Nashville Real Estate Talk

Mt.Juliet Short Sale Sold! Here’s how we did it.

When the owner of this home on 5 acres came to us we knew right away that we would need to use a short sale to get him out from under the horrendous mortgage payments and salvage his credit.

The owner had bought the home for just $180,000 two year before.  But the over zealous lenders kept coming back to him and telling him the property value was escalating. They led him to believe he couldn’t go wrong re-financing the home and taking out money from his “equity”.

Within a year he owed over $260,000 for the property. Ten the re-finance option stopped.  he was informed by a Mortgage company that the property would bring less than $230,000 in the 2009 Market.

Worse yet, the homeowners business was failing because of the struggling economy, he could not make the large monthly payments. With his business failing he could not qualify for Government  Mortgage Reduction either.

That’s where we took over the situation.

We immediately contacted his Mortgage company and let them know the situation.  We helped the homeowner write hardship letters explaining his predicament.  We applied for a Short Sale package from his lender and helped him gather all the required paperwork.  Then we made sure that each piece of paperwork was received by the mortgage holder and verified that.

We had the homeowner sign paperwork authorizing us as his representative to the mortgage company. That way we could call them anytime and keep the process moving.

We listed the home for sale at a price close to last appraisal value of $230,000. We let everyone know we were Short Selling the property and would consider ALL offers for the Bank.  We also committed to would be buyers that we would only forward one bid to the bank. Others could bid if they wanted, but we would only send them in if the Bank turned down our best bid.

We negotiated a bid from a buyer and with the homeowners signature sent it to the mortgage company.

Once the bank gave us the name of their negotiator we made ourselves available to him day and night, weekends too. I carried the file with 24/7 and was always ready to answer any questions.

Next we helped the bank get a Brokers Opinion on the property from an independent, registered Broker.  He concurred with our estimate of the properties real worth and the property was moved to a second tier negotiator.

From then on we provided the mortgage company with accurate numbers of exactly how much of the offer price they would receive. The final price was $215,000.  The property was closed in the last week of June 2010.

the new homeowner got a great deal on a wonderful 5 acre property. The home seller came away with nothing but at least he was relieved of the burden of the mortgage and can now restart his career and put his life back together.

The mortgage company learned a lesson too.

We were happy to help another neighbor get through this ordeal

If you or someone you know is underwater with a house note they can’t possibly pay, don’t let them slip into foreclosure. Short selling can mean the difference between a short setback and years of bad credit.  Give us a call at 615-347-4424.  We’re confidential and we’re here to help.

It is estimated that 40% of the home sales in Nashville for 2009 are “Distressed” properties.  These are properties which are either in or near to foreclosure.

40% of Nashville Home sales are "Distressed Sales"

It is the properties “near to foreclosure” that are of the biggest concern. These properties are referred to as “Short Sales” because the Seller is asking his mortgage holder ( also called the “Lender”) to accept a payoff of the mortgage that is short of the original amount.

Foreclosures are straight forward propositions. The Bank acquires the property through the foreclosure process and puts the property up for sale.  The buyer makes an offer and within a few days the bank accepts or rejects the offer. The buyer then either walks away or the property is moved to “Pending” status and scheduled for closing.

Short sales however do not conform to this model and have several pitfalls which Buyers AND Sellers need to consider.

How does a Short Sale happen

First a Homeowner has a problem. Possibly they lost their job, had an illness, or a variable rate mortgage has reset at a rate they cannot afford to pay.  Second, the Homeowner determines that the present value of the house is LESS than the amount owed to the mortgage company. 

What does the Homeowner do?

At this point the Homeowner, with the support of a Realtor/Broker,  will approach the Lender and let them know that they do not believe they can continue to make the mortgage payments.  This is accompanied by a “Hardship Letter” detailing the difficulties the homeowner is experiencing.  The Realtor/Broker will also provide the Homeowner and Lender with a BPO or Broker Price Opinion. This BPO will substantiate the current value of the home.

The Lenders Option

At this point the lender knows that the Homeowner may be facing foreclosure, The Lender also knows that if the home slips into Foreclosure, they may recover as little as 40% of the original loan do to the costs of maintaing and selling the home after foreclosure.

The Buyer

At this point the Buyer enters the transaction and makes an offer on the house.  The Homeowner accepts or declines the offer and then approaches the Lender with a detailed statement showing what a sale at that price will net the Lender.  The Homeowner has asked the Lender for permission “Sell Short” of the original loan amount.

The Process begins

Now the wheels start to turn in earnest. The Lender frequently will appoint a 1st tier Negotiator to oversee their interests in the home and process the paperwork.  The Negotiator will order an appraisal of the home from an independent appraiser.  This appraisal will be very important for the Lender’s approval of the Short Sale.  In some cases the Lender may require two appraisals to be done.

The Waiting Game

Now the Buyer must show patience.  As the Negotiator compiles the dossier on this home days will stretch into weeks. The Buyer must keep in mind that the Negotiator may have dozens of similar cases on his desk and Banks are notoriously slow in these matters.

The End game

Finally the Negotiator has compiled all his information and the file is handed to the 2nd Tier Negotiator.  This is the decision maker.  He will pronounce a yes or no. They may also, based on the appraised value, barter over the proposed price.  This can be very frustrating for the Buyer who may have been waiting weeks or months for an answer only to be told Yes, but we want additional money.

In this event it is very important to remember, the contract is between you, the Buyer,  and the Homeowner.  The lender is merely approving the Short Sale, not the sale price.  Unless the Sellers contract expressly says so, the seller could be legally bound to sell the home to you at the contracted price.

However; the Buyer may not be and should not be bound to pay any price higher than the agreed price on the original Tennessee Purchase Agreement.

The Short sale process can be a long and arduous one. But with an experienced Realtor and knowledge of the process, Nashville Home buyers and Sellers can use the the Short Sale as a way to achieve mutual satisfaction.

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