By Dave Robison
A short sale would have you think it’s going to be a quick and short closing. The problem is they all have too much Junk in the Trunk. In a race, their tail end is dragging along the ground, which makes the vehicle go about as slow as my kid in a wagon.
Here are two examples of what is going wrong and what you can do about it.
First case involves Aurora. We submit an offer in to the bank on our listing from a buyer. It goes 60 days or so before we get a negotiator from the bank. In the meantime a couple comes in with an offer for higher than what the current offer is. Aurora approves a sale price and we should be good to go right? Wrong!
The bank will only take the offer they reviewed. You can’t switch it out for a higher offer. If you do, you have to cancel the offer, resubmit another offer and guess what …. wait another 60 days for a negotiator. Too much junk in the trunk! All of these policies in their trunk are making the banks lose even more money.
Second case involves Fannie Mae. Banks appraisal at $230,000. FannieMae wouldn’t accept less than $270,000. Really? That’s right, Fannie Mae won’t take anything less than $270,000 when the purchaser owes $255,000. That is just plain silly that they think a buyer is going to come up with $40,000 more than what it appraises for.
This home got foreclosed on. Today, it is on the market for the same price it could have sold for 8 months ago. They could have cut their losses 8 months ago but now their cut is getting deeper and deeper.
Third case from various lenders. They approve the short sale but want the seller to sign a note for the difference. The sellers are going into bankruptcy. This doesn’t make any sense. If they could make payments for the difference, they would rent it out and make payments for the difference.
I have three deals right now with different banks that the banks want a note and the buyer won’t sign. The buyers attorney said don’t do it. We are doing bankruptcy.
With junk in the trunk, they aren’t able to maneuver quickly. You have to build the road so it’s straight enough for them. Good news is that you have time. On cases like Aurora, here is how you work with the bank:
1. Make sure you know the guidelines for submitting offers to the bank. You may need to take a class like CDPE class or one that NAR suggests. Your job is to know what you are doing and not waste the banks time. Incomplete packets and unnecessary phone calls backlog the banks.
2. Don’t just submit the first offer you get. Negotiate and get the highest offer you can while making sure the buyer is fully capable of buying the property.
3. Follow through with the buyer and update them regularly to keep them in the game and keep them from buying something else. Make sure they know that they get first shot. If another offer comes in higher later? The bank won’t look at it so be sure to not lead people on that if they come in high they might get it. Let them know they will be in second position.
4. Meet the appraiser or broker doing the BPO at the home. You may know more than they do and your information will help them assess its value. Sometimes the broker doing the BPO or the appraiser doesn’t know the area nor the damages with the home.
5. Prepare people in advance that the bank may need them to sign a note. See if they are willing to do this upfront and set their expectation of it being a possibility.
And in cases that you get ones like the Fannie Mae one — yell for HELP! Join a short sale mastermind group and see what agents across the country are doing. Ask for a supervisor — you may need to wait for the offer to cancel and then retry again hoping it doesn’t get foreclosed in the meantime.
As the motto goes, “try, try, try again …”
What We Can do That Will Help Them
I’m absolutely baffled at the junk in the trunk with these short sales. Part of their problem is that they have too many agents not understanding the process calling them every day. They need agents with experience giving them good packages and making their job easier. This is the part that we need to do.
The other part is the banks need to empower their people a little more to swap out an offer and get it done. Resubmitting just wastes their time and money. Let’s make sure we do our part and as a result, they will have more time to work on their part.
Dave Robison, known as “Utah Dave,” is a broker of Robison & Company Real Estate.