Just about the time that Dan my Investor was trying to figure out how he was going to manage all of the repairs that had shown up in the Home Inspection report for the Older Victorian home on Mt. Tabor in Portland Oregon the Title report arrived with some alarming news. It seems as if the Seller of this fixer upper had created several liens against the property in excess of the amount of the property’s equity.
As a real estate Broker with 19 years of expierience in selling portland oregon real estate to investors, I know that often times liens that are on a title report are not always relevant. A further search of the liens status and amounts owed would tell the tale. Meanwhile I put a call into the listing agent to see what they knew of the property.
Nothing was the response that I got back. Nothing accept a letter the Seller had recieved from the Lender this morning in regards to default and foreclosure. I told Dan not to stress that I would call him as soon as the clarification came from the title report. The following morning the title company called and sent me the lien search with amounts owed. The total amount was $60,000 more than the accepted offer of the home. The Lender had issued the pre-foreclosure letter just three days earlier. This is good news as we are in the early stages.
So this leaves us with basically 3 choices. :
- The Buyer could choose to pay the additional $60,000. (not realistic but an option)
- The Seller could pay the default amount at closing. ( could but had no money to do so)
- The lender could be involved and reduce there amount they are owed.
This is what is known as a short sale. Certainly the listing agent should have done his due diligence and known of this potential problem before listing the home for sale. Obviously he did not and we were left to solve the problem now at hand if it could be solved rather than just to point the finger in a blame game.
Solving the short sale problem is different from lender to lender. Reason and rationality are not always part of the equation. Typically the solution will be written down in the lender’s own guidelines and they will often adhere to those policies even if it is to their detriment.
Some of the keys to working with short sales :
- Maintain a positive productive attitude.
- Do not show frustration or try to lecture the Lender as to how you think it should work.
- Suggest solutions and then wait for approval from the Lender before implementing them.
- Find out what the Lender’s policy for short sales is and follow them.
- Make sure you are in direct communication with those that make the decisions. Not just someone who answers the phone.
- Provide all pertinent information about your buyer that will help the Lender view you as credible.
- Make sure you have the complete understanding and approval from your buyer as to the length of time and complexity of this sale.
Next time in Part 2 Dan works towards the prize.
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