What the title depicts is not exactly far from the truth. The time and process involved in short selling a home is full of drudgeries that must be hurdled to reach the culmination of the transaction. Take this home for example: Site Address: 10536 North Park Ave N, Seattle, WA 98133. (4-bedrooms and 2 baths
My first step: I aggressively marketed the property via print and on hundreds of real estate websites. About 3 weeks before the foreclosure auction, we received an offer. The next problem was that the buyer’s offer was much less than my asking price (which was already about 5% below my latest Market Analysis). At this point, I needed to convince the lienholder to postpone the foreclosure based on the premise that they would net much more money if they accept this offer as opposed to foreclosing the property and selling it as an REO (Real Estate Owned aka Bank-Owned). As an aside, the foreclosing bank spends an average of $60K in foreclosure and holding costs for each home.
So, I submitted the buyer’s offer to the lienholder for a short sale request. A few hundred hours of phone calls, e-mails, and faxes, and I got the lienholder to do a 60-day foreclosure postponement just within 3-days prior to the auction date. After hundreds more hours of phone calls, e-mails, faxes, and about 71 days of delay, the lienholder decides to counter the buyer’s offer for $30K more.
Whack! ‘Way to kill the transaction, huh?
You would think I had given up. But no ma’am! --- I decided to dispute the lienholder’s property valuation. Several more hours of phone calls, e-mails, faxes and about two more weeks of haggling with the lienholder and I got them to agree to the buyer’s original offer. We’re back on the saddle again! Yahoooooo!
But my celebration was short-lived.
‘Got the short sale approval on hand, the buyer had 30 days to close; the buyer proceeded with her purchase loan and we hit a major snag: The interest rates have gone up significantly in the preceding 3 months that the buyer no longer qualifies for her purchase loan. Whack again! This time there’s no way to salvage the deal.
At that point, I really needed a drink (or ten).
After about 8 drinks, I convinced myself to dust off and give it another shot. I aggressively re-marketed the property once again, this time as a “Price-Approved Short Sale.” The foreclosure auction is looming at under 45 days. I casted a silent prayer and waited for the Gods to nod. --- ‘Got the nod: Lucky for us, just about two weeks prior to the foreclosure date, we received an offer that will net the lienholder the same amount as the original approval. Yaaaahoooooooo!
I am back on the short sale negotiation table in no time. After hundreds of hours of phone calls, e-mails, faxes, and another 62 days of delay, we got the new short sale approval. Yay!
The Buyer was given 30 days to close the transaction. Luckily, the current buyer is a strong buyer with 20% down. Fast-forward: Another 34-days went by, a closing extension approval from the lienholder and we finally made it to the closing table. This short sale transaction successfully culminated on April 22nd, 2011. Chaching! Two dollars in the bucket.
In retrospect, spending 9-loooooong months of marketing and processing the short sale twice just doesn’t quite make this business as profitable as one would assume. But I was more than happy to help the three homeowners avoid getting a foreclosure on their record. You ask why? Besides earning a decent, honest living, I’ve secured a safe spot in the homeowners’ hearts and minds: I’m talking about repeat business and future referrals.
Anyone who has a foreclosure on their record may not qualify for a mortgage loan for up to 7 years. Because I succeeded in preventing the foreclosure and successfully executed the short sale, the homeowners may qualify for a mortgage loan (purchase loan) again in as little as 2 years. Besides saving the homeowners’ credit, I’ve also contributed towards the betterment of our local economy. That’s priceless!
SHORT SALE EXPLAINED IN A NUTSHELL: Pre-foreclosure sale is commonly known as short sale. In a short sale, the Seller’s Creditor(s), also known as lienholder(s), may allow the homeowner to sell the property at its current value even if the sale nets less than the total amount owed to the Seller’s creditor(s), to satisfy the Seller’s obligation to transfer clear title at closing. Approval of a short sale requires the borrower to list and actively market the home at its fair value. The sale must be an arm’s length transaction with all proceeds (after closing costs) to be applied to the discounted Lien payoffs.
Short sale is a complex transaction involving careful coordination cooperation among a number of parties – Seller(s), Buyer(s), creditor(s), appraisers, real estate brokers, title agency and often mortgage insurance companies and junior lienholder(s).
