Well, it has been another incredibly fascinating week at Seattle Short Sales. Let's jump right in and go over four recent Cases and see what we can learn:
MILL CREEK: The BPO we submitted compelled Wells to lower their demand by $85k
We submitted the short sale to Wells Fargo on 11/6. The offer was for $315k. The BPO was completed on 11/13. On 12/21, LaShonda from Wells Fargo countered our offer at $400k. That’s a full 25% more than the offer!
We explained to her that the property had been listed at $352k and that this was the only offer received since October 1st. We attached the property history. We asked LaShonda to review her counter. She said we can request a BPO dispute with the BPO department. We were told to provide a CMA to support the offer.
We took her up on the offer, but instead of a CMA, we submitted a BPO done by the listing agent. On 1/15, we received an approval letter with the contract sales price of $315k.
The lessons:
- Never give up, even if the lender’s counter is 30% higher than the offer price
- Use BPOs, never CMAs.
- All short sales are a negotiation, never blindly trust the lender.
MOUNTLAKE TERRACE: Don't give up even when Aurora tells you to come up by $116,000
We submitted the short sale to Aurora Loan Servicing on 11/11. Our offer was for $184,700. The complete package was received and assigned to a negotiator on 11/17. On 11/23 we were told that the offer was extremely low, and that they are looking for $300k.
Everyone in the transaction was disappointed to hear that news. However, the offer wasn’t officially rejected. We were told to expect an update on 1/17. On 1/18, Aurora countered the offer at $205k. We have since countered their counter at $200,500.
The lessons:
- Aurora is pretty good to their word regarding timelines for their response.
- Keep the buyer on-board, even when things look grim.
- Never give up, even if the lender’s first reaction is that your offer is $100k too low.
FRONTENAC: How to Pay the Excess Demands of the Junior Lien Holder
Quite often, on properties with multiple loans, the lien holders disagree on how much should be allowed for the junior lien holder. Typically, if the junior lien holder wants more than the first will allow, either the buyer, the seller, or the agents have to make up the difference at closing. A couple of years ago, this was a bit unusual, and figuring out how to put this on the HUD could be a bit challenging.
Things have come a long way. Today, Chase sent us an email, telling us that they were only allowing the junior lien holder $2,000. They knew that GMAC was expecting $5,000. Chase told us to have the buyer pay the difference and put it on line 216 from the buyers and line 403, credit to sellers.
In another transaction this week, Wells Fargo was in a junior position, and they issued a lien release letter that addressed this situation exactly. Here is their wording:
Wells Fargo will approve a short sale, in consideration of $3,000 from the proceeds of your sale. Please be advised that the Bank will not accept $3,000 in full consideration for the release of its lien on the property…the Bank must receive an additional amount of $14,500…the amount of the Additional Funds must be disclosed on the HUD-1.
So, they have created two kitties: The Sale Proceeds and the Additional Funds. In the end, the banks have found a way around the senior lien holder demands, and still have found a way to maximize their revenue.
The main strategy to address this situation is to submit the buyer offer at an amount lower than the contract sales price. If you can get the first lender to agree to that amount, then you have freed up some buyer resources to use to pay the excess demands of the junior lien holder.
GRANITE FALLS: The HAFA Request for Pre-Approval Works!
On 1/11 we submitted a HAFA RFP, along with a full borrower financials to Litton Loans. On 1/14, we received an email from Chiquita at Litton, asking us for a PSA with a HUD. We thought that the HAFA RFP did not work. Instead, in actuality, Chiquita ordered a BPO, which was completed on 1/18 and we are moving forward to getting a pre-approval from Litton. I think they liked our HAFA RFP form.
In a similar case, Wells Fargo received our HAFA RFP form, and quickly responded to us. They too, told us they needed an offer, but, like Litton, went forward and ordered an appraisal.
Well, that wraps up some of the crazier files from this week. Talk to you soon. Ross
Comments
Post has no comments.