Too often the agent and seller set an unrealistic
asking price in order to attract buyers. Since the seller’s mortgage company
has the power to ultimately accept or deny offers and is based on their due
diligence not the asking price. The bottom line is that the buyer needs to remain
positive and patient, for 2-6 months, throughout the entire process, provided
the listing agent is competent, creative and diligent.
If the seller has multiple loans (liens) owned by two different mortgage companies it is a lot more difficult to approve the short sale. This poses a great challenge to the listing agent processing the short-sales. Buyers should know that when the seller only has multiple loan(s) the chance of failure is greater than if the seller has one lien holder vs. two liens with different companies. A creative seasoned short-sale specialist can help the listing agent if that listing agent is learning how to process challenging short-sale transactions.
Because the sellers mortgage company is unconcerned with the asking price lowball
offers aren't realized until the sellers mortgage company has received their
independent price opinion, the Brokers Price Opinion (BPO). The Mitigator will
counter the offer but if the BPO is much higher than the buyers offer the deal
will likely fail. The buyer’s agent should be able to analyze the current
solds, actives and pending sales to help the buyer determine the likeliness
their highest and best offer will get seriously considered.
In the early 2000's short-sales were a niche market; today, they are all too common and the mortgage companies across America are ill prepared. Your agent should either help the listing agent or be able to advise you on whether they think the seller’s agent is competent to work with a lender that is overwhelmed, loses paperwork often, doesn't communicate pro-actively, is evasive, and has multiple layers of approval. It’s a race against the attorney handling the foreclosure so diligence and creative ways to contact mortgage companies drowning in short-sale requests is essential to success.
The price of the home is based on being "short" of the loan balance
not fair market value. Keep your options open and continue to actively look
at multiple properties because the uncertainty of your price being accepted
in a timely manner is high. Buyers must remain optimistic; the right property
will come along. Most states allow a buyer to write multiple offers that are
legal and risk-free with the proper contingencies.
The listing agent processing the short-sale MUST present the Sellers hardship effectively. If the seller has cash or equivalent assets or extraordinary expenses that aren't considered necessary, the sellers mortgage company may require that the seller sign a note and participate in the loss. This has virtually no effect on the buyer as long as the seller cooperates but few sellers will sign notes as they may genuinely be downtrodden but the sellers mortgage company doesn't believe the sellers hardship is worthy of a note-free approval.
Many Multiple Listing Services (MLS) advertise whether the short-sale price
was previously approved. The catalyst for catapulting a short-sale to close
is the BPO. If the seller’s short-sale package is complete, with an offer
to purchase, the Mitigator will order a BPO. If that BPO comes back after the
previous buyer abandon the transaction the seller’s agent can advertise
a feasible price that will close much quicker than a short-sale lacking a BPO
performed within 4 months. Most offers within 5-10% of the BPO are seriously
considered depending on many factors your agent should know of, i.e. when is
the trustee sale, when was the BPO performed, etc.
The seller’s mortgage company has all the power in approving short sales.
The seller’s mortgage company is evasive and many of the details that
influence the approval are unknown by the seller and listing agent. The Mitigator
is rewarded for recovering more money for the seller’s mortgage company.
The Mitigator may prefer a buyer with a large down payment while others just
want the highest price regardless of down payment. Many buyers want to know
if they will get a deeper discount for an all cash offer which is impossible
to know upfront. As long as the buyer is working with a competent (and experienced)
team, a low offer could be accepted expediently but you won't know until you
try.
When the sellers mortgage company hires an real estate agent specializing in REO properties to do a BPO they instruct the agent to return a value "AS-IS", no repairs. If the buyer’s appraiser or lender requires repairs to be made, don't expect the seller to do them and certainly don't expect the seller’s mortgage company to do them. Occasionally a credit or discount will be given but that poses another problem, the buyer’s lender doesn't allow monies to be escrowed for repairs unless weather is a factor, e.g., roof shingles in the winter time. Be prepared for a balancing act to address repairs under these circumstances.
Once an approval is granted the seller’s mortgage company logs it into
their books. The Mitigator gets paid bonuses if that property is closed on-time.
Don't expect leniency from the sellers mortgage company, deadlines are rarely
extended. Because of this, it is important that the buyer’s lender update
and pursue underwritten approval once the BPO is completed. The buyer’s
loan application must be fully underwritten and unconditionally approved subject
ONLY to title and appraisal; hold the buyers loan officers feet to the fire!
If the request is made early enough, many seller’s mortgage companies
may grant an extension but it is wiser to assume it WILL NOT happen and be prepared
to close earlier than later.