Program HR 3648 | If Cash Isn't King in a Short Sale...What Is?

Program HR 3648 | In a recent blog post on ActiveRain by Rob Magnotta, Program HR 3648 noted the interesting trend he addressed—that cash wasn’t necessarily king.  In our own short sale work, we find that cash, which was once a powerful element, has, for the most part, been relegated to a position of insignificance.  What we hoped would help move a lengthy and difficult process forward at a swifter, smoother pace seems to have almost no bearing on it. 

Our brain tells us that a lender should find an “all cash” offer to be enticing, favorable, and/or helpful, because it is less complicated for everyone involved and it’s as close to a “sure thing” as we can get.  In reality, our ears hear only silence on the other end of the phone when we announce that we have a good price and it’s all cash!  We think we’ve been disconnected (something that happens during calls to the overwhelmed lenders) or that the rep or negotiator on the other end just didn’t hear what we said or doesn’t understand the implication of this liquid offer.   We are left to wonder why the policy and response is one of, “Not so much.”  It is disconcerting to listen to the molecules of air bouncing around in our ear instead of hearing, “That’s great!  You’ve made the entire process so much easier by bringing us this cash offer!!  Thank you.  Thank you.  Thank you!”   The short sale buyer’s brain, which was also expecting to hear a “Hip, hip hooray!” or the like, finds it hard to compute the response of, “It won’t make any difference”. 

The processors and staff at Program HR 3648 are accustomed to sometimes hearing unusual comments, reactions or requirements from some of the lenders involved in short sales.  We also realize that lenders who hold significant residential mortgage positions are under siege in this foreclosure-laden economy.  It is our position that most of us who work with lenders—whether we are looking for an approval on a loan for a standard property sale, or for an approval on a short sale offer—feel that there may be misperceptions about the reality of the current real estate marketplace, a disconnect, whether it is how to price a property realistically because of scarcity of properties or a flooded marketplace, economic restrictions and limitations, lender policies for new home buyers, and buyer and seller concerns and reticence. Program HR 3648 knows firsthand the gap between what is happening in the real estate world vs. what a lender thinks should be when we hear, for example, a requirement that a short sale property be listed for 90 days minimum (or some other  lengthy period of time) before an offer will be accepted.  The logic behind this requirement is, “So we can make sure we get the best offer available.”  Program HR 3648 recognizes that what the lender thinks may be an excellent, productive policy is, in reality, anathema to every real estate agent who watches the amount of traffic fall off after the first week or two a property is on the market. 

Although it appears on occasion that there are “disconnects” between the lending side and those of us who work to achieve successful sales and closings, Program HR 3648 continues to have a solid success rate with our short sales ("Watch Barry's Touching Story"). We are confident that we can overcome any current issues through a collaborative effort with the financial institutions where cash will again be recognized as a positive element in a transaction. The professional efforts, knowledge and requirements of everyone involved with the sale or purchase of a home will be considered as lending institutions continue to revise and refine their processes, guidelines and policies to reflect what will bring everyone “the best offers available.”   

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And thank you to everyone who responded so positively to Program HR 3648’s first blog post about navigating the short sale process successfully.  Comments, suggestions and questions are welcomed.