Yesterday, as I was dropping in on recently expired listings, I met a couple in Plainfield whose home was a short sale. I offered them the help of an investor that I met recently who makes cash offers on short sales, negotiates a price with the bank on the seller's behalf, then sells the home to a 3rd party buyer below market value as an approved short sale. The investor's goal is to help people improve their chances of selling their home by shortening the period of time that it takes for a short sale to close. For this Plainfield short sale home, the owners already had a cash offer from a buyer, but were having difficulty negotiating the terms with their lender. The following is the story that they told me about their frustrations with their lender, PNC National City.
The home was originally put up for sale at around $450,000 and received an offer of around $280,000. The bank came back with an appraised value of $282,000 and asked the buyer for more money to make the transaction work for the bank. The sellers and buyer agreed to add more money to satisfy PNC. However, once they got in touch with the bank, they were informed that they now needed more money to cover real estate taxes to make the short sale meet their needs. The sellers and buyer again got together and came up with some more money to meet the new demands. During this time, they learned that foreclosure proceedings had been initiated as they had stopped making payments. When they got back with the bank, they learned that they were still $5,000 apart. The sellers continue to negotiate with the bank but are completely frustrated as they believe PNC is delaying incurring the loss on their balance sheet for their own financial needs. The offer for the home is at the appraised value, but the bank seems willing to allow the home to go to foreclosure over a few thousand dollars. The sellers have kept a meticulous log of their communications and feel the bank has no interest in allowing them to short sale the home.
The baffling thing about the experience of these sellers is that they have what would appear to be the best possible offer for the home. The buyer is offering a cash deal, with no contingencies. The offer is for the appraised value of the home. The sellers are doing everything they possibly can to help make the deal work, yet the bank is holding up the deal by demanding more.
The national closure rate on short sales is reportedly somewhere around 25%. This means roughly 75% of homes nationwide are going into foreclosure. The reasons for this can be attributed to buyers who tire of waiting for the bank to approve the sale, poorly constructed offers, and deals like the one described previously with lenders who are unwilling or unable to close short sales. Some lenders flat out don't do short sales under any circumstances and others are so inundated with short sale offers that they can't get them processed. Many negotiators and sellers report that the processor on their short sale closed the file for no apparent reason, misplaced the file, or didn't even start to process the file or acknowledge receipt of documents.
Given all of this uncertainty, it makes sense to enlist the help of people who do short sales for a living. There are qualified short sale negotiators, attorneys and investors who have a proven track record of closing up to 90% of the short sale files that they work on.
If you are experiencing difficulty in paying your mortgage and would like to explore your options, please visit my Avoid Foreclosure page. I can help you get a fresh start and avoid the damage to your credit that foreclosure will inflict. Do not wait to get help as the number of options for avoiding foreclosure diminish over time.
Please visit my website for more information on how a short sale can help stop foreclosure.
Originally posted to myforum.placesinplainfield.com 4/25/2010.