Short Sale Negotiating Skills
We just closed a short sale for $85,000 after 6 months of back and forth with the bank.
It was listed at $70,000 originally, in line with the “comps” or similar properties that recently sold. After much paperwork faxing and phone calling involving hold time, transfers, and disconneted calls, we got a counter offer. The 1st wanted to NET $89,000 and the 2nd lien holder wanted $6,000. Oh my.
A Short Sale means the homeowner owes more to the bank then they can sell the home for. For example, you owe $300,000 to say, Wells Fargo for your home. You can only sell your home for $150,000 due to the current market. IF you qualify (you must have a documentable hardship), you can try to do a short sale. If approved, the bank, in this example Wells, will issue you an Approval Letter stating they will accept less than you owe, AND FORGIVE THE REST OF THE DEBT.
Here in Oregon, if it is your primary residence they typically can’t pursue that anyway. We’re blessed to live in one of the “non-recourse” states. We also had cooperative sellers, who gave me every signature, initial, and document I requested in a timely manner. (after having their lawyer review it)
After having the buyer's offer declined, filing a formal value dispute on homepath with Fannie, and again being declined, I eventually talked the 1st, who was backed by Fannie Mae, down a bit. The 2nd wouldn’t budge.
Because the 1st only allowed $3,000 toward the 2nd. buyers agreed to pay the difference. The first wound up netting $76,864, the 2nd got their $6,000. The sellers got to walk away clean from their mortgages, with full release of deficiency. (The mortgage holders cannot come after the sellers for the difference between what they received, and what they were owed) The buyer’s got a steal of a deal.
Oh, I almost forgot the part where Fannie Mae demanded a note from the sellers for $28,022.40. Ummm.. NO! I had to submit documentation that was not possible or reasonable.
Luckily the market kept rising, so by the time all was said & done, the buyer’s paid roughly $88,000 for a home currently listed for $129,000, $129,000, and $135,000. Same units. Same street. Same everything.
And that is how it’s done.
I always give the same advice to my short sale clients. Be patient. Be flexible. The buyer's are getting a home at yesterday's price. The sellers are getting free of a debt and avoiding foreclosure. Win/Win.
