Short Sale Price Negotiation

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25w100k+_IHB

25w100k+_IHB

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I'm once again seeking the wisdom of the RE gurus who frequent this forum. There are a lot of short sales that appear to be decent deals. From my understanding, a short sale is when a homeowner negotiates with the bank to sell their house for less then the value of their loan.






Now, my question gets into the specifics. <I>Who</I> at the bank do they negotiate with. Do banks have a company wide policy to allow short sales, or is it on a case by case basis? Once a bank approves a short sale, do you have any negotiating room?






The confusing part is that I may be negotiating with the homeowner, who has no final say over what the actual price would be. Or do you end up negotiating straight with the bank? Is there any point to lowballing a short sale?






I realize this is a lot of questions, but I'm hoping someone knows <I>someone</I> who works at a bank and can give us the inner workings on their thought process. Know your enemy, eh?
 
[quote author="25w100k+" date=1212542926]I'm once again seeking the wisdom of the RE gurus who frequent this forum. There are a lot of short sales that appear to be decent deals. From my understanding, a short sale is when a homeowner negotiates with the bank to sell their house for less then the value of their loan.</blockquote>


You nailed it on the head there.



<blockquote>Now, my question gets into the specifics. <I>Who</I> at the bank do they negotiate with. Do banks have a company wide policy to allow short sales, or is it on a case by case basis? Once a bank approves a short sale, do you have any negotiating room?

</blockquote>


The policies vary by the bank, IB, or hedgefund that is holding the bag, er loan. It pretty much would be a case by case basis, but I have heard B of A has been a stickler to their policy. My advice has been to find the bagholder, and find a manager in the loss mitigation department. Be cool with them, be there friend, as they are used to dealing with lazy and stupid RE agents, so you will be a pleasant change of pace from the norm. Get as much info as you can, and use it to make your case, i.e. another foreclosure, short sale, or proof of pending doom. You could hit up IR2, he should have every manager of every bank in his cell phone by now, if he has been listening to the complaints from some others on how lame and useless their agents are. Once it is approved the price should be final, unless the inspection finds something gawd awful, then you might be able to plead your case, but they are sold as is, and your SOL most of the time.



<blockquote>The confusing part is that I may be negotiating with the homeowner, who has no final say over what the actual price would be. Or do you end up negotiating straight with the bank? Is there any point to low balling a short sale?</blockquote>


It doesn't hurt to try, but you are correct the bank makes the final decision. I would focus on negotiating with the bank.



<blockquote>I realize this is a lot of questions, but I'm hoping someone knows <I>someone</I> who works at a bank and can give us the inner workings on their thought process. Know your enemy, eh?</blockquote>


I do know someone at the inside, and I need to try to get a hold of him. In fact, I just sent a text msg. to try to set up a night to get some drinks. I will see what else he can add.



I think I might be working on finding or making a list of the loss mit. depts. with the names and phone #s of who to contact.
 
I would rather be trapped in an elevator with AZDave for 4 months than go through a short sale, which will probably take the same time.



Stick with REOs if you are looking for a deal. They are still getting overbid, but at least their advertised pricing is real, and you can get a response back usually within 24 hours.
 
[quote author="IrvineRealtor" date=1212557665]I would rather be trapped in an elevator with AZDave for 4 months than go through a short sale, which will probably take the same time.



Stick with REOs if you are looking for a deal. They are still getting overbid, but at least their advertised pricing is real, and you can get a response back usually within 24 hours.</blockquote>


IR2 - Have you noticed/heard anything about the SoCalMLS recently dropping/moving the indicator that a listing is a short sale? They've fallen off Redfin (who didn't do any re-programming, they are just populating with info from the MLS and that info apparently no longer comes in).
 
Yes. The MLS data entry GUI has been changed a couple of times recently to accomodate the changes in the market.



Previously, there was no notation for short sale properties until the sale had already been completed.



As short sales and foreclosures became more prominent as listings, a toggle button was added by the powers that be with the MLS locally (I should note here that different areas have different MLS systems and data entry points, and that my details here are just in regards to <strong>SoCalMLS</strong>, which serves the local area here in Orange County. <strong>Sandicor</strong> serves San Diego, <strong>MRMLS </strong>is for Riverside County, <strong>Valet </strong>serves Newport, and they have their own changes.)



With the toggle button being insufficient, there is now a selection bar that allows anyone who knows how to [shift]-[left-click] to add multiple info points for clarification. i.e. short sale + NOD filed instead of just one or the other. I noticed the change on my latest listing entry but didn't know if it was being used by secondary- or tertiary sources. I'm guessing it happened about two weeks ago.
 
Short sales are a no-no. Remember you are purchasing the note, and if/when the original purchaser decides he wants to BUY BACK that note (which Kalifornia law states can be up 12 months? ) you HAVE to sell him back that note. ANY MONEY, ANY WORK, ANY UPDATES, ANYTHING you've put into the house is G.O.N.E.



So say you buy the 2st note, but not the first. Somebody else bought that, you do whatever it is you want to do to the house and then the buyer of the 1st note calls it in. You walk away with zero. So be sure, this is what you REALLY want to do. I'd just let the house go back and then negotiate with the bank which will, by then, should have a free and clear title.



good luck

-bix
 
[quote author="biscuitninja" date=1212563968]Short sales are a no-no. Remember you are purchasing the note, and if/when the original purchaser decides he wants to BUY BACK that note (which Kalifornia law states can be up 12 months? ) you HAVE to sell him back that note. ANY MONEY, ANY WORK, ANY UPDATES, ANYTHING you've put into the house is G.O.N.E.



So say you buy the 2st note, but not the first. Somebody else bought that, you do whatever it is you want to do to the house and then the buyer of the 1st note calls it in. You walk away with zero. So be sure, this is what you REALLY want to do. I'd just let the house go back and then negotiate with the bank which will, by then, should have a free and clear title.



good luck

-bix</blockquote>


Huh? That doesn't sound like a short sale, that sounds like buying a property in preforclosure or something. When you buy a shortsale, you are buying the property free and clear I believe....
 
[quote author="25w100k+" date=1212565557][quote author="biscuitninja" date=1212563968]Short sales are a no-no. Remember you are purchasing the note, and if/when the original purchaser decides he wants to BUY BACK that note (which Kalifornia law states can be up 12 months? ) you HAVE to sell him back that note. ANY MONEY, ANY WORK, ANY UPDATES, ANYTHING you've put into the house is G.O.N.E.



So say you buy the 2st note, but not the first. Somebody else bought that, you do whatever it is you want to do to the house and then the buyer of the 1st note calls it in. You walk away with zero. So be sure, this is what you REALLY want to do. I'd just let the house go back and then negotiate with the bank which will, by then, should have a free and clear title.



good luck

-bix</blockquote>


Huh? That doesn't sound like a short sale, that sounds like buying a property in preforclosure or something. When you buy a shortsale, you are buying the property free and clear I believe....</blockquote>


Yep, those are two very different situations. Stay away from both.
 
I know this is going to sound kind of strange, but if you serious about buying a particular property that you think is going back to the lender, you may want to try the following:




First, lease the home from the present owner.


Second, when the owner stops making payments to the lender, offer the lender your rent payment.


Third, if the lender accepts the rent payment, keep living in the house.


If the lender does not accept the rent payment, keep living in the house.


Fourth, make your offer at the courthouse auction.


Fifth, if they accept your offer, great.


if someone outbids you besides the lender, you are out.


But, if the lender takes the house back, you immediately make your written offer to the lender. And you let them know that you are not going to move under any circumstances. And you have to mean it.


I know someone who did this, not intentionally. They just intended on leasing a house, and the house went into foreclosure.


The lender was Countrywide.
 
[quote author="awgee" date=1212568031]

if someone outbids you besides the lender, you are out.


</blockquote>


Uhm, you mean you can squat and get free rent for a few months no? ;-)



Sounds like the best bet of getting a good deal on a shortsale is to call the person, tell them its hopless and talk them into defaulting, then buy it from the aunction or bank. *sigh*



I really liked some of the shortsales i've seen lately.
 
<blockquote>I know someone who did this, not intentionally. They just intended on leasing a house, and the house went into foreclosure. </blockquote>
Awgee, I think you told me about this situation. Do you know if those renters bought the house?
 
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