Hot Short Sale Negotiation Tip and Some Short Sale Basics

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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  1. Winston Heverly 11/29/2011 10:36 PM
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Kay Van Kampen
Realtor®, Springfield Mo Real Estate
RE/MAX Broker, RE/MAX Solutions

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!

November 29, 2011 09:44 PM
Joan Whitebook
Consumer Focused Real Estate Services
BHG The Masiello Group

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.

November 29, 2011 09:49 PM
Gene Riemenschneider
Turning Houses into Homes
Home Point Real Estate

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

November 29, 2011 10:58 PM
Joe Kenny
Better Than Your Average Joe
Realty Executive Midwest

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

November 29, 2011 11:01 PM
Pamela Seley, REALTOR®
Menifee Lakes California Real Estate

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

November 30, 2011 12:43 AM
Jane Peters
Connecting you to the L.A. real estate scene
Power Brokers Int'l

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.

November 30, 2011 12:47 AM
Ginny Gorman
Homes for Sale in North Kingstown RI and beyond
Phillips Post Road Realty ~ 401-529-7849~ RI Waterfront Real Estate

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

November 30, 2011 08:44 AM
William J. Archambault, Jr.
The Real Estate Investment Institute


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.


November 30, 2011 10:13 AM
Elizabeth Weintraub Sacramento Real Estate Agent, Top 1% of Lyon Agents
Put 40 years of experience to work for you
Lyon Real Estate

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.

December 01, 2011 10:11 AM
Betina Foreman
Realtor, C.N.E. Selling Homes in Lake Travis & Central Austin!
512-771-6318 Austin Home Girls Realty

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


December 02, 2011 02:33 PM
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Melissa Zavala

Broker, Escondido Real Estate, San Diego County
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