$30,000 Seller Incentive. WTF?
Someone please explain the reasoning behind this:
I have a Seller who is upside down in his golf community home. This guy has a 1st mortgage with BoA and a HELOC which was used for consumer debt.
He makes a healthy income, works for the #1 place to work in the entire Nation (Google it), has plenty of retirement, income, toys, cars jewelry etc. So much so that I told him a short sale would not be a good idea. He agreed and said he makes too much money and he honestly has no real hardship.
A few weeks later, BoA sent him a letter that he was already pre-approved for a Co-op short sale. Great! We can work with this.
A few weeks later, NDS called (on behalf of BoA) and said that the seller incentive will be just shy of $30,000 (actually $29,400 and change) and that they wanted to sell the home with the use of Auction.com.
I can understand a few thousand dollars as a seller incentive to someone who is down on their luck. A little something to help with the relocation costs, moving, food, school etc. I can understand tax payer dollars going to help someone in need.
But come on! $30,000 taxpayer dollars going to someone who already has more toys, food, cars and second homes than most people ever amass in their lifetime?
What is the reasoning behind this? How can anyone justify this insanity? And not to mention the large HELOC of consumer debt that was just wiped.
Can I invoice this guy $15,000 for 'consulting'?
Replies to This Discussion
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Permalink Reply by Short Sale Superstars LLC on
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Drew,
What is the value of the property? That typically has something to do with the incentive.310-564-6389
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Permalink Reply by Drew Ludlow on
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About $400k. And yes, they said the incentive is based upon the value of the house. But again, how does one justify giving a well-off individual a windfall of gravy?
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Permalink Reply by Kevin - Greenville, SC on
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Because it may cost them more to Foreclose and then Liquidate. A carrot now to avoid future potential larger losses later.
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Permalink Reply by Sam on
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The reality is that short sale is less destructive to the net asset value then foreclosure, that is true. That being said, the deal you cite above has less to do with a loss mitigation strategy and more to do with a money grab.
The large banks were hit with a multi billion settlement earlier this year from the "robo signing" scandal so they each had to set aside billions of dollars into a homeowner assistance account and subtract than cash from their income for the quarter and balance sheet...but, the attorney general left the fox with the key in his pocket for the hen house...and yes, this account full of cash is the hen house.
The large banks, with BOA leading the way, are going through their defaulted loan portfolio that been written down based on required OCC guidelines of loss expectation, and settling out those accounts for 100% ON THE DOLLAR, with the money from the homeowner assistance account!! Who cares if the homeowner needs or wants help, all they care about is the bottom line and they are allowed to settle out accounts that would not trade for more then .10 cents on the dollar for 100%. Don't blame them, they are only protecting their shareholders by creatively profiting any way they legally can, blame the idiot attorney general for coming up with such a ridiculously under thought out program.
Then of course you have a widow who was hit with medical issues and cannot live alone any longer, and who is upside down in their house has actually no choice but to sell, and the same bank will pursue a strategy of foreclosure with deficiency demanded or only approve short sale with large prom note because their loan is outside investor owned!!
Thanks again government for running to rescue us!! Please, just stay out of the way and let the market and common sense settle it out...
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Permalink Reply by Ben Benita on
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WAY too much to get into on here, but, simple numbers, ALWAYS (and without it none of us would be here)!!!
Know this, 9 times out of 10 the bank loses less money on a short sale, paying someone to move out is just good business REGARDLESS of their situation (and ALWAYS know this, it ALWAYS come down to cashola).
Sam had a good response below, but, also know that banks have a Loan Loss Reserve "LLR" in banking speak. These are monies they must set aside for non-performing notes to cover losses, and, can be anywhere from 1-8 times the loan amount, i.e.,
A $200k loan with a loan loss reserve equates to roughly $800,000 the bank must "freeze up", or not loan out, until that note again becomes performing (sold via short sale, or, at foreclosure).
As dumb and moronic as many of us believe the banks to be, again, it ALWAYS comes down to cutting losses.
if they are stroking your client a check for $30k, know that it will cost them MUCH MUCH more to foreclose.
USE THIS TO YOUR ADVANTAGE!!!!
Demand your 6% commission and anything else......
And contact me directly at [email protected] to learn WHICH BANK IS CURRENTLY PAYING UP TO 10% commission to agents for their short sales!!!!
Giddyup!!!! Call me if you need help processing or negotiating your short sales (no charge),
and
I wish everyone all the best, finish 2012 strong!!!!
Sincerely,
Ben Benita
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Permalink Reply by Kimberley Kelly on
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OK..I give. Which banks are paying 10% commission?
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