Listing an Under Water Home with No Hardship

How do you list an under water home with no hardship. If the Seller is willing to bring the "difference" to the table does the Buyer have to be informed? Does this have to be "announced" in the MLS? I think there will be more of these transactions and I want to address them appropriately. Has anyone heard of the lender reducing the debt when there is no hardship?

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Comment by Kimberley Kelly on June 7, 2010 at 6:28am
Don't get why you opened Escrow Evelyn, if the Demand letter conditions had not been negotiated in the Short Sale? In CA, I receive the Demand Letter, negotiate the terms/conditions with the Investors and ONLY IF my Buyer and Seller agree to the conditions, do we open Escrow and the EMD is wired into Escrow at that time. I also think it is wise to advise the Buyers at the time of the offer what could POSSIBLY be asked of them re: seconds, closing times, possible cancellations..that way everyone is on board and all info is up front.
Comment by Margaret C. Taylor on June 6, 2010 at 4:16pm
The 'stories' out there are amazing. We all have to be careful for our clients and ourselves.
Comment by Evelyn Santiago on June 6, 2010 at 7:44am
In my MLS system we only need to announce if it's a short sale, foreclosure or court ordered liquidation. Anything else is confidential between you and your seller.

Just price it correctly and don't expect the buyer to make up any short fall. I was just involved in a transaction where I think the listing agent did not do her numbers and we were told that the seller had to have list price because they did not have enough money to close. After giving them list price we were then told that to make the "deal work" the buyer would have to come in with $1900 and both realtors would have to reduce our commissions to 2%.

The buyer agreed relunctantly and so did I since I did not want my buyer to lose the home. The strange thing is that the closing did not happen because my buyer's lender failed to get the closing package on day of closing. The attorney told us that "if it didn't close that day the deal would be dead".

Buyer walked away thinking the deal was dead and renewed her apartment lease. Now she received a demand letter for not performing according to the contract and the seller wants to keep the earnest money. Seller was willing to close a week later but we found out on Monday when my buyer had already made up her mind that it was not meant for her to have the home. Now my buyer is furious that her earnest money is being hijacked and that she will have to get a lawyer to get it back.

So it's your job to make sure you price it well so that your seller has enough money to bring to the table without having the buyer come up with more money just because of the circumstances.

Hope this helps! Good luck!
Comment by Margaret C. Taylor on May 21, 2010 at 2:46pm
Thanks Kimberly, I did prep the seller that they may have to bring all, or some, of the debt to the table.
Comment by Kimberley Kelly on May 21, 2010 at 1:59pm
Short Sales can absolutely be done without hardships as Bryan commented. If I know it is going to be tough to get it approved, I ask my Seller BEFORE listing the property how much they are willing or able to put towards the second, or second AND first if that's the case. Then I put in the Agent info in the MLS that the Buyer needs to bring some additional money to the table for 2nd lien payoff and to keep that in mind when they submit their offer. If we all know ahead of time, what is owed, how much the Seller could feasibly pay-(wait for that Demand Letter of course)-then we have a general idea of where we can begin our negotiations with the lien holders. Everything is negotiable.
Comment by Margaret C. Taylor on May 19, 2010 at 5:52am
Thank you
Comment by Wendy Rulnick on May 19, 2010 at 5:41am
Margaret - The first part of your question seems to be how to handle a listing if the seller can cover the entire difference of an upside-down sale. In that case, it is not a short sale, and would not be contingent on third-party approval. I don't see why that would have to be announced in the MLS. Bryant answered the other part of your question.
Comment by Margaret C. Taylor on May 18, 2010 at 6:10pm
Thanks again. It makes sense.
Comment by Bryant Tutas on May 18, 2010 at 2:48pm
It really all depends on the sellers financial situation. If they have money WF will want some. If they don;lt then they may settle for a note.
Comment by Margaret C. Taylor on May 18, 2010 at 1:49pm
Thanks Bryant. Will this be possible if the funds are in the form of a promissory note? First and second are both Wells Fargo.


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