kpage, Home Buyer in Henderson, NV

Is a short sale with two loans of record more likely not to close or have problems???

Asked by kpage, Henderson, NV Mon Oct 17, 2011

Help the community by answering this question:


Hi kpage,

A short sale with 2 lenders involved usually takes longer. The 2 lien holders
have to agree on the amount of money each will get of the price you pay. This
has been my experience with my buyers.

For example, if you find 2 homes you like equally and one has 1 loan to
satisfy and the other has 2 - pick the home with 1 loan. However, if you fall
in love with a home and it has 2 lien holders, go for it, if you can stand an
extra wait time.

Good Luck,

Marita Topmiller
Indianapolis area
1 vote Thank Flag Link Mon Oct 17, 2011
There are degrees of difficulty with these types of transactions and yes multiple loan situations can cause problems but they can also work out and go to closing. Every situation is different and comes with its own set of challenges.

One of the most important ingredients for a successful "short sale" is how the owner has approached this. It they are taking the advice of an attorney that specializes in these transactions there is a much higher percentage for success than with those that are wandering their way through the process.

Prior to seriously considering making an offer, I would recommend finding out where the owner is in the SS process. Have they filed the paperwork? Are the working with an attorney? Are the two loans held by the same lender? Is the primary lender showing a willingness to work with the owner? Is there a legitimate hardship involved?

In short...more difficult? Possibly......impossible, not in the least!

0 votes Thank Flag Link Tue Apr 30, 2013
A year and a half ago when this question was originally asked I had been successful in closing all of the short sale in which I had been involved – both as listing agent and representing buyers.

My record is no longer 100% but it is WAY higher than the 50% claimed by David Cooper (below). Short sales continue to close if handled properly. That means vetting the seller; getting the seller’s package together properly; pricing the property properly; negotiating the offers professionally and handling negotiations with the lender(s) professionally (or hiring a negotiator to do so).
0 votes Thank Flag Link Tue Apr 30, 2013
Only 50% of all short sales close with only one loan, so the odds are less than acceptable to make an offer on a short sale with 2 loans. Nothing but trouble

David Cooper Investing in Las Vegas since 1994 702.499.7037
0 votes Thank Flag Link Tue Apr 30, 2013
This deal would be less likely to close. The lender in the second position would have to settle, or write off the loan and the primary is already taking less than owned, so I would think there is not a lot of room for other lender to negotiate a settlement. The seller or his Realtor has to negotiate with both to see what they will take. Hard ship letters, bank statements, income tax returns etc. and this could to on and on with doing the above paper work, several times.
I would look elsewhere , sorry the answer is not more positive.
0 votes Thank Flag Link Mon Apr 29, 2013
I am from the lending side, ran into a situation similar to this. It takes longer because of the two different lenders involved. You will receive the property in cleared title position.
If you are getting a good deal I would not shy away from it.
Do you know if this bank owned already or if the ones short selling are still in property...
If you need help with finance let me know, just contact me.
Also we underwrite loans for purchase loans where you dont have a property in contract yet, not just a pre-approval.

Michael R Diaz
0 votes Thank Flag Link Mon Apr 29, 2013
This is NOT a short sale. I have owner the property free and clear since I purchased it on 12/27/02.
I don't know where you are getting your information but it is wrong if you are saying there are two lenders on this property. There are no lenders involved here.
0 votes Thank Flag Link Sat Aug 4, 2012
Yes, it may make it more difficult because you need to negotiate on behalf of the 2nd loan with the first loan who may not want to pay as much as the 2nd loan is asking. My previous experience is that the 2nd loan usually settles for just a couple thousand dollars . The 2nd can require the seller and/or buyer to pay something and I have even see them try to reduce the listing and buyer agents commission. Much more difficult and time consuming since you will need 2 Short Sale “Approval” letters. However, If a deal between the first and second cannot be made then the property will go into foreclosure and then the 2nd gets nothing.

Todd Carlson
Realty One Group, Las Vegas
0 votes Thank Flag Link Fri Nov 4, 2011
Both mortgage holders must agree to their payoffs, and though it may take a little more time and effort, having one or two loans is not necessarily a make it or break it factor.
0 votes Thank Flag Link Mon Oct 17, 2011
It's more complicated and will take longer, but short sales with 2 loans do close. I would say your odds go down with more complexity but you can improve your odds by hiring a well trained and more importantly an experienced short sale agent.
There are lots of agents "trying out" doing short sales. Some of these agents will go on to some success and others will pull out their hair and give up on them. You need to select an agent with a solid track record of success closing short sales. A certification is nice, but will not trump experience.
I did a blog post on the multiple parts of a short sale. You might find it helpful. Best of luck.
0 votes Thank Flag Link Mon Oct 17, 2011
Having two lenders on a short sale increases the time and complexity of the deal but does not doom it. I have closed all of my short sale listing, so far, that have had two lenders. The seller must have a good negotiator working on their behalf. The buyer must be patient. No two deals are alike.
Web Reference:
0 votes Thank Flag Link Mon Oct 17, 2011
This will be a longer time frame to close, if it ever does. Both Lien holders have to agree to take less and it has been my sad experience that the second will not do that.
I have heard of deals where the two lien holders do reach agreement, so you will need to patient with a tranaction like this.
Good luck
0 votes Thank Flag Link Mon Oct 17, 2011
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