sale experts and that makes me look better. :)
Dec 17, 2009 09:56 AM
Hallmark Sotheby's International Realty Hopkinton, MA - Bellingham, MA
Great post Dianne and congrats on the feature. I was taught through America's Home Rescue in my CDRS class to approach second first. Get them to agree and then move on to the first. Helps to avoid the buyer having to pay off the second.
Dec 17, 2009 10:30 PM
Realty ONE Group - Poway, CA
Erin - Thanks. I would love to hear some feedback results with that process. The one we are working with now the second signed off before the 1st. I was not at the listing end of that one but I know they only demanded $2000. They wanted more but I guess that was where it ended up.
Dec 18, 2009 09:32 AM
Charles Stallions Real Estate Services Inc - Gulf Breeze, FL
Buyers Agent 800-309-3414 Pace and Gulf Breeze,Fl.
Don't you just love doing the deal, never a dull moment. We all probably need to forewarn our buyers of this anyway. The sellers are under water they sure can't bring anything.
Dec 22, 2009 03:00 PM
Realty ONE Group - Poway, CA
It definitely makes you feel great when it all comes together. Oddly enough, I do love it, Never a dull moment... that is the best way to look at it (lol). I absolutely change the way I prepare the buyers, the banks were not this demanding a couple of months ago.
Dec 22, 2009 03:33 PM
Property Management & Sales at REALTY WORKS TEMECULA, CA 92590 (951) 217-6745 - Temecula, CA
Property Management & Sales Experts 951-217-6745
Get post,this is a trend that I believe will come to an end this coming year in April
when some of the new rules that many of the bank have agreed to follow start to kick in.
Dec 29, 2009 02:37 PM
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Dec 29, 2009 10:40 PM
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