Wednesday, September 21, 2011 / by Ira Miskin
First and foremost all parties must understand that the time it takes to complete a successful short sale can be double, triple or quadruple the time it takes to conclude a retail sale or even a bank foreclosure (REO) sale. There are some transactions that take even longer! Here’s a just a sampling of the real world tasks and issues that must be executed and solved, and the hurdles that have to be jumped.
The HAMP and HAFA programs set up by Congress and managed through HUD to help struggling home owners modify their loans or to assist short sale sellers in completing their sales are, for the most part, a failure. It is not mandatory for lenders to even participate in these programs. No question there are some homeowners who have modified their home loans, or benefited from the move-out program. But most, like two recent clients who tried to modify their loans themselves with their lenders ended in failure. They spent months being passed from customer service person another, were repeatedly told their files didn’t exist, were lost, were wrong, and after all those months were ultimately turned down for modification or offered a modification program that was worse than the payment plan they started out trying to modify. One fought the system right up to a week before foreclosure and lost their home having been told that they made too much money to modify. A totally incorrect conclusion by the Lender but received too late for the home owner to take any other course. The other pulled out of the process after a year with the same experience and no results, but did have sufficient time to place the home on the market as a short sale and his Realtor and short sale Team are working to complete sale approval with his Lender.
Even with a very experienced Realtor and the Realtor’s short sale Team, concluding a short sale is no easy task. In addition to all the carefully crafted and targeted marketing that must be done to expose the property to the right Buyers, the added burden of getting a reasonable and acceptable offer and hoping that the Buyer’s expectations are correctly managed by the Buyer’s Realtor, complicates the offer, negotiation, sale and closing process. There are many excellent Realtors who have learned through tough experience how to navigate the stormy seas of a successful short sale. But there are many who are woefully unschooled. They may have participated in one or two unsuccessful short sales and have no idea how to guide their Buyers through the process. As a Buyer, if you think purchasing a short sale property can net you the best deal, be sure your Realtor thoroughly understands the short sale process before you start your dream home search. Remember, the Seller wants to sell you their home… but is not in control of the process. Their Realtor better be schooled, experienced and savvy or the sale process with the Seller’s Lender will fail. Lose-lose.
Buyers must keep in mind the Sellers are losing their home. They are under a lot of stress. They have no control over a difficult situation, are being continually harassed by their lender’s customer service department or foreclosure department despite the fact they have a short sale in process in the short sale department. They receive letters and phone calls regularly from disconnected clerks, lawyers representing the Lender, or collection companies representing the Lender (or the Investor in the background that actually holds the mortgage,) asking the Seller to pay up, make a deal. When the Seller explains they are working on a short sale with the lender’s short sale department and ask “why don’t you know this, isn’t that information in your system,” they are told it will be noted. Then three or four days later another person calls and the same conversation starts all over again.
You would think after several years of short sale processing, the many lenders and investors who own or buy defaulting mortgage packages at discount prices in order to successfully profit from a sale would have developed a coherent system for short sale processing. Unfortunately, for the most part they have not. At the same time, with short sales having become such a large segment of the residential home resale market you would think Realtors would have learned how to correctly manage and execute a sort sale and manage their Buyers’ and Sellers’ needs and expectations.
Whether you are buying or selling a short sale property, the process is arduous, often disjointed and not always pleasant for either party. So a word of caution, because with the right Team assisting you, your short sale can be successfully completed with a minimum of added stress. When choosing a Realtor to guide you through the short sale process, be sure they are well schooled, experienced and backed up by a Team that has the track record of successfully closing short sales. If they do, helping you through the process by both correctly executing each of the many added steps in the sale process and helping manage expectations with all parties will get the short sale job done.
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