Realtors Beware -- Short Sale Pricing

So a party who wants an offer on their home to take to the bank for approval needs to list their home for the full value of encumbrances and then note that they will bring offers to the bank if they are below the Balance?

Q: If a real estate licensee lists a property at a below market price he knows the seller probably won?t accept, is the licensee in violation of Florida real estate license law?

My experiences with a handful of shorties this year is that the seller will accept anything if they think their lender will not chase them for a deficiency. And the listing agents are listing them at very attractive prices just to get offers. Then we explain to the buyers that closing at that price is usually a longshot- after researching the mortgage(s), lender(s) and seller's hardship situation.

A better question would be, "should a realtor list at a price that would not be accepted by the seller's lender?" But of course the realtor is not going to know what a lender granting a shortie will accept...

I have not had any shortie luck with Wells Fargo, Countrywide, IndyMac and Wachovia. Each was a hair pulling experience dealing with the loss mitigation departments.

Good! Hopefully they can weed out the bad bait n switch realtors with those!

Joe Mammy, my experience has been different, as I have had sellers not accept low-ball offers, knowing that it was too far below what the lender would likely accept, because that would pull the listing off of the MLS as "active," and therefore pull it from most every real estate website.

I understand that there are some forthcoming changes to the MLS Rules for ECAR, which will allow short sales to remain "active" while under contract, waiting for the lender approval. Look for the changes in the VERY near future.

Your new question is a good one, but legally speaking, Randy Schwartz, doesn't make mention of it, because it is impossible to know that which a lender will not disclose. However, a seller does know what he or she will or will not accept. Prime example is the home which sold for $5million + in Four Mile Village which was listed at $10,001 as a short sale. Randy is saying that the listing agent (also thought to be the seller, but hidden through other companies), may be false advertising.

I knew of at least (2) listings that were being advertised at a price far less than what the bank would accept in the situation. That is false advertising.

Always looking out for my friends in the SoWal Real Estate business, saw this on the web today and thought I would pass it along...

Realtors Turn to eLearning for Short Sale Training

PRLog (Press Release) ? Dec 02, 2008 ? Rochester, Mich,? ShortLeads.com LLC, ?a Rochester, Michigan-based provider of online realtor training?announced today the launch of the Short Sale Academy, an online course dedicated to training realtors on the short sale process.

?Industries ranging from health care, to manufacturing, to IT are all leveraging online training to provide flexibility to the person learning and to enhance the types of material that can be presented in the course,? said Lawrence Randazzo, Vice President of Curriculum Development at ShortLeads.com, ?we?re excited about being able to offer these benefits to realtors.?

The short sale training course offers all of the depth of an in-person seminar, with a number of unique benefits. Once a realtor purchases the course, they have access to the content whenever they need it. Even if they?ve already completed the course, realtors are able to go back and view individual lessons when they need to (often when they?re in the midst of closing a short sale opportunity).

The Short Sale Academy provides realtors the flexibility of learning on their own time, and also includes an iPod-friendly version that can be used to learn on-the-go. Both web and iPod versions of the course include eight lessons that walk realtors through the entire short sale process. The course also includes all of the documents and form templates that a realtor needs to complete a short sale, as well as useful links that contain up-to-date information.


www.ShortLeads.com

a Rochester, Michigan-based provider of online realtor training—announced today the launch of the Short Sale Academy, an online course dedicated to training realtors on the short sale process.

Here's the Short Sale Academy's Valedictorian:

[ame="http://www.youtube.com/watch?v=O8ii3TbVGZs"]YouTube - free short sale training, foreclosures investing, the secret[/ame]

I understand he's working toward a Second Major at Hamburger U.





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I knew of at least (2) listings that were being advertised at a price far less than what the bank would accept in the situation. That is false advertising.

I know of at least one situation like this that wasted about 2 months of my time. After the realtor listed the property as a short sale for 1,050,000, the bank said they couldn't take less than 1,200,000. Then when it came out of foreclosure as an REO, they put it back on the market for 950,000. :idontno:

Here's the Short Sale Academy's Valedictorian:

http://www.youtube.com/watch?v=O8ii3TbVGZs

I understand he's working toward a Second Major at Hamburger U.





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:lolabove:

OMG, It's the Indiana Jones of Short sales! Touching King Midas' head in the morning and watching it turn to gold sent me over the edge. Then when the Vulcan Jeannie came out of the bottle....well, I really lost it. :funn:
So, that's "the secret", huh?:floor: (P.S. The Secret starts at around 4:00 min into it)

I knew of at least (2) listings that were being advertised at a price far less than what the bank would accept in the situation. That is false advertising.

no one knows what the bank will or will not accept. What they reject today they may accept tomorrow.....how is the bank any different than any other seller you have to take what the market will bring

It seems some banks have started moving the short sale process along a lot faster!:clap: We have recently had some success with Country Wide and Wells Fargo! They are finally beginning to understand the short sale will bring more money then the foreclosure.

for?bear?ance (f?r-b?rns)
n.
1.) The act of suspending payment on a loan, sometimes resulting in a higher interest rate, that also allows for the accrued interest to be added (capitalized) to the principle balance.
2.) What millions of Americans did to their student loans to afford bloated mortgages they also couldn't afford.

I have a question regarding the difference of a short sale and a foreclosure.

If I am understanding what I am reading correctly then in a short sale the original owner walks away. In the event of a foreclosure the owner still owes any balance?

I have a question regarding the difference of a short sale and a foreclosure.

If I am understanding what I am reading correctly then in a short sale the original owner walks away.

Short sales go through when the bank is satisfied with the final price, sometimes that means the seller has to show up at the signing with a check. Obviously they would be willing to do this to save their credit rating.

In the event of a foreclosure the owner still owes any balance?

I believe in the state of Florida banks can sue former owners for deficiency judgments - cases where the bank looses a lot of money at the auction.

no one knows what the bank will or will not accept. What they reject today they may accept tomorrow.....how is the bank any different than any other seller you have to take what the market will bring

You can't advertise that you have something for sale for a certain price when you know you can't or won't sell for that price. In this case the only variable is the bank. Either you know the bank is in agreement or you don't.




817.44 Intentional false advertising prohibited.--
(1) WHAT CONSTITUTES INTENTIONAL false advertising.--It is unlawful to offer for sale or to issue invitations for offers for the sale of any property, real or personal, tangible or intangible, or any services, professional or otherwise, by placing or causing to be placed before the general public, by any means whatever, an advertisement describing such property or services as part of a plan or scheme with the intent not to sell such property or services so advertised, or with the intent not to sell such property or services at the price at which it was represented in the advertisement to be available for purchase by any member of the general public. (2) PRESUMPTION OF VIOLATION.--The failure to sell any article or a class of articles advertised, or the refusal to sell at the price at which it was advertised to be available for purchase, shall create a rebuttable presumption of an intent to violate this section.

I knew of at least (2) listings that were being advertised at a price far less than what the bank would accept in the situation. That is false advertising.

Even if the lender won't disclose the amount they will accept? How can you know that which you cannot know? It is a tough call, unless, like in the case where the home last sold for $5million + and is now listed at $10,001? Some things are obvious, but others not so much.

Easy - either the listing reads "bank has pre-approved this short sale price" or "this short sale price has not been pre-approved by the lender".

As always, a little honesty saves you a ton in legal fees and wrangling. ;-)

Scooter, according to the FAR attorney, disclosure that lender hasn't approved the list price, is a separate issue and doesn't make it legal to advertise a property at a price which he or she knows the seller will not accept. So, it isn't as easy as a disclosure.

I have a question regarding the difference of a short sale and a foreclosure.

If I am understanding what I am reading correctly then in a short sale the original owner walks away. In the event of a foreclosure the owner still owes any balance?

Short sales go through when the bank is satisfied with the final price, sometimes that means the seller has to show up at the signing with a check. Obviously they would be willing to do this to save their credit rating.

Not exactly. If a seller writes a check for the difference at the closing table, it isn't a short-sale. It is only a short sale if there is a deficiency (the seller cannot pay the difference). Sometimes, that means that the lender will "gift" the balance to the seller, and other times, the lender will hold the seller accountable for the difference. The latter is less common, but I'm working one of those right now.

gayboi, it gets a little tricky defining the different types of sales. Foreclosure is a legal process, which comes after default of payments. It can take about a year to get into foreclosure from the date you default on payments. The lender has filed foreclosure proceedings to take the property for default of payment, but hasn't yet taken the property. The seller is still the owner until after the bank takes the property back.

The next stage is REO (Real Estate Owned -- by the bank). This is when the lender has taken back the property and becomes the owner of record.

It can be difficult to understand the nuances, so thanks for asking. I'm sure many people are interested in learning more.

My guess is that, as with many things related to this economy, the rules are in a state of flux. Lender policies will most likely change to reflect (potentially) growing REO divisions combined with a bleak outlook at least in the near term. What worked in the past may have little if any bearing on the present and foreseeable future. Much of this will have to be made up as we go along.

Just attended a very interesting seminar where a mortgage broker who is a specialist in foreclosure solutions divulged to us something the banks do not want you to know about-
"The Early Loss Mitigation Dept".

In primary home situations and second homes (investor properties are more difficult to pull off) she is becoming quite successful in getting "loan modifications" from banks that will reduce not only the interest rate but the principle amount. These modifications come from the EARLY LOSS MITIGATION DEPT and according to her every lender has one!

Just attended a very interesting seminar where a mortgage broker who is a specialist in foreclosure solutions divulged to us something the banks do not want you to know about-
"The Early Loss Mitigation Dept".

In primary home situations and second homes (investor properties are more difficult to pull off) she is becoming quite successful in getting "loan modifications" from banks that will reduce not only the interest rate but the principle amount. These modifications come from the EARLY LOSS MITIGATION DEPT and according to her every lender has one!

Yes. This is true. It's very important to reach out to the Bank prior to reaching the point of no return. I hope you didn't pay money to learn this, Joe.

May I add, though, that some will not reduce the principal balances. I find this ridiculous because eventually it will wind up, in all likelihood, in foreclosure and they will be stuck with a declining asset. The smarter thing to do would be to reduce the principle balances with caveats that when the property sells, any proceeds up and over what was reduced, up to the original loan amount, will be repaid to the Bank. The average time a homeowner stays in the same home is 7 years.

Secondly, another tip. Once the Borrower has exhausted working out a solution with the Early loss mitigation Dept- some offer short sale as a solution-- it is imperative, especially if the Borrower can't make the payments, to obtain a lawyer. In true hardship, ie; loss of job or illness, the attorney will appear at the courts to answer the complaint, which after 90 days or so delinquency, the Borrower is served a court notice. Here the attorney is worth every dime because 90% of the complaints are not answered. The foreclosure mill attorneys go after these people first because it is cake walk work.

An attorney will buy time for a short sale to occur by arguing the case in court. It may also put added pressure on the Bank to provide a better workout. Because the FL, CA, NV court systems are so overwhelmed, and understaffed due to budget cuts, the Borrower could be looking at a years time for options.
If nothing else, then they can work with the Bank to just do a deed in lieu of foreclosure if the property doesn't sell via short sale, which doesn't impact the Borrowers credit as heavily as a foreclosure. The Banks at this point are amiable to deeds in lieu since they will not have to pay foreclosure mill attorneys to take it to final REO.

Yes. This is true. It's very important to reach out to the Bank prior to reaching the point of no return. I hope you didn't pay money to learn this, Joe.

😀 Pay money, no - she brought breakfast to our monthly sales meeting. The interesting thing to me was the "EARLY loss mitigation dept" - apparently a totally different dept than the "loss mitigation dept" that nobody enjoys trying to deal with.

The EARLY lmd deals with folks that are not in default- yet.

She said the banks all have them but few know to ask for them.

😀 Pay money, no - she brought breakfast to our monthly sales meeting. The interesting thing to me was the "EARLY loss mitigation dept" - apparently a totally different dept than the "loss mitigation dept" that nobody enjoys trying to deal with.

The EARLY lmd deals with folks that are not in default- yet.

She said the banks all have them but few know to ask for them.

Joe, I have worked for major Banks, in some shape or form, in mortgage banking. It's called the customer service dept or still yet, LMD. I do not understand why some people believe that they need to be in default before someone at a Bank will talk to them about payment arrangements or modifying their mortgage. If I were in your chair, the last person I would be referring my clients to, who are in these pre-default positions, is to a mortgage broker to negotiate the terms -- unless they are doing it as a public service and pro bono --which is unlikely.

This is emerging market for mortgage brokers and imho, should be regulated. A) They should have an on staff attorney B) they should have to be a certified credit counselor -- I have had one for as long as I can remember it being available-- C) Before being allowed to collect fees for mortgage modifications, be reviewed for the type of mortgages they procured in the past. Here in New York, as other States -- not sure about FL-- one has to report all mortgage types via a volumes of operations report. This is broken down by Prime, Alt A, and subprime.

I do not feel that they should be allowed to profit from this sector if they stuck every Tom, Dick and Harry in a liar or subprime loan.

Glad you got some donuts for listening to the spiel, though. :cool:

Mango great information thanks. I would be willing to bet that ytd the number of mortgage modifications granted from all banks combined in our area is less than 1 tenth of 1 percent while at the same time foreclosures have more than doubled.

Here's an interesting question. An unmarried person buys a house - only his name is on the deed, the mortgage (pledge of property as security for loan), and the loan itself. Sometime later, he remarries and both live in the homestead property. If he falls behind on payments and is unable to negotiate an affordable modification, the lender will of course proceed to foreclose. However, the new spouse is not on the mortgage and has Florida's homestead rights. Seems to me that this would make it much more difficult for the lender to actually foreclose. Of course the original borrower still owes the the lender, but what would happen next?