Foreclosure in San Francisco>Question Details

Christine, Home Buyer in San Francisco, CA

I too am waiting on a short sale

Asked by Christine, San Francisco, CA Wed Feb 20, 2008

Agent has submitted offer to bank 3 months ago (Nov) and the 2 banks are still negotiating with one bank accepting the offer and the other still negotiating . A Notice of Default has just been sent to the owners. Sellers agent has told us to hang tight but we have been hearing this for the last month. Any idea on how much longer these can take when 1) notice of default was sent to seller, and 2) 1st bank has accepted our offer ??

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6
That's a short sale for you!
1 vote Thank Flag Link Fri Feb 22, 2008
Unfortunately, it does take months in this market. The banks are swamped. In my recent short sale, the bank took over a month simply to acknowledge an offer. If you want to get a property under the market value, you must be really patient. A short sale isn't for someone who needs to move quickly. So if you buy a short sale, it has to clearly be worth while for you which is your motivation for being so patient. If you want convenience, buy a property that is on the open market. But if you want to start out with, say, 20k in equity, wait. As an investor, I would love to buy some of the short sales I've seen lately but I have my hands full with current properties.
0 votes Thank Flag Link Thu Mar 13, 2008
Sorry to hear you are going through this...it can be a real test for your patience.
Timeframes vary by lender...Example - I've been working wth ASC on for one client since the end of October.
Already got the 2nd lender to agree to the short, but waiting on ASC. Finally got the BPO completed (went well...), got my own inspection for repairs, and will now push forward. Both lenders are aware that junior lien holders get nothing if the short fails, and the home goes to foreclosure. The default payout for the 1st lender is usually the 1k as mentioned for the 2nd, but this can be modified depending on how the short package was initially prepared. Expectations for the realtor, lender, and homeowner have to be carefully managed. It is critical to successful outcome. For example, you need to manage the realtor's expectation of the commission adjusting. This will give you slack if you need to negotiate a higher payout to the junior lien holder with the 1st lender. Nothing worse than seeing a good deal go sour because of a couple grand...I don't let that happen.

Again when facilitating the negotiations between 1st and 2nd, you need to make sure the 2nd understands the costs being saved by not holding out for foreclosure proceedings. Seems logical and they should know this, but they can be stuborn, and you need to lead them down the path where they actually start agreeing with you on the best alternative for them...the win-win approach to negotiations.

For example, a case I did, the 2nd agreed to 12K payoff for a 130K mortgage. When the first told me they would only pay $1K to the 2nd, the 2nd balked and would not initially go for it. It took a little Excel and some powers of pursuassion to point out that it will cost more than 12k for them to pay a firm to represent them in foreclosure proceedings, keep the home current with taxes, keep the home secure and weatherproofed during the foreclosure timeframe, etc, etc. Accept 1K now, take the loss, be done with it was a lower cost for them, and what they ultimately agreed to. But as I said, try to create a "better" win-win when possible, and usually work the realtor commission buffer to pay out more to the 2nd to show in good faith that you are working the best deal possible fr everyone. While many here may disagree and give up and say it isn't worth it, I say it is worth it because it does work. Experience and confidence is what makes the difference also.
0 votes Thank Flag Link Sat Feb 23, 2008
Both banks approving is a huge step when that happens but it is certainly not the end of the negotiation. Once hey both agree to the price and the short sale, now they have to agree with each other on how much the 2nd is going to accept from the first to go away! That is where the negiotion hits a few bumps because you can see the light at the end of tunnel, as a matter of fact you can touch it, but its muted by the big egos of the banks :o)

Sorry, that sounds like I've been there, a little bitter maybe!! Right now..... as we speak as a matter of fact!!

The 1st mtg offers 1k to the 2nd mtg to go away, the 2nd comes back and want 10k to go away....and it goes on and on.
Now the 1st is tiried of going back and forth and says, "I'm done, its going to trustee sale and the 2nd gets nothing"(they are not insured)

All the while, I am screaming inside " Noooooooo, I just spent 6 months, with 8-9 offers, buyers walking away one by one in disgust, advertising dollars, and hours and hours of labor on this transaction"

It's never over until it over but we are certainly CLOSE to the finish line, not sure if we will cross over it though :0)
0 votes Thank Flag Link Thu Feb 21, 2008
I have seen this take this long, and in some cases it can take longer. Yours sounds like a sale that should be wrapped up soon. Try to be patient, it just takes time to work this out.

Hang in there!
0 votes Thank Flag Link Wed Feb 20, 2008
To clarify. The 2nd bank has accepted. In my resarch thruout Trulia I am finding that if the 2nd bank has approved then it should be a much smoother process. Your thoughts?
0 votes Thank Flag Link Wed Feb 20, 2008
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