Short Sales in a Short State: Foreclosure Postponements

Needless for me to say yet again - that everyone should be doing short sales right now.  They are a necessity for our local markets.  BUT MORE SO - there is a necessity as agents to find ways to make them easier, get faster approvals, and see MORE get to the closing table.

If you work in a SHORT STATE you have an additional battle - FORECLOSURE POSTPONEMENT. 

What do I mean by short state?  Well, for those of you that don't know...Some states have a very fast foreclosure process.  I live and work in Georgia and at 90 days default a home is listed publicly for foreclosure the first week of the month and then auctioned the first Tuesday of the very next month.  FAST!  We do not have the long judicial process like Florida or South Carolina for example.   It is much easier to work the system for time-line extensions in states that are judicial. 

Average short sale time-lines take from listing to the closing table anywhere from 3-6 months.  In our state - that time-line is much longer than the foreclosure process itself.  To make it to close, agents must formally request a foreclosure postponement.  Now sometimes a Seller may be proactive and approach an agent well before they are scheduled for foreclosure.  However, most are far enough along in the process that a posptonement is required.

How do you get a foreclosing lender to postpone?  The answer to this debated by the same agents that love to debate the proper way to negotiate short sales. 

Most lenders require that a COMPLETE Short Sale package is submitted to them - and MOST lenders require a complete package to include a purchase offer.  Lenders do not want to spend time and resources evaluating property value to preemptively give an agent or homeowner an approved short sale price.  Postponing foreclosure costs them money and often a lender's only recourse is foreclosure.

They will, however, consider postponement when they have an offer that is viable, reasonable, and likely to close.

Now - that does not mean that we send straw offers to lenders - that is unethical and illegal.  I know agents and investors that do this.  If you are putting in an offer for which you do not fully intend to perform but merely wish to get a postponement - you are doing the wrong thing

Instead - there are other options.  One:  Price the house RIGHT.  If you price a house for true fair market value, meaning that you consider true comparables, what it will be in 3 and 6 months, and the cost of any issues the home has to make it marketable, you will get an offer.  You can then send that offer to the lender with a complete short sale package.  If you priced the home correctly - then getting the BPO to match your offer wont' be difficult....and from there, bank approval will be a breeze.

Option Two:  Work with investors who will make often heavy or all cash offers on properties and then have the agent with the short sale listing immediately help market for a re-sale.  Some investors specialize in 'turning' short sales or may even be looking to ad short sale deals to their long-hold portfolio.  Cash offers are highly regarded by foreclosing lenders.

Either option you choose - The number one most effective way to get a postponement is to have an offer on a property.

Now - what if there is no offer and the Seller has approached you less than 30 days from their foreclosure date?  There is still time to get an offer to the lender.  Foreclosing lenders are now much more agreeable to considering postponement requests than they have been in the past.  If they won't do it - then the Seller may need to pursue other options.

Our group specialized in negotiatins, purchasing, and re-sale of short sale properties.  Most of the states we work in are short states - so we like to think we have refined the process.  If you are reading this and have any suggestions, ideas, or questions yourself - PLEASE SHARE!  www.Southeastern.ManageMyShortSale.com