A tale of two sales

Short sale craziness continues. The short sale team in my office took two short sale listings a few days apart in August. At the time, neither seller had done any preliminary work with their respective lenders. The team went to work getting the hardship and other required documentation together from the sellers for submission to the lenders. Both properties got offers shortly which were submitted within days of one another to the lenders along with all requested documentation. Both sellers had legitimate hardship. Forty days later, one sale was approved in writing and ready to close while the other lender was still asking for more and more documentation. The seller confessed yesterday that he had continued to make mortgage payments the whole time that we were trying to negotiate a short sale with his lender. Asking a lender to approve a short sale while the mortgage is current is like panhandling in an Armani suit. Chances of success are slim.

The take-away: If a property owner has the resources to stay current on the mortgage and does so, the lender will be way less motivated to agree to a short sale or modification. Why should a lender write off tens of thousands of dollars when they can just continue to accept timely payments? Any reader considering pursuing a short sale needs to understand that hardship must be real and able to be proven. Prepare to be asked for documentation similar to that required to obtain a new loan. Without proof of hardship, chances of approval approach zero. With proper documentation, real hardship and an experienced short sale negotiator a seller stands a good chance of successfully selling a property short.

“You have to learn the rules of the game. And then you have to play better than anyone else.”
___________Albert Einstein

 

Hard Decisions

Another hot Mayo board. This one is a 6′2″ quad in Coke bottle tint.

I have talked to several distressed property owners over the course of the year who have found themselves in the undesirable position of owing substantially more on their mortgages than their properties are worth. Whether they bought at the peak or refinanced with cash out, they now struggle with their obligation to continue to pay off a loan that’s far more than the property would bring in a sale. Many feel an ethical obligation to continue to pay regardless of the impact on their personal finances. Even some of those not so ethically encumbered continue to pay for fear of ruining their credit or even shame among their peers should they decide to walk away. Those who find themselves in this position have three basic choices; continue to pay, pursue a short sale or simply walk away. Without taking any position on the ethics or morality of choices two or three, I will point the reader towards a very interesting discussion of the subject at Mish’s blog. Excerpt below.

“Mortgages are not ethical documents, they are legal contracts. The typical residential mortgage for an owner-occupied home gives the borrower two options: pay on time and in full, and keep paper title to the house, and full entitlements to any appreciation upon its later sale after the mortgage is satisfied; or, stop making payments, and hand the keys back to the lender. Morality and ethics don’t even enter the equation. Either option is perfectly legal for the borrower, and the only criteria should be business-based. All the ethics you need are contained within the four corners of the pages of the mortgage contract.”

“It doesn’t matter which side of the fence you get off on sometimes. What matters most is getting off. You cannot make progress without making decisions.”_________Jim Rohn

 

Is that short sale real?

I rarely link to other real estate blogs as I consider most of them embarrassing self-serving attempts to snare clients. One shining exception is the shortsaleblogger.com who had a brilliant post last week, Top 3 tips to buying a short sale I recommend it for anyone contemplating buying a short sale or selling a property as a short sale. I read it just after hearing another horror story about a buyer finding out several months into a short sale that the listing agent never presented her offer to the lender or the seller. I’ve encountered a similar situation in the past. In my case, the listing agent was accepting but not submitting other broker’s offers because he was hoping find a buyer in time to score both sides of the commission representing the buyer and the seller. He would just lie and tell the other agents that their offers were in the works. I think in this most recent example that the listing agent is just a slacker or, as Dave put it so succinctly in the blog post I linked to above, an idiot. Read his post.

Be careful out there, folks. Question everything and have a contingency plan.

“Lies run sprints, but the truth runs marathons.”
___________Michael Jackson