Another Short Sale SOLD in Big Lake MN - 55309
I have been working with Susan G. at Keller Williams on this property for about 1.5 years. Why do I tell you that? Because you might want to know what to expect (as a buyer or a seller) during a short sale.
Beautiful home, Trulia says the 3 bedroom, 3 bath home sold for $223,000 back in August 2004 – this week it sold for $126,000. This couple definitely qualified for a short sale and we started working the first buyer’s offer in November 2010. There were 2 banks involved, both with Wells Fargo. (You might think that would make it easier, but since the 2nd mortgage was with WF Home Equity, it might as well been with Chase or Bank of America or anyone else.)
I have done several short sales, and the beginning steps started out very predictably:
- submit all paper work
- the bank orders an appraisal (or BPO “broker’s price opinion” which costs about 25% of an appraisal)
- bank counteroffers.
First problem: BPO came in at least $10,000 more than it should have, but the bank wouldn’t listen to what Susan said the value of the house was even though they required lots of documentation of other comparable homes.
Next problem: buyer didn’t want to accept the counteroffer of the bank, they waited weeks to respond and by that time the short sale file was closed and it took a lot of persuasion to re-open the file.
Next problem: once the buyer’s new offer went in, the BPO was “out dated” – the bank must do a new BPO every 90 days during the short sale process. Also, the home owner must submit their updated bank statements and pay stubs about every 6-8 weeks as well. (You can see how tedious this is already, right?) Oh yeah – and since 2010 taxes were filed April 15th, we had to submit the new tax return as well!
Finally mid-May the banks started their “STAND OFF”. The 1st mortgage holder said they would give their short sale approval after they saw the second’s and the second’s said they were waiting for the first. (Luckily all the banks seem to have worked this “hitch out” by mid 2010.) This stand off continued for approximately 5 weeks and required multiple requests for escalation of the short sale.
Finally, the second gave their short sale approval on July 13th (7.5 months after the first short sale documents were submitted) and we continued to wait, despite me calling almost every other day, until August 11th, when WF said the file was finally complete and ready to send off to the investor, Freddie Mac for approval – which is estimated to take 7-10 business days. (Most of the banks we work with are simply “servicers” for the investors and must have final approval from the investor…)
Next problem: even though the government had extended the tax credit for people to Sept. 30th, home prices across the country were dropping rapidly and the buyer WALKED AWAY from the sale! The buyer’s agent said that they were able to find a property that was bigger for less money since the prices had dropped. (As a Realtor, I totally understand this and his duty to look out for the best interest of the buyer – it was just really painful to have worked 8 months on the file.)
Now what? Find a new buyer for the short sale. The home was foreclosed on in December, but MN has a redemption period, so the pressure was on to get a new buyer AND an approval before early June!
The next short sale package was submitted to the banks in early Jan 2011 and the whole process began again. This time, from the start, I submitted the details of how badly the short sale was handled the first time and was pleasantly pleased at how quickly the process went. We still had to have another BPO done, of course, but this time it was much truer to the value of the home and the counter offer from the bank was more realistic for the market (and almost a full $25,000 less than the value in 2010!).
We got the short sale approval from the first in record time, the end of February and then had difficulties getting the paperwork tracked down (with respect to recordings) of the second mortgage and finally an approval from them as well.
This short sale worked out for the home owner and many do not. Many homeowners and buyers get completely fed-up during the short sale negotiations and just give up. If you are looking to buy or sell a home and you know a short sale is inevitable, the most important thing for you is to have a strong team of people who have completed short sales! Great communication is imperative for all parties!
Please contact me with any questions about short sales. I work with 2 great negotiators in MA now (that have successfully negotiate short sales in many states across the country). Certainly many many short sales are working for people, but other short sales are still falling apart for one reason or another. If you want your’s to be successful, contact me today at 603-318-6953 to get all the facts!