The deal in question involved two mortgages, a tremendous amount of debt, and a fair market value that had dropped from over $400K down to the mid $200K’s.  Both mortgages were staring at a big loss and buyers were not coming in droves.   Because the deal quickly had to be converted to a retail short sale, we then had to not only find a buyer with a high enough offer, but also convince them to make their offer inclusive of extra funds to go to the 2nd mortgage, GMAC, which we ultimately needed to get this closed.

Those were the initial challenges.

Now down to the solutions.  As I said, the property had two mortgages.  The first was only allowing $1000 to the 2nd mortgage, and the 2nd mortgage wouldn’t cooperate unless they got $6000 at closing.  So the first challenge was to meet that requirement.  By working with the offer price and the buyer’s agent, I was able to get the buyer first to agree to pay the difference, by way of us negotiating seller’s concessions for the buyer.  The next step was to get the 1st mortgage on board.  At first they only agreed to half the seller concessions that the buyer would need to pay the 2nd, but I continued to push and got an approval for the full amount, and in turn the written short sale approval letter from them.

I then proceeded to attack the 2nd mortgage. Now that I could depend on the sum they required at closing (which, incidentally, they had already approved on a prior offer), I was not only able to tell them the 1st mortgage and buyer were on board to pay them, but also to remind them that they had already approved the amount I was proposing.  And now for the icing on the cake – the negotiator at the 2nd mortgage was a rep that I had dealt with on a prior short sale and built a level of trust and rapport with.  So I knew I had an ally that would help me in getting this deal done.

Through some more perseverance I got the 2nd mortgage on board to approve $6000 once again, and we were able to get the offer accepted.  Once we got both lenders on board and approved, we now had to coordinate the closing and settlement phase of the process.  At the last minute, the buyer’s agent came out and told us he was going to have to cover the balance of the sum that was to go to GMAC, since at the last minute the buyer claimed they forgot they were responsible for that.  Once we got that sorted out, I then moved to get all the necessary paperwork to the title company.  At the last minute, I also needed to get another extension (the 2nd) from ASC to make sure there was enough time to close, since the buyer’s lender was dragging their feet (no surprise!).

After all challenges were met, both preliminary ones and last minute ones; the buyer closed and a property that we had been working on for roughly 8 months finally disappeared from my pile.  As for how we got paid on this one…we received $7,400 in short sale fees.

Take – Away

Always persevere when working on your short sales, especially those that have multiple mortgages or liens.  They may seem like an insurmountable task at the outset, but if you keep pushing and don’t give up, you will be successful!

And always, always be professional and courteous when dealing with any and all negotiators that you face.  You never know when you’ll see them again and they’ll be in the position to either make or break a deal for you.  For more articles and videos with real-time updates on changes in the pre-foreclosure industry visit www.RealEstateBusinessMentors.com and if you would like to ask me a question visit www.AskBobLachance.com.

And so we decided to roll the deal into a retail short sale and realized that we could have the buyer pay us a fee equal to the one we’d make if we completed the wholesale short sale! (In Connecticut part of the reason that this can occur is because when doing wholesale short sales we have to perform two separate closings and added costs). This is how we did it…

In looking over the contract, we noticed that the buyer did not require any concessions/closing costs, and so we spoke with the buyer and his agent and told them that we could work out a way to have the lender pay our fee. We then spoke to the buyer’s attorney and informed him that not only would we be able to accomplish this, but that we’d be able to represent everything on the HUD1 to satisfy title issues. And so what we did was negotiate 3% seller’s concessions for the buyer, which they in turn agreed to pay us at closing. The beauty of this was that the buyer wasn’t faced with having to pay us that amount out of pocket, and so they gladly agreed to pay the concessions, especially since we negotiated them and got them approved to begin with.

As I said, the initial offer was $400,000. The first time the buyer set out to get a clear to close, their appraisal came in at $350,000, and so we had to go back to the lender and get them to approve $350,000, which we were able to do shortly thereafter. For more articles and videos with real-time updates on changes in the pre-foreclosure industry visit www.RealEstateBusinessMentors.com and if you would like to ask me a question visit www.AskBobLachance.com.