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There needs to be a guidebook written for short sales that would give the seller or the buyer specific instructions on how to close the perfect deal, but there is not and never will be two exact closings. Each bank is different and each buyer is different. Some short sales have co-borrowers who need to be quick-claimed off the deed and some short sales have liens involved.
A lien is a mortgage in 2nd, 3rd or even 4th position. There are very few mortgages with a 4th mortgage against it due to the fact that it is in a very dangerous position. When there is a foreclosure, the 1st home mortgage loan is paid from the proceeds of the sale first and then the subordinate loans are paid afterward.
So the 2nd is paid after the 1st and the 3rd is paid after the 2nd mortgage loan. If a buyer is contemplating on purchasing a home in a short sale, before making an offer, they should request a title report showing if there are any additional loans on the property. This should be a prime consideration before making a bid on the home and maybe a warning to avoid the short sale all together.
How to Negotiate a Short Sale With Bank of America
Bank of America is the easiest bank to deal with and may help in negotiations on the liens. They have in the past paid a full commission to the Brokers, making them eager to accept short sales with Bank of America too.
Usually the stipulation with Bank of America is that they want the loan. This is normal in many of the cases and it perfectly acceptable. Their appraisers are lenient and if the appraiser does not agree with the sale price, the loan officer may help negotiate a higher appraisal with the Broker to close the deal.
Rule number one is to have a loan officer at Bank of America the seller has clout with, so when the main office calls about negotiating the sale and setting up the appraisal, the paperwork for the loan is already in the works. As in all short sales, be very kind to the Loss and Mitigation Department and follow their instructions very carefully.
How to Negotiate a Short Sale With Countrywide
Countrywide is a bit tougher than Bank of America, but again Countrywide wants to close the deal. They will cooperate with repairs on the property and will give extra time to accommodate repairs necessary for FHA or VA loan approvals.
They will never pay more than a 5% commission, so when listing the property write this commission on the listing. It is better to state the commission upfront as not to have complications with the selling agent down the road. Some selling agents will back away when told at a later date that the commission is less.
How to Negotiate a Short Sale With Fannie Mae
Fannie Mae is the most difficult to deal with concerning a short sale. They not only have their appraiser's working on the case, but they will contact outside Brokers to check on the short sale package validity. They will check all the "I's" so make sure the package is exact.
Understand that the seller must work with a government entity here and they are exact in every way and they have the facilities to check on the full background of the seller. Be careful with this type of short sale and allow extra time to close the deal.
The package to Fannie Mae must look official, typed with labels and make sure everything is included in the package. An incomplete package will be put at the bottom of the pile and just may be delayed too long to get a satisfactory result.
