Okay listen up Real Estate agents and Short Sale Negotiators out there. I find it hard to believe that many of you are NOT running a title search at the start of your short sale. If needed to be paid up front the home owner should provide that as it typically is very affordable. I don’t know how many times a home owner has told me the only liens on the home were the two mortgages they have but to find out during the title search that there is an IRS lien or other judgments.
To be successful negotiating short sales you must start with all the facts so you can pre-negotiate and set your case up for success. In the case of additional liens or judgments found during the title search go ahead and include them on your initial submission to the bank(s). You would be correct to assume they will counter back or deny them but on some occasions with strong purchase offers they will actually pay them. Start negotiating with these additional liens quickly so when the final approval comes you are prepared with alternatives if the bank denies them. While many banks now run their own search to support your claim we find it very useful to provide a copy of the title report to the bank when this happens, highlighting the additional liens or judgments.
We know from our experience that IRS liens are actually easy to deal with and in the state of Virginia our title agent can work with the home owner early on to remove this lien. If the home is upside down and has no equity removing it is not too hard. Additionally HOA and Condo Association dues that have not been paid can really add up quickly but can often be negotiated to a lower payoff. We recently negotiated an $11,000+ past due condo fee down to $3500 and were able to get the buyer to pay for it. In this instance we had the title report back and knew of the Condo judgment before the contract arrive. So when the offer came in we approached it and were able to show the value to the buyer in having them prepared to pay it if the short selling bank denied it. When we came back with needing them to pay $3500 and not needing them to support the full $11,000 they were happy to step up and pay it.
All of this is made so much easier if you take the time and work from the start mapping out a path for success. If all of this waits to the end I can almost promise you often that deal will fail. Most often with the buyer leaving the offer and the seller frantically looking for a new offer and a second chance to avoid the auction block.
