Listing a property as a short sale typically brings with it great challenges. Your chances of success right from the beginning are diminished due to all the hurdles that you can go through to get to settlement. It becomes a business decision for the agent to decide when they take the listing if it makes sense to move foward or to pass. If it does succeed, one more short sale does mean one less foreclosure !
On December 30th, we had a successful settlement for a property that was a short sale in Somerton (Philadelphia Real Estate) from a listing that we initially put on the market in March 2008. After 3 buyers and many hurdles, the goal was accomplished !
Below is the story of the deal:
1. Listing taken in March 2008 - my past clients contacted me about their situation and not knowing what to do. A friend was going to list their property at "whatever price they wanted" and at a lower commission. They asked my thoughts. Once I found out how much they owed on the property due to refinacing during the height of the market, I knew that their only option would be a short sale (or lose the property to foreclosure). Since my past clients also had a very good case for hardship it made sense to move foward. They decided to not go with the "friend" and had us list the property in March 2008.
2. Buyer # 1 - We got the property under contract in the first 60 days, but within the first month, the buyer backed away from the deal saying that they could not wait for the short sale to be approved.
3. Back on the market - Property goes back on the market - back to square one !
4. Dealings with the bank - We are told by the bank that the sellers had to do counseing as part of the short sale process. This had me worried as I was not sure I was going to be able to get husband and wife (who were not living together anymore) to some sort of counseling class. Isn't this more for buyers, not sellers ? I blogged about this awhile back and received a call from an executive at the bank that said this step was not necessary after all ?? We got it worked out with the bank.
5. Buyer # 2 - We got the property under contract again at a higher price ! Buyer was putting down 35 percent - everything looked great !
6. Short sale approved - woo hoo !
7. Buyer # 2 cannot procure financing even though he was putting down 35 percent ! Was mislead by the buyer's mortgage company from the beginning and with the mortgage guidelines changing, that did not help. The buyer calls around several different mortgage professionals but no luck.
8. Market slows down - after losing all that time with buyer 1 and buyer 2 there is not as much activity. We have to lower the price and work it out with the seller's bank for they already approved the short sale based on deal number 2 at that higher sales price !!
9. Negotiatie more with the bank - We needed to get a lower deal accepted, that was apparent. Also now there is a significant amount of money owed for liens, for Gas bills and water bills.
10. Buyer # 3 - We have another deal accepted.
11. After intensive discussions with the bank and updated comparable sales fowarded to the bank, we get the deal accepted and have some of the liens approved by the bank !!
12. Negotiated an agreement between all of the parties for the excess liens.
13. Buyers mortgage company requires several certifications last minute over the XMAS holiday in order to approve the loan. Fortunately for us, we have great relationships with contractors who were able to go out to the property over the XMAS break and provide the certifications.
14. Property settles !
The look of relief on our seller's eyes was priceless and it reminds me of why we became a Realtor to begin with - to help people. Without the right representation, this property would have been a forecloseure which would have destroyed our sellers credit for years.
As a consumer, in today's market, it is imperative to have experienced representation right from the beginning, no matter what the situation is.
I had a strong sense of accomplishment, pride and purpose that day. Was one of the tougher and longer deals, but we put out the effort and got it done !
I am sure as a consumer or an agent, you can relate to these stories. Please add some of your own tough stories that had a successful outcome during 2008.
For prior blog posts regarding short sales, please see the following posts: