LET'S GIVE SOME CREDIT TO FOLKS THAT GOT THE SHORT SALE TO THE CLOSING TABLE.
If you read the saga of my Short Sale adventure for the past week, you'll be interested to know that we did close. If you missed that post, just look at what we were faced with on the 15th of April. See HURRAY - IT CLOSED!
Who are the parties involved?
- Seller
- Seller's Agent/Broker
- Buyer
- Buyer's Agent/Broker
- Seller's Lender(s) and or Servicing Company(s)
- Buyer's Lender
- Title entity.
- Home Inspector if included in the Contract of Sale.
- Termite Inspector if required by buyer or buyer's mortgage company.
BRINGING EVERYONE TOGETHER. That's a lot of parties to bring together. However, agents who are experienced with case management see this list of parties as "routine". With a Short Sale, nothing is routine. Closing a Short Sale is a Herculean task that requires a lot of hard work on the part of all parties involved. The buyer's agent has the task of keeping the buyer in the contract because, until the seller's lender provides the contract approval, the buyer can walk. Their earnest money doesn't get deposited until the seller's lender has approved the sale. The date for closing is included in the seller's lender's approval letter. At that time, and only until that letter is received, does the time run for deposits, home inspections, termite inspections, etc.
I have read that only about 10% of Short Sale listings ever make it to the closing table. Based on the Short Sale referrals I make to my Broker Network and the ones I have brokered over the years, I believe that is a fairly accurate statistic. The reasons would be many.
- Banks let the property go to foreclosure.
- Sellers not able to establish "hardship". This buyer's job was relocated to a southern state.
- Sellers not willing to accept any deficiency payments. Seller executed a note for $15K for the 2nd.
- Listing agents not experienced with Short Sale process.
- Listing agent failure to perform "due diligence on seller's loan(s).
- Buyers not prepared to wait for the process to work through. My buyers were the soul of patience. Of course, we did continue to preview new listings and stay on top of the market.
- Changing market while awaiting for the final bank "approval".
- Many agents don't show Short Sales because of the propensity of the seller's bank to reduce the agent's commissions.
- The "Third Party Contingency" requires the buyer to lose many of the consumer protections found in normal real estate contracts. This property is in good condition with minor repairs needed.
- Although reading and signing the "as is" clause of the Short Sale contingency, many buyers still expect the seller to make repairs.
- Although advised of the necessity to have patience, buyers often give up and move to different properties they believe will close faster with firm terms and conditions in a normal Contract of Sale.
- Buyers' lender not available timely to provide financial follow through demanded by the seller's lender.
- Buyers using lenders not acceptable to the seller's lender due to inability to assure funding.
- Buyers writing offers with short closing dates, repair conditions, offers below the seller's desired net.
SO MANY THINGS THAT CAN GO WRONG. IS THERE ANY WONDER THAT SO FEW CLOSE??
Some things that help Short Sale contracts get to the closing table is good communication between the listing agent/broker and buyer's agent/broker. Communication between the seller's lender and the seller's listing agent is often not reliable.
SO, WHEN A SHORT SALE DOES CLOSE, I LIKE TO THANK THE FOLKS THAT MADE IT POSSIBLE.
Thanks to my buyer's loan officer. I did recommend this loan officer to my buyers along with two others whom I know well and have closed many sales. One just couldn't match the rate offered by Bill and the other didn't return the buyers phone call the day they were shopping rates and selecting a loan officer.
Bill Hylind is the hero in this transaction. He exhibits all of the qualities I love in a good loan officer.
Bill Hylind answers his phone when he's at his desk or available by cell.
Bill Hylind provides GFEs and TILs to the buyer AND to the buyer's agent throughout with revisions.
The mortgage company is a major local company with direct lending ability.
The buyers changed financing type during the processing. Bill was on top of it with an excellent rate.
Bill Hylind is very experienced (I've known him for about 10 years) and has established good sources and routines with the industry (quick appraisal), processor and underwriter. When things need to move quickly, he knows how to get them done.
INTRODUCING BILL HYLIND.
Photo provided by Bill Hylind.
Bill Hylind
Chevy Chase Bank
Phone: (410) 872-8460
Fax: (410) 312-0301
wghylind@chevychasebank.net
This is the kind of relationship that I like with a loan offier. My buyers are very appreciative of the hard work Bill Hylind did for them and think that Lenn walks on water for recommending him.
Courtesy, Lenn Harley, Broker, Homefinders.com, 800-711-7988, E-mail.
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It is unfortunate that this type of success with short sales is the exception to the rule. But I am sure if we can give the banks enough money, that will fix everything, right?
Mark. You old cynic you.
I thought that was my job.
Hi Lenn~ Yes, everyone is important in the transaction. Having a fantastic loan officer is key. What I can't understand is why professionals do not answer their phone, or at least call back within a reasonable amount of time!
Vickie. I've never understood that either. This particular listing agent would sometimes return calls and sometimes. . . . . . .
Lenn - It definitely takes a team effort working with short sales no matter whose interests you are representing. This same dedication and commitment should be applied across the board with all our clients and partners who are involved in any type of sale.
Great article by Bill Lenn, and the point of excellent communication between the two agents cannot be emphasized enough. When it is great the transaction goes so much more smoothly.
Donna. Indeed. This is the way we work with all of our clients. It's just a tad harder with short sales.
Gary. The article isn't by Bill. It's by me about Bill and thanking him.
Lenn, WOW only 10% make it to Closing. I guess I have been extremely fortunate that the ones I have been involved with have Closed. They were not easy, and a couple of them almost did not make it there, but everyone so far has Closed.
I don't walk away from them, but I don't look forward to them either.
George. Good for you. Imagine being a listing or selling agent dealing with the seller's bank.
Great post, Lenn...and Kudos to Bill! We're seeing a rise in the %%% of short sales that are actually getting to closing. Hope springs eternal that banks are finally getting the idea that it generally costs less to take the loss up front as opposed to hanging on, spending all that money, and still EATING the house...not to mention the time invested by too few staff with too little experience!
Judi. I believe that some banks are getting better. They still have the same problems of "mitigators" or "negotiators" who don't know how to sell real estate.
Lenn, when they finally close it is surely a happy day for many! I still don't understand why the lenders want to dilly dally when they have an eager buyer who's approved with a legitimate lender. Bill is a gem that I know you'll keep in your speed dial!
Connie. We never know the seller's motivation for botching these things. Seems to be that once they qualify the seller for Short Sale, they should be doing everything possible to expedite these sales.
Indeed. Bill is a jewel. I recommend him to the agents in my network regularly.
Lenn- That is awesome that you closed and that you had a great lender! We just had Jeff Belonger save a deal for some buyers our buyer agent was working with. They just closed on a short sale a few days ago.
We close all of our short sales. We may not close with the first buyer that makes an offer but eventually they close. 10% closing ratio is unacceptable to us. We just don't give up and we know what to put on a HUD! That is what usually kills the deal around here, listing agents don't even look at the HUD or don't know what needs to be on the prelim HUD then wonder who is going to pay for outstanding taxes, liens, HOA's etc!
Katerina. You pointed out one of the hazzards of agents who do not understand short sales taking the listings.
The listing agent for this property made a $10,000 mistake on the HUD-1 and caused another 4 week delay. Sadly, this agent and too many are quite Cavalier about such mistakes. They don't proof their work and when a money mistake is made, they expect everyone to just go along.
My buyers were not going to "just go along". If they had lost this house, they would have proceeded against the listing agent. When noticed of that likelihood, things started to move rather quickly. Sad but true. Agents work harder when they know that they will be held accountable.
Hi Lenn... can you share what kind of 10k error could get all the way to the HUD to delay closing ?
I am dealing with a few short sales now- some going faster than the others and I totally agree with your post- it takes a great team working behind the scenes to make a difficult process go more smoothly.
Lenn good to hear you made it to the closing table. Like Katerina I have had 100% success so far. I know this is an exception to the rule though. You want to borrow my rabbits foot:)
At the end of the day there are those that close so I guess instaed of saying well FINALLY we should take a positive attitude and thank the folks that make it possible. Good post
Great endorsement for great service. We all should be working towards the goal of closing but sometimes it feels like you are swimming upstream without anyone else wanting theat goal. Congrats on the closing too.
Lenn - They claim that this will be the year of the "Short Sale" and that we will see a noticable increase in the percentage of successful transactions. We will see as the Fall approaches as to whether or not an increase is noticeable.
You are 100% correct if you have an experienced and professional LO in your corner just about anything can get to the settlement table.
Lenn - way to give credit where credit is due, and thanks for keeping us up to date on this saga, hopefully we have all learned a few things.
I have enjoyed and learned from your short sale saga and glad it had a happy ending. Kudos to Bill, too.
There are a lot of complications to getting a short sale closed. Nice of you to give kudos to your loan officer for getting the job done.
Nice to give props to the poor loan officers out there who do a great job.
Hi Lenn! (Re: Chevy Chase Bank. I was told they never did the Sub-Prime Loans! If true, they stand head and shoulders above the others. And should get some credit-where-credit-is-due).
Short sales and REO's are currently moving in our market, so I appreciate your sharing your experience. Navigating this learning curve through trial and error can be frustrating. Makes you miss 2005, when it was so important just to be first and fast! Elizabeth
Lenn, that's a nice endorsement from you to a man that did a fine job in helping close this transaction. Good post pointing out the 'land mines' involved in closing a short sale. Alot of it is patience, which seems to be in short supply. Knowledge of the system too.
It's actually good to know that so few short sales make it to closing. I have blamed myself in the past for not being able to keep my buyers focused - they just lost patience. I have another offer going now for a foreclosure, and my buyer's lender doesn't answer the phone. And you can't leave a message because her mailbox is full!!!
Lenders are definitely the unsung heroes. A good one is worth his/her weight in gold and a bad one not worth the paper on which their pre-approval letter is written!!
I keep hearing the banks are going to make the short sale process easier! Is that one of those myths like the simplification of the tax code?
Communication: Even MORE critical in a short sale transaction. I am in the middle of one right now. The buyer's agent prepared her for the process before they made a very fair, uncomplicated offer on my listing. Now, if the bank agrees, we will be headed to the closing table, instead of the foreclosure auction!
It is sooooo important to recognize the people who took part in the transaction. It takes hard work from all of us. Congrats on your closing.
Lenn - BRAVO! OMG! A Realtor who actually appreciates the hard work that an LO provides for a client. Actually, I'm not surprised by your post at all. I'm sure you're very appreciative to the people you know, trust and respect. That's the way it should be.
Like you, I have a few Realtors that I know, trust and respect highly. I've been working with them for years because of the way they treat both me and my clients. It's because of those relationships, that I don't refer my clients to anyone else.
I don't care how good you say you are. If I don't know, trust and respect you, you're not getting your paws on my clients.
Like many others, I also have had 100% success with pre-foreclosure sales. But I have changed my strategy now and as a Certified Loss Mitigation Specialist, am helping more people KEEP their homes, rather than being forced to sell them or be forced out in a foreclosure situation.
I just wanted to make note of one comment that you made - yes, it is true that the bank normally will sign only one document pre-closing. That is to say, they will sign either the offer to purchase or the purchase and sale agreement (in MA, we have both since we do not use escrow companies to close). I always recommend that my buyers put down a minimum amount of cash with the offer to purchase. This is to protect them because if the deal doesn't close, or if they can't wait and walk-away, then their financial loss is minimized. Also, it is not easy to get the banks to release escrow once they put it into their account.
Martin. My buyers' earnest money goes into MY escrow account.
Donne. Indeed. I applaud them when they are good and drop them when they are not.
Jennifer. Thanks. Everyone worked like busy beavers for a week.
Linda. Which is the best thing about short sales.
Gene. You old cynic you.
Pat. I have pretty good luck. Of course, I'm a pure pest from the day they get my buyers in their file.
Diane. That's all to typical.
Lyn. I understand the process very well and advised my buyers all along. They are the real heros in this sale.
Lenn: Having a lender you can trust and who can get the job done, there is nothing better!
That's phenomenal team work!