Finding information on short sales

[Kristopher Devers]

Aloha everyone,

Hoping to get a better understanding of how to address a current situation that has come up several times. Houses are listed on MLS as a short sale. When I start digging up info as far as owners, when previously sold, listed mortgages and so on....it would seem as though many of the listings are listed for more then what I approximate would be owed. Since they are listed with an agency/brokerage....much of the info on the shortsale timeline and owners situation is hard to find out. So any thoughts on what's going on or what I can try to do? I know short sales can be difficult but I am willing to put in some work to have extra open opportunities available to me.

Mahalo,

Kris

[Ron S.]

If you are trying to buy, read below. If you are trying to be an agent for these types of transactions, unless you have experience with short sales, run. I'm thinking, based on your questions, you don't have any experience with short sales.

My opinion would be, make your offer based on what you think (know) you are willing to pay, independent of anything else, and stick with that price. Do this with an agent that specializes, or at least has significant experience dealing with short sales. THEY will do the work to find out the other relevant factors such as, junior lien holders. If there is a junior lien holder, THEY will submit the short sale package to them in tandem with the short sale package to the senior lien holder. Only the listing agent would have advanced information on other liens and only if they are experienced and only if they ask the seller and only if the seller provides thorough, relevant, accurate, factual responses to the agents inquiries about the deal. It will require both agents on both sides of the deal working together and in tandem to make it work, to present a complete package to the lenders (lien holders).

The lien holders will review your agent's short sale package and come back with a yes, no, or counter. They will be aware of the other lien holders if your agent is doing their job. They may or may not care about the other lien holders when it comes to their "yes/no/counter". They have what they want out of the transaction and if it works, it works. This is where the experience of your agent will be worth their weight in gold, or, where their inexperience will kill your deal.

If the senior is a Fannie/Freddie loan, 99 times out of 100, excess proceeds are capped to the junior lien holder at a paltry amount, ($6K or in some cases, $8.5K) regardless of the balance of the loan. There are NO requirements for the junior lien holder to accept any amount the senior lien holder "allows" in excess proceeds, barring VERY few exceptions, like, the junior lien holder is a 2MP participant with Fannie/Freddie (rare). All of the threats of, "Take this or you get nothing", or "Take this or borrower files BK", or "Take this or the senior forecloses", and other tactics rarely, if ever, get anything more than a laugh. Again, this is where an experienced short sale agent earns every penny.

Don't use a short sale negotiator. that will gum up the deal faster than anything. A) they suck. B) they can't do anything that the agent can't do. C) They are like using a travel agent to purchase a plane ticket on priceline.com

None of this should (Amounts owed, junior lien holders) be anything you should worry about or deal with. This is the job of your agent. As Wayne says, what's owed is irrelevant, and how many people are owed is not relevant to what your purchase price offer is. What is relevant is, if there are other people (lien holders) in line, and there is not enough of the pieces of the pie to go around for everyone to feel comfortable saying yes, you will have to decide if you are willing or able to kick in more dollars to make the deal work. Again, as Wayne says, that last part may impact what you offer if you know there are junior lienholders and that someone else is gonna want a piece of the proceeds.

One final thing when making an offer...Lenders don't accept or reject a purchase offer. They accept or reject "net proceeds". It's always "net proceeds". We all think, "The lender told us we have to increase the offer price" and that's just not the case, nor is it what the lender is saying. If the offer is rejected or countered, they aren't rejecting the price, they are rejecting what they are netting so, they want more in net proceeds, not necessarily a higher price. That usually means a higher price but could also mean, lower commission to the agent, removing or reducing seller concessions, more cash infusion by the buyer, etc..