Short Sales – just GOOGLE it!

For most realtors, short sales are a substantial part of our business. After 4 years in a decreasing marketplace, more people find themselves upside down on their mortgage EVERY day. While they certainly have their downsides, helping sellers in a financial quagmire unload a very negative asset is rewarding.

While I have a SFR designation (Short Sale & Foreclosure Resource) and have attended numerous training events offered by our local realtor Board and other entities, there is NO substitute for getting your hands dirty and working the phones for a short sale. I learn new things just about every short sale I close.

I took a listing recently that has THREE mortgages. It’s a first for me. Obviously, 1 mortgage is normally fairly straightforward and 2 mortgages requires some more advance planning and technique. But 3 mortgages??? Now I’m in the majors, baby!

After the fear subsided, I realized I had no choice but to dive right in. The very first thing I did was send in the authorization letters. My second action was to hop online and Google “short sale 3rd mortgage” and also the bank holding the note.
Now, we all know 2nd & 3rd lienholders THEORETICALLY have no “leverage” but they actually wield quite a lot of power, which catch many by surprise. They have the power to withhold approval, meaning you have a dead deal. They have the power to release the lien, allowing the sale, but NOT release the seller from the obligations of the note. They have the power to require a large payoff at closing, which is basically a ransom demand.

If one has never dealt with a particular bank in a particular lien position, then Google is a great place to start. The amount of info-sharing via customers and realtors is great. For instance, I learned that this particular 3rd mortgage has a separate number for submitting authorization letters (which I knew beforehand) and it behooves realtors to follow up for a contact in their Executive Client Relations division, where they will be assigned a neogitator. Unfortunately, I also learned that under no circumstances will they release the deficient amount owed on the equity line – at least that is what people claim. A follow-up call to the lender confirmed that.

Information is power these days. I have already alerted the sellers in order to set their expectations. I know the bank’s negotiation position beforehand. I also know how they have responded to other borrowers.

So if you’re wondering how your bank responds to short sales, just Google it. You’ll be glad you did.

Excruciating...frustrating...nails-on-chalkboard...

That may very well describe every realtors job these days. If a realtor is not experiencing these emotions, I claim they are not really working!

I always like to say that I will take real-life situations and store them away as a teaching "moment". I had one occur recently that has thrown me (and my clients) for a loop and really caused some heartache.

Long story short, Buyer contracted to purchase a beautiful pond-front home that has recently been remodeled. Seller got it at foreclosure, did some very nice things, and put it on the market. All well and good...

...that is, until today. I get a call from the title company closing the deal who proceeds to inform me/wreck my day that the home has an OPEN mortgage on it. Huh? Apparently, only 1 mortgage was foreclosed on and the other mortgage remained open and in force. Ugh.

The delicious topping on this was that the mortgage that was foreclosed on was riddled with errors relating to the legal property description...those, too, must be corrected.

This is an excellent illustration of CAVEAT EMPTOR, or Buyer Beware. Some people believe that when a property is purchased at county auction due to foreclosure, the property is free and clear. It's not. IRS liens MAY stay with a property until satisfied or negotiated. If the 2nd mortgage is foreclosed on and a buyer outbids the 2nd, then the Buyer takes title SUBJECT TO the 1st mortgage. Utility liens normally stay on past foreclosure.

One MUST due a quick and dirty title search, at the very least, before purchasing a property at auction. That is the only way to know the true picture. This is not true, however, if the property is bank-owned. Normally the proper channels have been followed and title is clear of defects.

Will let you know how this turns out...

I am pleased to announce that I have just earned the National Association of Realtor "SFR" designation - the Short Sale and Foreclosure Resource designation. With such a large contingent of my business being short sales and bank-owned foreclosures, I felt my clients would be best-represented by a realtor who is certified in such areas.

I take pride in handling my short sales with dogged determination and efficiency. To date, I have closed 10+ short sales with excellent results for my sellers. The key to Short sale success is constant communication with all parties involved. It keeps the banks moving forward, the buyers engaged, and the sellers optimistic.

Here are a couple terms that may be new to you:

1. Convenient foreclosure: This occurs when the seller already has a second dwelling to move to and will allow their over-mortgaged property to be taken back by the lender, regardless of their monetary assets.
2. Strategic foreclosure: An occurence where a homeowner will acquire a 2nd home BEFORE their 1st home goes into foreclosure with the express intent of allowing the 1st home to be taken back by the bank.

The bottom line: this massively-depreciated real estate market has affected just about everyone I know and I have re-committed myself to assisting embattled owners as best I can.

If you have any questions about the short sale process, just let me know. I don't profess to know EVERY thing about the sale process, as each bank is different. However, there are general rules that most banks adhere to and I'm always willing to share my knowledge to help a client.

I discovered this video gem and couldn't help but share it. If only I knew about this gentleman during the run-up.

Essentially, Peter Schiff was seeing into the future as he did the whirlwind of financial talk-shows in 2006 and 2007. Not only was he right, he was EXACTLY RIGHT!

What's so comical are the "EXPERTS" who predicted 10% real estate gains, picked Merrill Lynch and Bear Stearns as best-buy stocks, and prophesied expanded wealth in the financial sectors.


http://www.liveleak.com/view?i=b0a_1232747931

So, in the future, listen to Peter Schiff!