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"Integrity is the name of the game with Us"
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You Got Questions ? We Have the Answers to your Real Estate Needs!
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Certified Short Sale Agent at your service !
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Short Sale Warnings By: Rachel Saltmarshall,CSSA I am coming into my sixth year doing Short Sales and I have to say it’s been a crazy ride. I am reminded of a short sale that took 4 months back in 2006 only for the bank to approve it two days before the redemption expired then refused to extend the redemption allowing it to become an REO and then selling it 30k less than what the buyer was offering. Here we are almost 4 years later with the Mortgage Debt Relief Act, moratoriums up the wazoo and this same scenario is still playing out. My company had a 98% closing track record for closing our short sales within 45 days or less. And then we got a BOA mortgaged property. And then another one. And then another one. And then another one. And then I got my first negligent negotiator. Assigned on October 31st 2009. No contact until December 28th 2009 after numerous phone calls, escalations, sheriff sale postponements etc, etc, etc.
The joy truly comes in the morning working Short Sales for most clients. For others particularly investors it can be a labor of love gone horribly wrong in the end. While some information cannot be disclosed due to its being seen as confidential like “you must be 31 days late in order for us to even consider a short sale”. Other information can save the homeowner the Realtor and everyone else involved a whole lot of time and effort. Like the one we were recently hit with by CHASE Bank. Four months into the deal .Short Sale approved only to read the verbiage in the letter that stated “ This approval is for the release of the security interest only , the borrower is still responsible for the deficiency according to the terms of the original loan “ . Huh? This is an elderly client on a fixed income stuck with a property in an area that has gone from very nice to not so nice and is a challenge now to keep occupied.
Of course the approval letter was followed up with a plea to please reconsider and revise the approval to reflect the seeking of no deficiency judgment followed up by phone calls to the negotiator until I received a response. Well I did a week later and I was told that because of the type of loan it was being a direct loan from CHASE they always seek the deficiency. That’s disc losable information in the initial stage of the Short Sale process. There was no way I was going to advise my client to close on the Short Sale. The sole decision had to be his after weighing all his options .The end result of this was of course a dead deal. Time, money effort.
While the Mortgage Debt Relief Act and all that it entails were not written to help the average investor out of a bad situation many banks do not seek the deficiency from investors. They are giving the same relief afforded primary homeowners to investors. Many of our investor clients have received approval letters waiving the deficiency judgment all together. While others have produced open letters that in fact have an either or tone to them. In the state of Michigan a creditor has 6 years in which to come after you seeking the deficiency judgment. Who wants that kind of cloud over their head? Like rain already please!
One other thing investors need to look at before walking is this. If a property sells at the sheriff sale for less than what was owed and the property goes through the redemption process and becomes an REO the bank can still come after you for the difference of what it sold for as an REO and what was totally owed on the loan ! Now that really bites! You’re damned if you short sale and damned if you don’t sell. However with the former you may have the opportunity to negotiate the amount to be paid back. You may be able to on the latter as well however from what I’ve been told from an insider at the bank it will be a lot more and the strength of your ability to negotiate may not be so great due to the fact that you have now caused them to incur attorney costs, holding costs commissions etc, all over and above the initial debt.
Another thing (now this is me talking to the fellow Realtors now) that must be figured out early in the game before taking on a short sale is whether a hardship truly exists? Is the homeowner selling because they really cannot afford to pay the mortgage nor are they selling because the home down the street just sold for 75% less than what they paid for their home 10 years ago? What is the hardship? You’re pissed off! How do you advise your client to word that in order for it to make since to the bank and get their short sale approved? You don’t. Many want to sell their home and cash out another one. The harm in that is this. Some banks want to see bank statements and yes they go through them line by line. So if there’s an earnest money deposit check in there for another property there is a possibility that your short sale will not be approved. And Mr. Agent I would hope you’re not the Listing and the selling agent on both deals. Fraud alert, fraud alert .
As an agent we must counsel our client’s buyers and sellers alike in such a way that no one’s time is wasted. “Mr. Seller you must seek the advice of an accountant for tax liability purposes and the like”. “Mr. Buyer this is by no means a 30 day process it could very well take up to six months. Are you prepared to wait that long to close?” Mr. Seller certain documents are required by the bank in order to facilitate this short sale are there any objections to what is required of you Mr. Seller “? You need 100% cooperation in order to do your job and do it well ending in a successful Short Sale. Everyone needs to be on board and in tune with the process . No slackers allowed.
Short sale companies have popped up all over the place requiring upfront fees in order to negotiate your short sale and while it is not illegal to do ask yourself this question, why am I paying for a service that can and should be handled by a licensed Realtor certified in this discipline for free? One that has a code of ethics and a standard of practice to abide by. Does paying make you Mr. Seller feel as if your getting something for your money and that by paying this fee their going to work harder for you “? No Mrs. Seller it just means that they’ve already been paid so if it closes it closes and they’ll make a few more dollars however if it doesn’t they’ve already been paid and your being evicted .That’s all.
While Short sales are gaining momentum and may outpace REO’s as more banks realize the cost saving advantages Real estate agents must not ignore the need for education in this area of expertise. It’s constantly changing. Even the banks can’t keep up and it shows in the time frame it takes to close as well as the file load of the negotiators. This cannot last forever and until the banks realize that buyers are not going to continue to wait 6 months to close on a deal a light may eventually go off in someone’s head at the top of BOA’s food chain and they’ll say “hey these buyers cannot be held at bay for six months just to close on a short sale, how about we reduce the time to close to 30 days”.
Rachel Saltmarshall is the Broker/CEO of Brice Winthrop and Associates,LLC. Rachel has managed and sold REO’s for going on 6 years now. She has sat on numerous panels discussing the impact of foreclosures on the City of Detroit as well as strategies involving the purchasing of foreclosures. Rachel is a sitting director on the Board of the Detroit Association of Realtors . She is also the Treasurer on that same board. Rachel is a member of the Detroit REO Taskforce of which she heads the Committee dealing with the Detroit Water and Sewerage Department (a fight she took on prior to joining the Task force).Rachel currently oversees the dealings of six agents and growing . Rachel trains agents and offices on a monthly basis on “How to become an REO Agent” as well as “ The Art of Short Selling “ .She is married, the mother of seven children and resides in the City of Detroit .
Rachel is available for interviews and questions at 313-974-7274 and by email at Rachel@bricewinthropassc.comcastbiz.net
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