Getting the Short Sale approved (two loans) can be a win-win-win-win-win. That’s win x 5
Well, it’s getting more and more complicated and in order for a short sale with two loans to happen, the second lien holder has to drop the lien and if they don’t, there’s no sale. Unfortunately for the seller, and the REALTOR, both of the lenders (lien holders) have some control. I just want to point out that even though everyone feels like they’re losing, given today’s set of circumstances and the reality of the real estate market, everyone is winning. Well, kind of. Hear me out. The first lien almost always realizes more, and some would argue much more, out of the Short Sale as opposed to a foreclosure. The reasons are simple. No expensive legal battles (the foreclosure process). No holding costs once they own the property (maintenance, taxes, utilities, etc). No repairs to get the property in-shape to market it for sale. No vandalism or liablity on a vacant property. No “cash-for-keys” or lengthy eviction process. Depending on their equity position and where the property is located, it has been estimated that the first lien holder may net an additional $100,000.00 by utilizing the Short Sale process as opposed to going through a foreclosure. Sounds like a “win” to me. Now, for the second lien holder, if they cooperate, even on a very basic level, they will net something. Under the current set of “circumstances” they almost never have any equity positon left. Which means that if the first lender forecloses, the get zero dollars. So, what we’re seeing in daily practice, is that the first lienholder usually allows the second lienholder to net somewhere in the neighborhood of $3,000 to $5,000. to get them to cooperate and remove their lien when the property closes escrow. Sounds like a “win” to me. You do have to be careful here as some second lien holders are now trying to negotiate “outside” deals with the homeowners to net more to them but it’s illegal unless you have full approval of the first lienholder. You can always ask Mike & I for more information on this point. Now for the seller. You may get to negotiate with both lien holders so that when they report the “payoffs” to the credit reporting agencies, they report it in such a way that won’t“ be as damaging to your credit report and subsequently, your FICO score. Sounds like a “win” to me. You can also ask Mike and I for further information on that. And for the REALTOR, it may not feel like a “win” because it’s 2 to 3 times the amount of work, and you’re at the mercy of third parties that have no real interest in the transaction. But you should eventually get a commission. Sounds like a “win” to me. And for the buyer. You only have to negotiate with the “real” owner/seller (subject to the lienholders approval) and generally not compete with multiple offers bidding the property way up over asking price because the property is usually listed closer to market value. Sounds like another win. Even with all of these “wins” for everyone involved, the process can be frustrating and lengthy. But it always starts with the first step. Go for it !!!!!
wallace…
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