Comment

Comment by Katerina Gasset on March 5, 2010 at 4:57pm

Donna- good luck, let us know how it turns out for you.

Comment by Katerina Gasset on March 5, 2010 at 3:09pm

Ben- Well, we can agree to disagree. The biggest bottle neck at most lenders and the biggest complaint we get from VPs at banks is that #1. Agents who don't know how to do short sales and then #2 Low ball offers and terms that will never fly. I don't know what state you are in and state law does matter in regards to strategy.
Here is we go to court with the highest and best offer- 99% of the judges are going to give us at least another 120 days to get the short sale done. If we go direct to VPs a week before a foreclosure with a GOOD offer and in line with market values 100% of the time we are able to get a stay of foreclosure auctions. If on the other hand, it is some low ball offer with 6% concessions- the judge is going to tell you to get real and the VP at the bank is going to say; bring me something I can work with, this one is so weak we won't stop the foreclosure with this one.
Here in Florida, most of our clients are well to do, the deficiencies matter a WHOLE lot because 80% of them are not even qualified for a chapter 7. Chapter 13 is not anything most financial savvy clients want to do.
We just got a new listing today wherein the seller is going to have to take part of deficiency but we will work on getting it traded it out for a promissory note and a nice chunk of cash at closing. He is well into the 6 figure income and is doing a strategic short sale., strictly business. This is the case for many of our sellers. Highest and best offer is the way to go in almost ALL Florida cases as we are a judicial state and we know SO many people who have not made a mortgage payment in well over 2 years and still live in their homes. Fighting against a foreclosure clock is very rare unless you take a listing a week before the foreclosure auction, which would not be wise on the part of the agent.

Comment by Steele V. Propp on March 5, 2010 at 11:01am

One other thought ( and forgive me if this had already been mentioned in the many replies here) is that the new lender may forbid a seller concession over a certain amount. Three years ago I had an REO listed and sold with a 3% seller closing cost concession. At closing the new lender contacted the title company and stated that their loan allowed only a 2% concession.

Now here the bank owner was perfectly fine with paying 3%. But they were not allowed to. They got an extra 1% and the buyer got the shaft. Or should I say the new loan officer did as he hadn't checked the restrictions and just assumed a 3% concession was normal.

The new lender may have restrictions. 6% is allowed by FHA but not by most conventional loans. They have had too much funny business in the past where buyers were getting the equivalent of cash back at closing.

Comment by Steele V. Propp on March 5, 2010 at 10:35am

I'm working on a Chase right now and Chase volunteered that they would pay out 3% in seller closing costs (or more accurately up to 3%). That is also their standard on REO sales as well.

I suppose one could try and dicker with them...

Comment by Ben Benita on March 5, 2010 at 10:34am

keep in mind too.....if an FHA Seller is Selling to an FHA Buyer you WILL be told the MAXIMUM Seller concession is 1%.....again, this too is negotiable....keep fighting for your clients guys!!!!!

Comment by Ben Benita on March 5, 2010 at 10:33am

It is almost ALWAYS a good idea to submit any offer, even low ones, to get the ball rolling and get bank valuations. If a Buyer wants 6%, as you pointed out, I would tell them they can likely only get 3% and inform them you WILL continue to market the property on your Seller’s behalf. As far as "highest offer" for your Seller, you certainly want this, BUT, priority number one should be avoiding foreclosure at all costs......then, worry about the deficiency. I have had other Sellers show concern over deficiency, but, when I ask them "What will you do if you get a $100k deficiency filed against you in the future" and let them answer (they most often say bankruptcy) they tell me the EXACT same answer when I follow up with....."So, you will do a BK with a $100k deficiency, what would you do if the deficiency ends up being $120k....." again, they ALWAYS say the same thing whether the deficiency is $50k versus $60k, $100k versus $120k, etc.

Comment by Katerina Gasset on March 5, 2010 at 10:26am

I don't understand why listing agents would ever even take offers with 6% seller concessions when most of the time you are going to get a counter back of 3% and sometimes less. This is not working in behalf of sellers if you are a listing agent. You are supposed to be getting the highest and best offer to net the bank the most money to lower the deficiency amount to the seller. It is the duty of the listing agent to understand the numbers. The more closing costs, the more loss in the net. Then the agents get all upset that the bank counters the price, but the net was too low to begin with so it makes no sense to take low offers or offers wherein the closing costs are too high. This is also why we require sellers to pay their HOA fees. A listing agent needs to know how to do a HUD1, how to move numbers around the HUD, they need to know what the market values are and then know how far they move that mark benefiting not hurting their sellers.

Comment by Ben Benita on March 5, 2010 at 10:26am

MOST of the time there are exceptions if you get in front of the right "genius" at the bank. Have the owner fill out a QWR (qualified written requst) asking who the ivnestor is. Get their contact info. and let THEM know what is going on and you should be ok. See if the loan is a portfolio (Chase owns it), gov. backed (Fannie or Freddie) or private (with an investor group). See if you have Tier 1, Tier 2 or Tier 3 approvals (technical stuff based on your NET offer being cleared through the investors "total loss", "offer to value percentage", or "current net to value". If Tier 1, you have only cleared one of these and could be in for a battle, if you have Tier 3, that means your offer is good and you should find them flexible. Tasha, on losing your deal, it is sometimes a good idea to have an investor put in an offer that can cover a few thousand dollars here and there whent he numbers make sense.

Comment by Kevin Donaldson 714-931-8500 on March 5, 2010 at 10:25am

Jeffrey, Fannie Mae/Freddie Mac cap maximum seller concession at 3% unless the buyer is puting over 20%, so why would they give more money than Fannie/Freddie would allow. It would never be able to be utilized. Good luck

Comment by Tasha Griffin on March 5, 2010 at 10:10am

Hi Lori,
I have 5 short sales with Chase right now, and from what I am seeing, when they say they will give NO MORE THAN 3%, they will give NO MORE. I have had 2 agents that I work with lose the entire deal because Chase would not budge. I'm seeing that with many banks. They cap it at 3%. I even asked them if the buyer could raise the sales price to compensate and be allowed more concessions....and the answer was still NO. Some banks will allow, but Chase will not. I am set to lose one over this if they cannot work it out. Good luck and sorry to be the bearer of bad news. :-)
TG

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