Sometimes when you think you are “done” with Destin short sale negotiations, you are not done! A short sale has many steps. There are several “layers” of negotiations. I am going to use my recent sale of a Destin Florida condo as an example. The property had two mortgages, both with Chase. It was an investment property.
Negotiation #1: The Contract. Contrary to some beliefs, not just “any” contract should be sent in to the short sale lender (also called servicer). Why? Because sending in too low an offer would lose marketing time for the seller if the offer was not approved. Countering early and getting a positive response from the buyer also indicates more sincere interest in sticking with the sale. Patience comes into play at this step. The buyers offered $275,000. We countered the price and terms to be more “approvable”. The buyer agreed to $290,000 after deliberating for several days. Getting the price right from the beginning saves time later, as it probably won’t be countered by the short sale lender. And this one wasn’t.
Negotiation #2: The Homeowners Association. This Destin Florida short sale condo had two associations. The dues were many months behind, not uncommon in my part of Florida. Chase would only pay $1,500 toward dues totaling $12,000, since there were no liens filed. If there were liens filed by the association, Chase would have paid them. (Hint). Sometimes HOAs will reduce their balance and “settle” for less. These associations would not. After much negotiation, they finally agreed to release their liens with a partial cash contribution and promissory notes from the seller.
Negotiation #3: The Senior Lien Deficiency Waiver. The dreaded “deficiency” is the balance still remaining on the note after the proceeds are applied from the short sale. (Not all short sales result in the lender settling for the funds received at closing. They may seek the outstanding balance from the seller via a deficiency judgment after closing, or with a note, etc. agreed to at closing). We asked if it could be waived in full. The Chase Senior lien saw that the seller had a real hardship, as he was in the building industry. His income was negligible and he was unable to pay the mortgage, plus any rental income could not sustain the payments. The negotiator asked if the seller could contribute anything in cash at closing, and write a second hardship letter explaining that he would be unable to pay the deficiency. (Hint) The seller agreed to contribute $3000 and his deficiency was waived in full.
Negotiation #4: The Junior Lien Deficiency Waiver: The Chase Junior Lien initially issued approval with a $5000 contribution from the Senior Lien. They did not, however, waive the deficiency. We went back to ask what it would take. At first the negotiator asked for 50% of the balance, or about $50,000. After we talked and he saw that the Chase equity line was used for items other than “toys”, he said the lowest he could take was 25% of the balance, $25,000. I discussed this with the seller. Fortunately, the seller had detailed notes of his previous Chase conversations, where they had offered to settle for $12,000 a year ago. I put the seller directly in touch with the negotiator, who dug through the file, found the old offer, liked the guy, and agreed. (Big Hint: Do not be afraid to allow the seller to speak directly with the negotiator!)
Through much negotiation this story ended in success for my Destin short sale seller. It wasn’t easy, and it wasn’t pain-free. The seller never once denied his obligation, he sought all possible solutions, and he can now move forward with his life.
Each short sale has a different story. There are many layers of negotiation, and many possible endings. If you are facing foreclosure in Destin Florida, and are seeking an experienced Destin short sale agent, let’s see if we can write a success story for you.
Wendy Rulnick, Broker, Rulnick Realty, Inc.
Call toll-free 1-877-ITS-WNDY (1-877-487-9639) or local 850-650-7883 ext 204
Email Wendy: [email protected]