All Forum Posts by: Jackie Patterson

It's my understanding that it's difficult to get a loan mod on an investment property. That's something the owner could discuss with their lender. It is sometimes possible to do a short sale without being behind. Some lenders allow it and others (FHA for one) require you to be 30 days behind. We're doing a short sale on an investment property in Florida - should be closing this month- and the owner is current. Although that would help the seller get out of the property, it doesn't help you purchase it if you don't have the funds.

You need to back out immediately so that a backup offer (if there is one) can be inserted in your place, or the property can be listed as active again and a new buyer can be found. Remember that typically the foreclosure process continues during the short sale negotiation. They may be postponing auction dates, or not scheduling them, but the clock is ticking. Even if there is an approval, in most cases it is for a specific buyer, and if you change buyers it must be approved again and a new approval letter issued.

Why don't you make a short sale offer? Your friend could walk away from a problem, and you could get a property at a good price and make a profit by adding the additional suites and then selling.

Of course you'd get your EMD back, if you made one. If the lender counters, the buyer always has the right to accept, decline or counter back. Are we in the same position as we would be if a buyer backed out because they'd made offers on more than one deal? Not really in my opinion. In this scenario we would have the option of rebutting the valuation, and if all failed, at least everyone concerned knows it was a good faith offer that failed because the lender valued it too high. Sometimes that happens. That's different than wasting everyone's time on an offer that's likely to go nowhere.

I agree that conversations like this are good because you learn other perspectives. I also have to say that I'm happy to see so many responses about a short sale topic.

Will, just to be clear, our opinions don't come from the side of the listing agent. We are NOT the listing agent. We are operating as the buyer/investor, or we are representing the home owner, the buyer, and sometimes the Title Company. Even when when we represent the homeowner, we work between them and the listing agent.

I think our philosophy is different than yours. We're not just playing a numbers game, looking for the biggest profit we can get. We look at the human element and are proud that we can help distressed homeowners out of a bad situation. We also help buyers get homes they want, work with investors to get great deals, help Realtors who don't have the time or expertise to negotiate short sales, help Title Companies provide a service to their Realtors, and generally take a bad situation and turn it into a win-win for everyone. Along the way we also make a profit. We've made very large profits, but we've also done a few where we didn't make a dime. Of course we don't want to do that all the time, but we're not going to abandon someone in the middle of the process because there is no profit. That's why hearing an investor say they make multiple offers and take whichever one come in first really bothers me. This puts the homeowner whose house has been taken off the market for that period in a really tough position. It also means that whoever is working the other short sales just spent many hours for nothing.

The choice of a negotiator can absolutely be up to the buyer. All you need to do is write into the offer that the short sale negotiation will be done by XXX. We negotiate for buyers all the time.

Thanks, Steve! It seemed to take forever to find the time to get our website going. Finally we decided we'd never have extra time so just made it a priority. We've been focused on short sales for 3 years. I think whether you're doing them nationwide, or just where you live, you need the same things......being well organized, understanding the process, and having a great team of title companies, attorneys, Realtors, etc.

First of all, if you have a good negotiator, you should have a very high chance of success as long as you're not making a ridiculous offer. As far as fair, you need to think about the time the negotiator or Realtor has to spend submitting and negotiating the offers. And also the lender who takes time to review the offer, spends money to do BPO/appraisal, etc.

Would you think it was fair for a homeowner with a conventional sale to accept 2 offers, and say whoever gets their financing together and is ready to close first gets the house? Would you want to jump through the hoops getting your appraisal, inspections, paying for loan origination and going through underwriting in the HOPE that you would be done first? If you're going to buy a short sale, and reap the benefits of getting a home at a great price, then you have to accept the time it takes. If you need a quick sale, then don't buy a short sale.

I disagree with Will on this one. It's not fair to the homeowner to make short sale offers on more than one if you are only buying one. It may be legal, but it certainly isn't ethical. In most areas, when an offer is made.......even on a short sale.........the property must be moved to pending, or contingency or back up offer on the MLS. Any of those automatically cuts down on the number of people that will even look at it. If the buyer backs out, the homeowner has now lost that number of days on the market, and is that much closer to foreclosure. You are also wasting the time of the person negotiating it with the lender. That's why we always require an earnest deposit from a buyer who is going to owner occupy, and won't knowingly work with an investor with that business plan.

As far as the scattergun approach of making offers without even looking at the house, again it is not fair to the homeowner, Realtor and/or the negotiator. It ties up the loss mitigators at the lenders that already have huge numbers on their desks, and creates more of a backlog. There are gurus out there that advocate making a 100 offers a week and seeing what sticks. This kind of approach just makes more work for everyone and is seldom effective. Everyone complains about the length of time a short sale can take, and wasting time trying to negotiate a short sale that is not a serious offer only exacerbates the problem.

I agree with Will's post 100%. Well said!

Our position is often unique. We facilitate/negotiate short sales all over the country. Sometimes we're the "B" buyer with a quick sale to a "C" Buyer, and often times we're handling it for an investor, or for an actual buyer who wants to live in the house. We're not the listing or selling agent. Our primary goal is to get a short sale approved with the best possible results for the homeowner (no deficiency) and a great deal for the buyer. We have a very high success rate which is why we're referred by Title Companies and asked to handle short sale by investors and Realtors. Every short sale we take on is with the goal of getting it approved and closed. It takes a lot of time and effort, and there's no profit if we
aren't successful. Will is correct............there's nothing wrong with making offers on as many short sales as you want, but be prepared to perform unless there is a legitimate reason.

Having an EMD is going to depend on the circumstances. We don't personally make an EMD when we're making the offer on our behalf. If we're facilitiating it for an investor that we know is legitimate and going to perform, we don't require EMD's. If it is for a buyer to owner occupy, we do require a deposit. That helps insure that they are serious, and aren't going to keep looking and walk when they find something they think is better, or just get tired of waiting. We always specify a realistic time frame and keep them informed throughout the process. Despite that, we had one last year where the buyer changed their mind. We had just received the approval letter and it was well before the timeframe specified in the purchase ageement to get it approved and closed. That buyer lost their $1000 earnest deposit. We were able to find another buyer and with an approval extension, get it closed.

Are there legitimate reasons to back out? Certainly there are, but not having the funds, or not being to find an end buyer are not acceptable reasons.