Hot Short Sale Negotiation Tip and Some Short Sale Basics

By
Real Estate Broker/Owner with Broadpoint Properties Cal BRE #01324959

Short Sale ProcessingIn college, the elementary level courses are usually the 100 series courses—all of them are numbered in the one hundreds. The advanced courses are in the 200 series. Before you fill your tummy with too much turkey (or tofurky), it seems like now might be a good time to provide a little bit of short sale 101 review.

Here’s some 101 on what to do when you are negotiating a short sale with two separate lien holders. 

If your short sale seller (the borrower) has more than one mortgage lien on the property, then it is the responsibility of the short sale negotiator to negotiate all of the mortgage lien holders that will be settling for less than full payment on the amount owed. 

When you have two mortgage liens at the same bank (like Bank of America or Wells Fargo, for example), you must research whether you need to negotiate the two liens separately or whether one employee at the bank will be handling both loans. If the mortgage liens are being serviced by two different lien holders, then you will need to negotiate with both lien holders separate and simultaneously.

That’s not always so easy.

First lien holders will offer second lien holders cents on the dollar in order to release their liens. Second lien holders will often hold out for more than just a cent or two on the dollar. Figuring out how much the first is willing to give and the second is willing to accept can often times be challenging and time consuming.

What short sale lenders do not want to hear: that you have not submitted the package to the other lienholder. It often takes longer to deal with one lien than the other. For example, you may get an approval on the first and still be working on obtaining the second lien holder short sale approval letter. However, short sale lenders never want to hear that you have not even begun working on the other loan. All they want is for the deal to close as quickly and efficiently as possible. So, in order to achieve that goal, always work both liens simultaneously.

 

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Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Winston Heverly 11/29/2011 10:36 PM
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Rainmaker
693,547
Kay Van Kampen
RE/MAX Broker, RE/MAX Solutions - Springfield, MO
Realtor®, Springfield Mo Real Estate

Great information.  Two mortgages are more difficult unless you are negotiating both of them at the same time.  I've never minded two mortgages......just more challenging!

Nov 29, 2011 09:44 PM #1
Rainmaker
1,105,481
Joan Whitebook
BHG The Masiello Group - Nashua, NH
Consumer Focused Real Estate Services

The types of short sales call for a large bottle of aspirin... and on the weekend, perhaps a cocktail.  When I am representing a buyer, I dissuade them from making an offer if there is more than one lien holder.

Nov 29, 2011 09:49 PM #2
Rainmaker
1,281,099
Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

Great post on Short Sales.  Thanks for the post.  I caught it on a reblog.

Nov 29, 2011 10:58 PM #3
Rainer
210,774
Joe Kenny
Realty Executive Midwest - Darien, IL
Better Than Your Average Joe

Thanks for the Sort Sale 101.  This is definitely a class for the times.  It's a good life.

Nov 29, 2011 11:01 PM #4
Rainmaker
706,924
Pamela Seley, REALTOR®
REALTY EXECUTIVES OTF - Temecula, CA
Seals the Deals in Temecula Valley California

Melissa, great advice. Managing both simultaneously is a must. Even so, there's always one lienholder who is faster than the other. LOL

Nov 30, 2011 12:43 AM #5
Rainmaker
914,544
Jane Peters
Power Brokers Int'l - Los Angeles, CA
Connecting you to the L.A. real estate scene

Oh yes, that second lien holder.  And heaven forbid there is a third one.  You are going to lose a lot of hair with these types of short sales.

Nov 30, 2011 12:47 AM #6
Rainmaker
1,132,253
Ginny Gorman
Phillips Post Road Realty ~ 401-529-7849~ RI Waterfront Real Estate - North Kingstown, RI
Homes for Sale in North Kingstown RI and beyond

Melissa, I so smile when my short sale seller says i have only one loan...aahh...it is actually a sigh of relief...go figure!

Nov 30, 2011 08:44 AM #7
Rainmaker
591,134
William J. Archambault, Jr.
The Real Estate Investment Institute - Houston, TX

Melissa,

Very good advice!

Just like your latest webanar! I'm looking forward to the next three 102, 201, and 202 I assume.

While you're dealing with mortgage liens don't forget that all liens must be released!

Foreclosure discharges all junior liens, but a short sale is a settlement with the bank or banks and the banks can only release their own liens with out foreclosing!

I keep suggesting that all listing agents get a preliminary title report on listed property and a credit report on all clients/sellers. Troubled sellers often if not normally have other problems witch can mean additional liens or even les pendance's all of witch can stop a sale. When a for sale sign goes up especially with a short sale rider on it every knowledgeable creditor could be filing! Don't forget that some liens can for labor and materials can be recorded from 30 to 120 days after the fact depending on the state.

Bill

Nov 30, 2011 10:13 AM #8
Rainmaker
1,255,068
Elizabeth Weintraub Sacramento Real Estate Agent, Top 1% of Lyon Agents
Lyon Real Estate - Sacramento, CA
Put 40 years of experience to work for you

Interesting. I don't work both loans at the same time in every short sale. It kind of depends with me who the second lienholder is and how long I think the first will take to approve. If I am dealing with a notoriously long negotiation process with the first lender, and the second is one of those that likes to charge per diems for a short sale extension, I'm holding off with the second until I am closer to approval with the first.

Dec 01, 2011 10:11 AM #9
Rainmaker
414,536
Betina Foreman
512-771-6318 Austin Home Girls Realty - Austin, TX
Realtor, C.N.E. Selling Homes in Lake Travis & Central Austin!

Thanks for sharing the Short Sale 101 Lesson. Many great and useful "short sale" tips were revealed.

 

Dec 02, 2011 02:33 PM #10
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Melissa Zavala

Broker, Escondido Real Estate, San Diego County
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