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I represent the buyer, and the seller holds a Chase mortgage. Their agents are great, but the negotiator is typically coy, giving no concrete answers.

Buyer has been U/c for $143,000, which was the H& B offer in a multiple offer situation in April
(listed at $149, then $139K for a month) Atlanta real estate market is bouncing UP.

The mortgage balance is from a Chase conventional refi of 201,000 in Feb 2012

Based on BPO, Chase has countered contract for $158,000 (the house is worth it).

If we counter back, it goes back to the investor and might get tied up a lot longer, and the F/C is looming in July/Aug

If we accept, we can be on the road to a closing - IF our buyers can get the money.

This extra $15,000 might not be doable for our clients - they will have to move mountains and we (their agents) will have to give up all of our commission to get them the house at this price, but do not them want to lose it.

Is it worth a shot to counter? What is the typical Chase experience with counteroffers? Once we are at this point in negotiations, do they usually accept or reject counters quickly, or could it be another 2-8 weeks?

Please advise, we need to respond for Monday.

Seller had a second mortgage and showed listing agent a release; so it seems Chase is the sole lienholder

Short Sale Road Rules: Getting Buyer and Seller on Same Page

One of the most neglected, and yet, most important part of a successful short sale is getting both buyer and seller on the same page.  This may stem from the traditional way of thinking on a traditional “retail” sale:  It’s “Us against them.”  This does not apply to short sales, and if you can over come this mentality, your closing success will skyrocket.  Getting the short sale approval is only part of your responsibility; the other part is getting your buyer to the closing table. This is how I do it:

Locking the Buyer Down: The Stick

As I have gone over in my other articles, locking the buyer down into an airtight commitment is part of my “Rules of the short sale.” We do not allow a buyer to have any “outs.” To recap, here are the “Rules:”

1. 90 day contract close date-We need enough time to get approval
2. Ernest money up front
3. Inspection time normal 10 days (NO “upon lender acceptance” allowed)
4. Attorney review normal 5 days (NO “upon lender acceptance” allowed)
5. Proof of funds for cash buyer
6. Mortgage Pre Approval (NO Pre-Grades from loan officers-only banks)
7. Buyer agreement on use of professional negotiator

These rules are non negotiable.  If they are refused, we recommend to our seller that this is not a legitimate buyer and we get another offer.  Period.  Trust me, a buyer that refuses is a buyer that will find some excuse down the road to walk away or not close.  Don’t waste your or your seller’s time with these tire kickers.

Sounds like a tall order?  I hear it all the time…”Joe, out here in (pick an area) my buyers will NEVER go for these rules….”  WRONG!  They WILL go for it, because you are going to DEMAND IT! It’s just that you are going to do it in a way that brings the buyer over to your side and gets them involved and excited about the process. Remember, the time where agents could make money by being order takers is long gone! You need to put on your big boy (or girl) pants and go out and be a salesperson.   We accomplish this by giving them incentives to play by our rules.

The Carrot

We get our buyer on board by offering them incentives. The most obvious one is Price.  Remember, no matter what the objection, Price cures all ills.  Sounds simple, and it is, but like anything there is an art to it.  First, as a listing agent, it is your responsibility to do a detailed CMA on your listing.  We need to know what the true comparable properties are selling for, both distressed and non distressed. As discussed before, we have set our price aggressively at the very low end of the comp range.  This attracted buyers. Now once an offer has been tendered, we set about to find the most important key to our strategy, the buyer’s “All In” price.  This is where you have to get the buyer and their agent on your side. 

Coming Together

How I do this is simple.  I tell them that I have a duty to my seller to get this deal closed, and that if we work together, not only can I help my seller, but we can help your buyer as well. We know that it is in our best interest to make your buyer happy, and to get a great deal for them.  This is why they need to be committed and honest with us.  Remember, WE HELP OUR SELLERS WHEN WE HELP THE BUYERS BUY.  This puts the deal in perspective, and softens the edge a little so we get a more honest answer when we ask for the ALL IN price.  As explained before, no matter what offer was tendered, we need to know the buyer’s absolute, top dollar, price, fees, extra costs, everything price.  This is the ALL IN price.  Once that is established, I then like to ask the buyers to REDUCE their offer by 5%-7%.  You heard that right.  I said drop the offer.  This accomplishes two if things:

1. It gives us negotiating room with the seller’s lenders
2. It gives the buyer and incentive to stick in the deal.

The possibility of a discount is a powerful motivator for buyers, and once you show them that you are allowing them this opportunity, most buyer objections melt away quite rapidly.  In fact, they become your new best friends.

Now, I know many of you are telling to “Hold on, how is this benefiting our seller..” Well, again, we help our seller when we help our buyer buy.  What the seller owes is irrelevant.  Our objective in a short sale is not TO GET THE HIGHEST PRICE, BUT RATHER TO PUT THE SELLER IN THE BEST POSITION TO CLOSE. Of course, we have to be quite clear to the buyer that by lowering their offer, they must be willing to bump it back upwards should the lender counter.  This also means the buyer should be ready to bring a little extra cash to the table to buy out a seller deficiency on a second, pay ancillary fees, or cover any seller cost not paid for by the seller’s lender.  As long as our total amount stays below the ALL IN price, we should be good to go.  If you do this right, you will close at a number somewhere between the low offer and the ALL IN price, and everyone will think you are a hero. If, by chance, we end up beyond the all in price, most of the time it’s close enough that you can negotiate some sort of settlement. For those of you who can’t believe that the seller’s lender will go for this…they can and they do everyday.  What some of you don’t realize is that most investor guidelines allow for up to a 20% variance from appraised value if you know how to work the short sale right…hence the insistence of using a professional negotiator.

Remember, short sales are a strategy.  You should plan ahead because if you don’t, you will be doomed to react to lender actions and that, my friends, is why most agents fail at short sales.  Get the buyer on board and the rest of the deal will follow.

For more Short Sale Road Rules and information about the author, please visit our Facebook Fan Page at http://www.facebook.com/ShortSaleProcessor, and our website at www.josephalfe.com or www.ssprocessors.com

Can not stress this enough.....EVERYTHING on a short sale is negotiable, including ANYTHING that comes over on an approval letter.....

If you or the Seller does not like wording, commission amounts, or short sale consequences, then ASK THEM TO CHANGE THE LETTER!!!!

Most will if you negotiate properly.

Now go kick some butts!!!

Ben Benita, Speaker, Author, Radio Guest

BBenita@Comcast.net

• "I am outraged that we spend twice the time and work, sometimes working 12 months on a short sale deal and AUTOMATICALLY thelenders reduce our commission because they know we are hungry to makeany commission. They have us by the short hairs and they know it. WENEED TO STAND UP AND FIGHT BACK. We didn't create this mess, theydid!!! What can we do?"
  

1. Charge a flat fee at time of listing. The fee is for listing the property and the commission is for selling it. Getlegal advice on how to handle this***.
   
   
2. I guarantee the co-broke amount I offer BUT I take a larger piece of the pie if it's a full commission. If I get lessthan full commission then I may actually make less than the sellingagent. Their percentage remains the same regardless of how much I get.So on the average it works out to about the same. Make sense?
   
   
3. Always separate the Broker's commission and the agent's commission on the preliminary HUD. Let the lender know thatthe commission is being split. Lenders want to allow less if the sameagent is on both sides of the transaction. Make sure they know thateven though this may be the case there are still 2 parties or moregetting paid. Show them where the money goes.
   
   
4. NEGOTIATE!!! That's right. Just say NO!! Lenders ask for reductions because they know in most cases the agentwill just roll over and accept it. Don't be that agent. You will besurprised how easy it is to get them to give if you don't.
   
   
5. Have the Seller sign a note. Why not? We can get paid a portion of our commission over time. The lenders do it. Why can't we?