Our job as your Short Sale Agent is to give you, the Seller, the facts and let you make the decision.
Here are two responses recently received from Bank of America and how they were presented to my Sellers.
What Bank of America is really saying is "Yes we approved your Short Sale request now let's work out the details". This is the response we want. Right?
CASE #1
In response to your counter offer, BofA will not budge. They rejected your offer of $500. Below are the 2 options they have given.
OPTION 1: total proceeds of sale toward the 2nd $7,500.00 Can be any combination of proceeds of sale AND 'cash contribution.
OPTION 2: $3,000 proceeds of sale PLUS new deficiency note for $5,000.00, payable at $150.00 each , 0% APR.
We already have $2,350 to give to the 2nd so subtract that from the $7,500 figure leaving $5,150 needed for the first option and for the 2nd option it would require $650 cash and a note for $5,000. The notes are soft which means they have zero interest and they are unsecured.
Now we could try to get the buyer up higher. Although I personally feel this may cause an appraisal issue with their mortgage. The note could possibly be negotiated for a longer term, say 5 years. That would make the payment $83.33. They may even go 7 to 10 years.
Please consider your options and let me know. We need to give them a response no later than tomorrow.
CASE #2:What are you thoughts? The other items are things I would take care of. Please let me know as soon as possible as time is of the essence.
***I am not an Attorney and cannot give legal advice. You are advised to seek competent legal and tax advice. Any decision you make may have negative repercussions.
Do NOT be foreclosed on! Avoid foreclosure. Short Sales DO close.
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Bryant Tutas
Broker/Owner
Tutas Towne Realty, Inc
Licensed Florida Real Estate Broker
http://CentralFloridaShortSales.com
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Up until the last few months the short sales I have done did not require the seller to come up with anything. I knew my streak would come to an end at some point and the last few have required a signed note.
BB, shows sellers that they have different options. Whether they take one is all that you can do since your the negoatiations expert here. No one probably wants to take a note back but at least you show them the payment options. There's nothing wrong with 0% interest. Good examples on how this works.
I recently came accross a PMI company that wanted the seller to carry a note back....ever heard of THAT before?
Hun...
How many Agents do you think just tell them 'what' to do rather than 'let' them make their own decision? :)
That's all I got for ya today. Not in the mood for hard core RE.
TLW...ROAR!
Oh no problem! The bank is going to dump a major decision into the buyers' laps and expect an answer no later than tomorrow! I say you counter-offer in the same manner. Of course that would not be in the best interests of the buyers, but if someone gave me that ultimatum, I'd tell them where they could put it. I guess that's why I stay away from short sales O_O
Hi Bryant... I have seen both of these scenarios. In my experience, it seems that which of these (or other) scenarios the seller is presented with depends on who the investor that actually owns the note is.
Bryant- The sellers who are behind in their payments and have their credit affected may even get an early start on repairing their credit by paying on the promissory notes. They are not going to be having much credit and their credit cards might get terminated, etc, as their credit score drops for non payment on their mortgage so this may even be a positive thing for the seller.
Out of the sellers we have that signed promissory notes only a few of them keep paying. That is why Chase has stopped the promissory notes. They said that the promissory notes are not being paid back, they are unsecured so the sellers make a couple of payments, then stop.
While I feel no affection for banks- I do understand contracts and when you sign a contract to make payments and then stop- well- you broke your contract. Your choice is to pay your mortgage or not pay your mortgage. The bank is not obligated to forgive your debt. I don't think most people understand this. Katerina
Bryant, I agree with Katerina above. I would normally recommend the promissory note route, unless the seller can afford the extra payout. Lots of options with that route.
The point of this post was to remind agents that it's the sellers choice. And to remind us that these kind of responsed from the lender is a positive. It tells us they are ready to deal. It's all good.
Stephanie, It's very common for the MI compnay to want a note. In fact if you know there is MI on the loan you can let your sellers know at time off listing to expect to have to contribute someth8ing to get it closed.
Hi Bryant, At least BOA is dealing and responding. I hope it works out for your sellers. It seems hopefully to be a solution to getting the house out of foreclosure and off their backs. Keep all of us posted.I noticed Chase is not asking for promissary notes and seems to be cranking out approvals this month.
Dixie
Michigan is a deficiency state.
That means, that is they feel you can make it up they can come back ANYTIME during the 6 years and ask for more money.
I didn't see it alot in the early years but am more and more.
Now they can't do a 1099 and a deficiency, they have to choose which they want.
If a seller has no means to repay...whatever that means to them, then you get the 1099 and move on.
If not the seller who might be an attorney or Dr. or other higher income individual will get slapped with the deficiency judgement.
That is why we READ THE APPROVAL letter completely and go over it with our selllers.
BB: I just deleted my earlier comment. I must've read another blog post and then written a comment on this one--either that or I was smokin' somethin'
Once I had a seller cann me and say, "Look. What is the worst case scenario?" My response: "Promissory note or cash contribution." She said she could live with that.
Addressing that issue up front does help to move along the transaction. Would you agree?