The War & Peace of Short Sale

Real Estate Broker/Owner with Daytona Condo Realty, 386-405-4408

Cinnamon Beach in Ocean Hammock in Flagler County is one of those gorgeous new coastal developments that came at the peak of the market. We are working on a short sale there, and it is so far our longest. We are at 2.5 years mark. Yep…

Cinnamon Beach - Palm CoastFirst it was a sub for the Servicer, who negotiated the deal, but when they sent it to the Servicer, they refused to honor it. The Buyer walked away.

Then we went through court mandated mediation. The seller, hoping to ease the issue, agreed to settle with the second lender for $33, but it did not help mediation, which was just a waste of time, as the attorney for the Lender/Servicer came with no intention to negotiate. He had big “No” for every offer the Seller would make. Even to the offer to bring $50K cash to the table…

Frustrated, we thought it would go to foreclosure, but there was no activity. We put it back on the market at higher price trying to satisfy the demands of the Servicer.

There were no takers, and half a year later I wrote to the Servicer and showed all the numbers. They were showing that I was telling them the truth about the market at the mediation, where I sat next to the client and her attorney. The answer was that Investor will agree to a realistic contract provided that the Client brings $50K to the closing.

We changed the asking price and ran a few open houses, which is difficult to arrange in gated and highly protected residential coastal community of Ocean Hammock in Flagler County, ran ads, created a video show, promoted it on the Internet...

Finally we had the contract. Of course, because of the lapse of time they demanded we submit the full package. OK, Seller wrote what she was supposed to write, sent us all documents required by the Servicer. We sent everything to them by FedEx, we were in a rush, because we told the buyer it would be a quick short sale, as it was verbally agreed to.

I am calling the negotiator, no answer, calling supervisor – no answer. After a few crazy days we find out that the Servicer is no longer servicing the loan and that it went to a small financial institution. We find their contact information, and resend everything to them.

But now it is a whole new ballgame. They have the records from previous servicer, and they know about the arrangement but they do not feel like agreeing to any arrangement. Again, it is the question of money, and in that sense we start from scratch. They want every penny, they do not want to do the short sale. They own the Note, and they are willing to take their chances.

Cinnamon Beach - jon zolsky

Like the guys before, they think that they will get more money in the foreclosure. And the buyer walks away very upset with us. We thought that it was going to be quick and easy after I had the e-mail from the servicer laying out the conditions.

The Seller was bracing for foreclosure, and pretty much gave up. I kept bugging her trying to keep her spirit up, but there was less enthusiasm. What can you do, when the Lender does not want to do a short sale? Even with a lot of cash being offered at closing by the Seller...

And then the Investor’s mood changed. Yes, they would look at the offers... We put it back on the market, received the offer. Get the documents, prepare the package, submit, wait... Received a call from the Lender, looks like we are OK...

Good news, sending it to the Buyer's agent. The Buyer comes back saying he is not going to buy for that price. He is checking the county appraiser's site and the value for 2010 is showing a decrease by about $30K, and it is about $25K less than the contract price, so the Buyer feels that now it is good time to start twisting arms demanding to further reduce the price.

Try explaining it to the seller. She has either to agree to a $25K reduction meaning that in addition to $50K she would have to bring $25K more. Nope, not going to happen. Not only she wants the buyer lost, she will not sell to this buyer even if he comes with a great offer.

Putting it back on the market. Calls, showings, no offers. Calls, showings, no offers. Calls, showings, no offers... And the price is already a very good one. No more distressed sales there, prices are higher, this is by far the best deal in Cinnamon Beach, but calls, showings, no offers...

And then the offer comes. Decent offer. And a week later two back-ups came, and then a series of calls asking whether there was still a chance...

It is not a cash purchase, and we are not dealing with financing a lot, so I am cautious. But yesterday comes the call from the mortgage company, everything is fine, closing is mid September.

I reread it and thought that for a short sale it makes for a rather long blog, comparable, considering the difference in genre, to Leo Tolstoy's «War & Peace».

Short Sale long as War and Peace

It looks like there is a lot of war to go until we would be able to say «Rest in Peace» to short sales. But at least let's drink to it, so that this time comes.


* Image of the book courtesy of via undder Creative Commons license


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Andrea Swiedler
Berkshire Hathaway HomeServices New England Properties - New Milford, CT
Realtor, Southern Litchfield County CT

Jon, wow, I am speechless. Which is quite an accomplishment on your part. No less than hanging in there and closing this.

Wow.. again...

Sep 04, 2011 04:06 PM #1
David Shamansky
US Mortgages - David Shamansky - Highlands Ranch, CO
Creative, Aggressive & 560 FICO - OK, Colorado Mtg

DUDE! I thought I was a master of perseverance, I dont hold a candle to that story. At about the 6 month mark if your loan is resolved it was one of the rare ones I should have never taken on and likely bit off more than even I can chew. To work on the same property for over 2 years you should be getting royalty checks for that alone!

Sep 04, 2011 04:07 PM #2
Jon Zolsky, Daytona Beach, FL
Daytona Condo Realty, 386-405-4408 - Daytona Beach, FL
Buy Daytona condos for heavenly good prices

Andrea - I think we were the only people who believed we would finally do it. At least, we believed it more than anybody else. But setbacks were terrible

Sep 04, 2011 04:20 PM #3
Fred Griffin presently on Leave of Absence
Fred Griffin Real Estate - Tallahassee, FL
Licensed Florida Real Estate Broker

Jon, I read War and Peace in the year 2010, plus the "Cliff's Notes" to go along with it.  I had to read it twice to really grasp the characters and the stories within the story.

 The version I read was over 1100 pages long... which would equate to a 2.5 year Short Sale!

Sep 04, 2011 05:03 PM #4
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Jon Zolsky, Daytona Beach, FL

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