It is important to understand your servicer and investor guidelines before taking on a short sale with a 2nd from a smaller local bank or credit union. You may not be able to get there from here. We were surprised on a couple of short sales in the past two weeks because the servicer for…
- Tag: Short sale law firm
BB&T will usually not waive the deficiencies in a short sale if they own the loan (if they are servicing the loan then there is a chance that the deficiencies will be forgiven). Like most smaller or regional banks and credit unions, they simply cannot afford to forgive all of the deficiency in a short…
What Agents Say
The mantra for a Buyer should be WHAT IS THE FASTEST WAY TO GET MY OFFER APPROVED AND THIS SHORT SALE CLOSED. There is a long track of hurdles to get over between the offer and closing. That list includes: 1) document collection; 2) package compilation and submission (sometimes multiple times); 3) document review and additional document request; 4) valuation; 5) follow up and escalation; 6) negotiations with the bank for the short sale…better known as horse trading; 7) negotiations with the bank regarding the deficiencies; 8 ) Investor approval; 9) final HUD approval; 10) closing.
There is a misconception on the part of many Buyers as well as many agents that this is an easy and quick process. They think that you just have to present an offer to the bank and the bank gratefully takes the offer and considers it with thought and logic in a timely fashion and approves it. This is not the case. You would be surprised how many listing agents have this same belief. We have heard time and again from bank negotiators that agents send in an offer with no short sale package or an incomplete one, refuse to send in requested documents, and then yell at the negotiators when the offer is not getting any response. This is not a formula for success.
A short sale is a process that the offer (and the parties) must be go through in order to get an outcome…..any outcome…..even a rejection. I have heard from banks that their statistics tell them that less than 50% of approved short sales close. With that kind of a track record I can understand why they don’t do back flips when an offer is presented. In their eyes, the odds are against ever closing.
So if the odds are against you at the outset wouldn’t it be prudent for a Buyer to do everything they can to improve their chances of getting an approval if they truly want this property at their price…. sometime in their lifetime? One way to improve the odds is to have someone handle the short sale that knows what they are doing. As previously discussed, there are at least eight necessary steps to handle completely and professionally in order to obtain a short sale approval from a bank. There are certainly real estate agents, attorneys and third party negotiators who understand what many of these steps are. Of those I am sure that a few are performing every step (including the difficult negotiations required) necessary to get an approval at the best terms. If you are with one of them, then you are good to go. (In North Carolina and several other states this is considered the practice of law and an attorney is required to negotiate with the bank so check with your state’s Real Estate Commission and State Bar)
If, however, your short sale is being handled by someone that does not do this regularly, professionally and thoroughly, then your odds are well below 50%. If your short sale is being handled by someone who handles a short sale occasionally but is conscientious and determined then you are probably approaching 40% to 50%. If you are with someone with the requisite experience, focus and time, then your approval rate just doubled.
It’s the Seller’s short sale, so why should a Buyer get involved in who handles the short sale process? As discussed above, if a Buyer wants this deal, then the Buyer has a stake to protect and should have a desire to increase the odds of success. Additionally, the short sale may technically be the Seller’s. However, the deal is the Buyer’s, the property will be the Buyer’s, time spent negotiating a short sale (or wasting it on a rejection) is the Buyer’s and the eventual price approved by the bank is the Buyer’s.
Lastly, The Buyer’s Agent should also consider who is handling the short sale because it is their relationship with a potential buyer that is at stake. If an agent brings a buyer to a short sale and they wait for months on end because the agent on the other side doesn’t know what they are doing and they end up with less than satisfactory results, they may lose that Buyer forever. That Buyer is expecting their agent to help them through this arduous and confusing minefield we call short sales.