Short Sale Strategies

<p> My northern california based client took a new job in southern california and now it is obvious that the only way his home will sell is as a short sale (he is about $100,000 upside-down plus closing costs. </p> <p> He has not missed any payments on his mortgage and he is now renting an apartment in southern california with his wife still living in the present home. </p> <p> I have been advised that he should contact his bank to determine if they will accept a short sale but I have previously understood that this is a pointless waste of time until we have an offer to present with supporting documents to justify a short sale. </p> <p> Any thoughts on this one? </p> <p> Bernard Gibbons </p> <p> +++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++<br /> Bernard Gibbons, Realtor, e-PRO Certified Internet Specialist<br /> J. Rockcliff Realtors, 15 Railroad Avenue, Danville, CA 94526<br /> Phone (925) 997-1585<br /> <a href="mailto:bernard@bernardgibbons.com">bernard@bernardgibbons.com</a> </p>

<p> I have seen many pricing strategies and I would like to share mine. I also want to see what others are doing throughout the country and what the results have been. </p> <p> If a home is in the foreclosure process already, I list it at loan value. If it is not yet in foreclosure I list at 8% above loan value. I write into all my listing agreements a clause that allows me to systematically lower the price on the 1st and 15th of each month until an offer is recieved. Usually I lower it by 3% each time but if the sale date is near I somtimes get more agressive. All my listings expire on the 30th of each month this way I don&#39;t have to figure out when to reduce prices or contact clients about expiring listings. I also write them for one year out to be on the safe side. </p> <p> I also advised the seller not to expect much at the begining because we have to show the bank a concerted effort to get full loan amount for them. </p> <p> I haven&#39;t had a problem yet, however you must really pay attention to dates because the values have dropped so much, you always don&#39;t have the time necassary. </p>

<p> Do you generally open a pre-escrow when working a short sale or wait until the buyer&#39;s agent opens escrow once an acceptable offer is received? </p> <p> Bernard Gibbons </p> <p> +++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++<br /> Bernard Gibbons, Realtor, e-PRO Certified Internet Specialist<br /> J. Rockcliff Realtors, 15 Railroad Avenue, Danville, CA 94526<br /> Phone (925) 997-1585<br /> <a href="mailto:bernard@bernardgibbons.com">bernard@bernardgibbons.com</a> </p>

<p> I&#39;m trying to get my head around the newly signed bailout plan and how it will effect my business and short sales in general. Since the government will buy the foreclosed property, does that mean that banks will be more willing to now foreclose rather than sell short or modify a loan? If the government is buying the properties cheap, are the banks still better off selling short? How will the government manage all these vacant properties- will they just sit until they can sell them at a profit whenever that may be? Will the government fix them up and have their own Realtors through a Resolution Trust Company type of company and do they work with Realtors? I wasn&#39;t selling when this happened in the 80&#39;s so I&#39;m not familiar with how that worked and hope someone on this blog has some insight into how all of this will affect us realtors. Thanks in advance for your thoughts. </p>

<p> Does anyone have a direct contact into Wells Fargo&#39;s Property Preservation dept? (These are the people who secure the properties, change locks, etc....) </p> <p> </p> <p> THANKS! </p>

<p> I have a buyer who has made a cash offer on a short sale property. I understand from the listing agent there is another offer as well. We priced our offer 10% below market , however the listing agent wants the seller to counter all offers. Aren&#39;t all offers as presented supposed to be sent to the bank to either accept or counter? The listing agent has never done a short sale and is negotiating with Washington Mutual who holds the 1st and 2nd. How should I proceed? Thanks for any advice. </p> <p> Jacque Baker </p>

<p> I have been working this short sale for almost 5 months. The Lender is Countrywide...not the problem. I have been having a lot of trouble with the PMI company asking for a very high promissory note from the Sellers...Any input on this? Lori </p>

<p> The United States Tax Court has affirmed an IRS decision that the taxpayer<br /> owed taxes for the amount of debt discharged by a lender from a short sale of real estate. <strong>Stevens v. Commissioner.</strong> </p> <p> George Stevens (&quot;Taxpayer&quot;) and his then-wife, Sharon Stevens (&quot;Spouse&quot;), purchased a residential property for investment purposes for $256,000. The property needed work, and so the plan was for the Stevens to put some money into the property and then either sell or rent it. The purchase was financed with a mortgage from Homecomings Financial (&quot;Lender&quot;). </p> <p> Shortly after purchasing the property, the Stevens were unable to make a mortgage payment. In order to avoid foreclosure, the Stevens entered into a short sale agreement with a third party, with the approval of the Lender. A &quot;short sale&quot; occurs when the lender agrees to accept a sale price lower than the value of the loans secured by the property. The Lender imposed a number of conditions on the short sale, including limiting the amount of commissions and closing costs. The sale generated $181,461.31 in proceeds for the Lender. </p> <p> Following the sale, the Lender sent the Taxpayer a Form 1099-C stating that it had canceled $74,494.96 in debt. A duplicate form was also sent to the Spouse (the couple had separated by this time). Neither the Spouse or the Taxpayer reported the discharged debt or property sale on their tax returns. </p> <p> The Internal Revenue Service (&quot;IRS&quot;) found that the Taxpayer&#39;s 2003 tax return had a deficiency of $21,323 and imposed penalties of $4,264 for the Taxpayer&#39;s filing of an inaccurate return. The Taxpayer challenged this determination. </p> <p> The United States Tax Court affirmed the IRS&#39;s decision regarding the Taxpayer. In general, a taxpayer is required to include within his or her income all discharges from indebtedness. A sale of a property with a mortgage is generally treated as a sale upon which a gain or loss is realized. There are exceptions to this rule, such as when the sale resulting in the discharge of indebtedness is part of a bankruptcy case, or if the taxpayer is insolvent, or if the indebtedness is a qualified farm or business real estate debt. </p> <p> While the Stevens claimed the property was for investment purposes, there was insufficient evidence for the court to evaluate whether the Taxpayer qualified for the business real estate exception. There also was insufficient evidence to determine whether the Lender intended to make a gift to the Taxpayer by forgiving the delinquency. Therefore, the court agreed that the difference between the short sale price and the loan amount, or $74,494.60, should be treated as ordinary income to both the Taxpayer and the Spouse as a discharge of indebtedness. Thus, the court upheld the IRS&#39;s determination that the Taxpayer owed taxes on the discharge of indebtedness. </p> <p> Source: <a href="http://www.realtor.org/letterlw.nsf/pages/1008stevens?OpenDocument&amp;WT.mc_id=LS100808&amp;CAT=Legal">http://www.realtor.org/letterlw.nsf/pages/1008stevens?OpenDocument&amp;WT.mc_id=LS100808&amp;CAT=Legal</a> </p>

<p> I have the buyers for a short sale. The lender is Countrywide. Included in our offer was $5,000 in seller concessions for closing costs. Our offer was an overbid of $5,000 to cover this concession. </p> <p> The negotiator is a lawyer. We were advised that they had a verbal approval and we could proceed with the transaction. I double and triple checked that the buyer&#39;s closing costs were covered and was assured at all times. </p> <p> My buyer lives in a 3rd floor apartment now. He recently had a heart attack, so we have put this closing on a fast track. </p> <p> Yesterday, 3 weeks after the verbal acceptance, we received the formal acceptance. In this, they allow $0.00 seller contributions to assist in the closing costs. Without the concessions, my buyers can not buy the home. As of right now, my sellers are screwed... big time! </p> <p> A previous offer on this home was declined. In that offer, the buyer had asked for 6% in seller concessions but Countrywide&#39;s response said that they would only allow 3%. Our offer on this home is $150k. Our $5,000 request for closing costs is close to this 3%. But this time around, Countrywide is saying NO! </p> <p> I have a call into the negotiator to suggest that he escalate this transaction to a higher level loss mitigator for possible approval. Do you think this will work? </p> <p> Any suggestions are welcome! </p>

<p> I have done several short sales and worked with several banks and like everyone else I continue to be baffled by what I see. In Minnesota we are a redemption state, which means after sheriff sale our homeowners have 6 months to redeem the property by selling or refinancing. This typically is the best time to do a short sale because the banks dont want these homes back on foreclosure, or do they? I was told today by US Bank that they will not do a short sale after the sheriff sale. Is that right, has anyone done a short sale with US Bank during the redemption period? I am dumbfounded that they would take a stand like that and foreclose on a property that has a legitimate purchase agreement. They havent even seen the purchase agreement or the dollar amount. Any help would be greatly appreciated. Thanks </p> <p> Tara O&#39;Brien, Realtor<br /> Edina Realty Downtown Mpls<br /> 612-810-7728<br /> <a href="mailto:taraobrien@edinarealty.com">taraobrien@edinarealty.com</a><br /> <a href="http://www.taraobrien.com">www.taraobrien.com</a> </p> <p> </p>

<p> We are having some trouble contacting Washington Mutual lately with the numbers that are published, 866-926-8936 or 866-WAMU-YES. </p> <p> Does anyone have a good number to contact the loss mitigation department for WaMu? Maybe even a contact name? </p> <p> Please let me know, </p> <p> Thanks, </p> <p> Dave Walker, e-PRO REALTOR </p> <p> Short Sale Specialist </p>

<p> in a non recourse state. </p> <p> hi all, my first post tho i&#39;ve been reading and learning from all. I&#39;ve done about 30 short sales,only 2 have gone back to the bank due to the sellers unwillingness to go through w/the short sale; but now I have TWO banks on two different properties who want the seller to sign a note at close. In both cases the banks wanting this are 2nds but are purchase money 2nds and therefore are non-recourse. I&#39;ve used every arguement I can think of, but so far they are sticking to their guns. </p> <p> Any suggestions/ideas/knowledge our there? I&#39;m in Northern Calif/ Sonoma County area </p>

<p> I have a short sale in process with Countrywide and learned a few things in talking to their representative that might be useful to other agents who haven&#39;t done a short sale with Countrywide before. </p> <p> 1. If the foreclosure auction has already been scheduled, they want five days notice to postpone it, but will make an effort if you have an accepted offer and the time is shorter than that, as long as the items in 2. below happen really quickly (same day). </p> <p> 2. They will want the following things faxed ASAP: listing agreement; executed contract to purchase (or P&amp;S); a hardship letter outlining why the seller hasn&#39;t been paying or can&#39;t pay; two recent pay stubs for each employed person on the loan; a mock HUD 1 (seller&#39;s side). They also want the seller&#39;s financials updated right away. And they want assurance the buyer is pre-approved. </p> <p> 3. All that having been done, the best you can do is wait. They&#39;ll give you a phone number to call for a status update. </p>

<p> I am aware that lenders often pay separate parties, usually law firms, to handle the short sale negotiations. For this, they get paid, typically, 1% of the sale price, exclusive of the Realtor commissions. </p> <p> I want to have a contract, separate from the listing agreement, with the seller, authorizing that I get paid 1% to negotiate the short sale. </p> <p> If I negotiate my own short sale, I will get paid half of the Realtor commission plus the 1% for the negotiation service. It also allows me to negotiate a short sale for someone else and get the negotiating commission separate from their Realtor commission. </p> <p> I have been asking some law firms for samples of their short sale negotiation contracts but have pretty much been stonewalled. </p> <p> Does anyone use of have a contract like this that they could share with me? </p>

<p> As I go through the Notice Of Default list from the county I am finding that most phone numbers that I get through whitepages.com or zabasearch.com have been disconnected. How do you guys handle that situation? </p> <p> Thank you for any input. </p> <p> </p> <p> Michael Fischer </p>