Barry,
I didn't even think about mentioning BK. Great suggestion. I'll give it a try.
banks like us to be organized. the hard part is getting the bank to assign the file to the workout dept. the banks like us to be knowledgeable and love it when we give them a complete packet that they can move on.
Matt,
I agree. My problem is that they have a complet packet and they sit and sit and sit on it. My packet makes sense and in one case the lender is only losing $40k which amounts to half. They only approved the short sale if they could net $56k which was a loss of $24k.
In this case it's the 2nd that has to approve because the 1st is covered. None of the banks in first position are willing to negotiate anything if it's in order to accomodate the 2nd. In the above case I feel that this house is going to net a lot less if this property goes into foreclosure.
Mario, I have written extensively on Short Sales. My most recent one might be of help to you in understanding this situation. Short Sales - Who Wins and Who Loses?
Bill Roberts
Hey Mario,
A real estate attorney explained to me that in many cases lenders don't care if we bring them an offer or not since they have mortgage insurance to cover their losses. Seems to me like the mortgage insurance companies need to improve their guidelines to entice these lenders to consider legitimate offers. I would think it would benefit them more than anyone in these situations.
Chris, The offer I submitted was only $20,000 below total debt after paying off Realtor fees and penalties and late fees. They still denied the offer. I can not imagine them absorbing a $95,000 loss before fees. The last client I attempted to assist with a short sale was told by their bank that they had to have the house on the market for at least 90 days with a Realtor at fair market value, they had to prove hardship and they had to be in default for at least one month.
As for tips for dealing with the loss department; Make sure you have a letter signed by the sellers authorizing you to discuss the matter with them prior to calling. There are some interesting post on this subject. A few post suggest that the loss department is using us Realtors to gather information to use against our client, this would not surprise me, so be very careful.
You get a lot more with sugar.... I have been working in this market for investors for a long-time and one thing is consistent. You have to focus on building the relationship with the lender right way. Keep in mind that the people representing the bank are people. Having a complete packet is just one step. You can have all the comps in the world all the numbers to justify but if you don't show a benifit to the bank, the borrower, as well as yourself you may find it hard to push a deal through.
Your hardship letter should be well written and should include the elements of why this deal is good for the borrower as well as the bank. It should elude to consequences for everyone as well. Such as if this deal doesn't happen it will cost you and I money. The borrower may have to file for BK prior to Foreclosure etc...
As an Investor you should always include a letter thanking the bank in advance for your time. Introducing yourself to the lender and letting them know your here to help in anyway possible. Let them know your a good investor who is helping this borrower (if your giving them cash and you shouldn't, don't say that). Provide them with a good feeling about you and your investment goals for the property.
As an agent (by the way if your working without an experienced agent your crazy) Include a thank you note on the submission packet. Again let the bank know that your not there to take advantage but to help facilitate the transaction. Don't be a pest but make it a point to call every couple of days or so just to check in on progress. If the lender says it takes 3 days to review the file, put on the nice voice and ASK for thier help personally on the file.
Remember it's not always about the numbers. Remember they are dealing with 100's of files per day and that if your a jerk or pushy the natural human tendency is to put you off. But if they genuinely like you and you treat them with respect you'll see gold my friend.
Lastly if your trying to jump into this game and don't know what your doing get a mentor, an attorney, a loan professional, and an agent. The short-sale, pre-foreclosure game is high stakes and if you make the wrong call you could easily find yourself in a sling. Each state has different laws so deal only with area specialists. I hope this helps....
Will Green
Home Source Mortgage
208-703-7307
William, I have decided to delegate my short sale negotiations to a specialist. She has a high success rate and I'd rather concentrate my time on prospecting and marketing.
Marisol, I guess the problem that I'm encountering is that many of my short sales have two trust deeds and the trust deed in second position keeps holding out knowing very well that if this goes to auction they are likely to get nothing at all.
I recently made an offer on a house that had been on the market for 20 months. The house has sat empty for the past 18 months. The offer was for the house "as-is" as the seller has no cash to make any necessary repairs (it needs a roof, new siding and new gutters). Tax assessment on the house is $219,000. The seller owes $220,000. My offer is $180,000. The listing agent had my sign a contract agreeing to purchase the house with the banks approval via a "short sale". I've been qualified through my lender and have over the 20% necessary to put down. The bank has requested to "Review" my paperwork - but that was weeks ago. Since, I've heard nothing. I'm afraid that I'm wasting my time expecting the bank to pony up and take a $40,000 loss but I love the property and am willing to wait if there's a good chance that the bank will bite. Anyone have any input? Is there anything that I can be doing to make things happen? The sellers will definitely lose the house to foreclosure if our deal falls through. Does this seem likely or a long shot?
Danielle,
Some say it's taking banks anywhere from 30 to 60 days to approve a short sale. If your offer is a low ball offer then it might take them longer because they'll try to hang on for another offer to come in. But you are right and we all sit here in amazement because we hear that the banks don't want to sit on non-performing assets but their actions speak louder than words. I could only imagine the amount of files that they are reviewing so your patience can have a huge pay off. Keep looking just in case. Good luck.
I had a listing that was being foreclosed on. The seller owed about $130,000 on it. They sent the packet. Did the paper work. I listed at $99,000 which was still high because it need so much work (windows furnace c/a carpet cabinets updating) we got an offer for $80,000 the bank countered back at $109,000.... $10,000 more than the list price. I know the area well and I wouldn't have given them $60,00 for it. After talking with bank sending pictures and comps. They said it was all cosmetic and wouldn't drop the price. They want fair market value on an as is property. It was never worth $130,000.
Shelly
Well sometimes i dont know what to think of short sales. They are getting better and then they are not!
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