5 Quickest Ways to Kill Your Short Sale

October 22, 2011 By

Listen up Realtors and Home Owners alike.  The choice to do a short sale can be varied and often not an easy choice.  Once the decision is made you really need to to be careful not to kill your own short sale.

Here are my Top 5 Ways To Kill Your Short Sale

#5 – Assuming any offer is a good offer

The bank is always looking for market value.  Do your best to select the best offer and be prepared to defend it with real and recent sales comparables.  Don’t be afraid to counter back on low offers and no cash is NOT king in a short sale.

#4 – Communicating Outside of Your Short Sale Support

If you are a home owner be aware that often a bank will reach out to you directly and often their information will conflict what your Realtor or Short Sale Negotiator has told you.  Stay calm, be brief if you answer the phone and follow up with your team.  If you do not have faith in your team fire them, if you do then please let them do their job for you.

#3 – Ignoring Your Mail

As the home owner you, not your Realtor and/or short sale negotiator are responsible for checking your mail and identifying if your foreclosure has started or if an auction date has been set.  If you are not making your payments a foreclosure is an absolute possibility.  Keep an eye on your mail and sign for all certified mail immediately.  Get copies of all communications from your bank(s) to your team immediately.

#2 – Filing Bankruptcy

You can file bankruptcy and complete a short sale but if you are going to file you must interact with your whole team in order to orchestrate the timing and execution.

and . . .

#1 – Starting a Loan Modification

It seems almost guaranteed that after months or longer of attempting a loan modification that has failed or stalled completely that this one rears it’s ugly head at #1 on my list.  Here is the scenario that has played out often.

  • Failed Loan Modification
  • Decision to Short Sale
  • Short Sale Offer submitted to the bank
  • Bank NOW magically reaches out to the home owner to engage them to a loan modification.  The letter states something ambiguous like ‘Congratulations, you have been identified as a potential candidate for a loan modification and may qualify for our blah, blah, blah program‘.  A loan modification that by the way the bank has spent ZERO time qualifying the home owner for.
  • The Home Owner is excited and wants to keep their home and assumes since the bank contacted them that a loan modification that it would most likely get approved.
  • They fill out paper work thinking it is not a problem and in a worse case scenario their payments will be lower during the short sale.
  • Home owner never tells their Realtor or Short Sale Negotiating Team (ref #4 above)
  • The bank then cancels the short sale request in lieu of the new loan modification request.
Filed Under: Managing Short Sale Issues, Submitting Your Offer

Always have a Purchase Money Lender on Speed Dial

October 20, 2011 By

Even if all you do is list properties for sale and list short sales among those you need to have a strong purchase money lender on your speed dial.  No mortgage broker here I’m talking about a money lender that can work quickly on files and do their underwriting in house.  The reason the is so important was reminded to me just last week.

After months of negotiating a short sale and getting it fully approved and deficiencies waived the buyer’s loan was falling apart.  While not our client of course we hold an interest in having them approved and at the closing table.  Our initial attempts to get them to change to our lender fell on deaf ears and the mortgage broker had the file reassigned to another resource.  A week later, strike two.  The loan was denied and all on some truly superficial underwriting issues.

At this time the buyer in desperation finally allows us to step in an offer our Lender as a resource.  The short sale approval letter was already extended twice and the short sale lender was stating no more extensions.  So potentially we are out of time.  But our relationship with this money lender and knowing their integrity and work ethic allowed us to save this at the 11th hour.  Not only did they get it done they were able to do it in just 8-days!

Some short sale agents do take it a step further and it is worth considering.  When listing short sales it would be intelligent to require that the buyer also be pre-qualified with your lender.  While they can still use their preferred lender this way you have a backup in place in case things start to go south.  But note that in a market where getting buyers or buyer interest can be challenging this additional requirement can sometimes scare buyers away.

Filed Under: Managing Short Sale Issues