Does my bank really want my house? Part #2 – Short Sales

In my last article I gave you some ideas of what lenders look for to approve a loan modification.

If you take a look at your financial situation and your numbers do not fall into this, unfortunate small range, then a short sale might be your best option.

The key to a fast and easy short sale approval is, you must work with your lender to “net” them the most money possible based on what market value is in your area.

Here are a few huge common mistakes I see that cause short sales to fail and home owners to go into foreclosure:

I have performed over 3000 BPOs (Broker Price Opinions – this is when a real estate agent is contracted by a lender or third party vendor who works for the lender, to render an opinion of value on the home in question. It is like a short home appraisal but can not be called an appraisal. Many lenders use BPOs due to the reduced cost as compared to a full blown appraisal) and the main problem I consistently see is the home owner does not take care of the home because they are moving out or have already moved out and this is noted in the BPO.

When the short sale negotiator sees the home is full of trash (BPO agents send in pictures of every room, exterior and back yard), the pool is full of green water and looks like a toilet, what do you think they want to do?
What is their best option? Foreclose on the home! When they foreclose, they can clean up the home and sell it for a higher net return.

This is the number one reason I see short sales fail! I actually hold the listing real estate agent as accountable as I do the home owner who is trying to sell the home for allowing the home to be a huge mess.

Unless the offer is the same as the valuation amount, the lender will usually “lose your paperwork” or “not return calls” or the other various things I read agents bitch about on many short sale blogs on the internet. Get a clue you guys! The lender will NOT discount the price of the home because it is a total disaster which could easily be cured by the home owner!

As the home owner you must help your lender net the highest amount of money possible!

If you leave your home a mess during the short sale process, then yes I would think your lender would want your home!

If you have second loan that is a line of credit, you will most likely have to bring cash to close and they will most likely want you to pay more money after the home closes. If you spent the line of credit money on vacations and new cars, why would you think that this should be free money to you just because you lost your job or your home is now worth only 1/2 of what you paid for it?

You can get as mad as you want to, but the bottom line is you agreed to the loan, you used the money, and you are on the hook for that loan.

In Arizona, a second loan that is a line of credit does NOT go away with foreclosure. This is a common myth that many people think and then they are caught off guard when their lender starts calling and hassling them after the foreclosure is final.

Now, if you used some or all of the credit line to upgrade or repair the home, then make sure you send pictures and receipts in with your short sale package stating this.

If you can prove you put most of the money into the home, then they might lower or waive the deficiency all together!

A huge tip, if you find yourself having to do a short sale, please make sure you hire a real estate agent who has experience doing short sales! Not all agents know how to do short sales.

I hope this has opened your eyes and if you are in trouble please seek out skilled & professional help! Please comment or ask any questions below.

Related posts:

1. Does my bank really want my house? Part #1 – Loan modifications
2. Do I have to be financially distressed to do a short sale?

Tags: bpos, broker price opinions, financial situation, lenders, loan modification, negotiator, real estate agent, short sale