Short Sale: Too Close for Comfort

One of our most recent short sales came down to the wire. It all began back in MARCH when our client contacted us because his house was going to foreclosure. The AUCTION date was only about 10 days away. We knew we were facing an uphill battle, but for the sake of our client, we were going to give it a try.

We immediately put the townhouse on the market and within 2 days, I had multiple offers for the property. We took the highest and best offer and our professional short-sale negotiator presented it to the lender BB&T. Even though she was initially told NO, that BB&T would not postpone the foreclosure, through persistence and superior negotiating skills, she was ale to get them to agree to it in the end. The file sat with BB&T for several months, but they finally gave us the net amount that they required to approve the short sale. We thought we were in the clear and then we found out that the seller, our client, was behind on his HOA dues and there was an IRS lien on the property. In order to avoid the deal falling through, the buyer agreed to pay the HOA dues, but we still had the problem of the IRS lien. Per the lender, we only had about 20 days to resolve the IRS lien issue.

We would need the IRS to release the lien before we could move forward. My client had been on the phone with several IRS representatives but he was still not getting the information he needed. He was sent two different types of applications and was being given conflicting information. My client and I therefore made the 1.5 hour trip down to Richmond to see if we could speak with someone face-to-face. We stood outside the office door knocking and ringing the bell, and just when we thought we had just wasted our time, someone opened up. It turned out the very person who came out to help us, was the designated person that would actually be reviewing his file once the application was completed. She was extremely helpful, showed us exactly how to fill out the application and gave us tips on how to avoid any delays. Her usual timeline for completion was between 30-60 days. We needed it in less than 30. She did not promise anything, but we know that in the end having that face-to-face meeting was crucial since we got the approval for the release of the lien well within the 30 day time period.

When the short sale approval came in, the lender only gave us about 7 days to close. Since it was a cash deal, we set the closing day for two days later. On the day of settlement, the buyer walked. Because he had waited so long (about 6 months) for the approval to come through, during that time period, the market had cooled. He was an investor and he no longer would be making the profit he originally thought. How do you re-list a property, find a cash buyer, and get them to close in 5 days? My team members and I were on the phone contacting our network of investors to find someone that could make this happen. Just when we thought all was lost, we found the cash buyer and they accepted all the terms originally agreed to which is critical when dealing with short sales. Any change in terms, could kick the short sale process back to the beginning. We finally closed, but most importantly, my client, the seller, had a weight lifted off his shoulders. Having been unemployed for almost 2 years and struggling to make ends meet, they just needed some good news.

The lessons learned from this short sale transaction.

1. It is not over until it is over. As Realtors, we have to keep trying until the bitter end. It is more than just listing a property to get it sold; sometimes it is relying on your network of contacts to make something happen or just thinking outside the box.

2. Face-to-face meetings are still important. Emails are okay, phone calls are better, but a face-to-face meeting makes it personal. That person will always remember you if they had the chance to shake your hand and talk to you even if it was just for a couple of minutes.

3. When you are given a deadline, don't wait until the last minute. Try to close as early as possible so in case there are problems at settlement, you have sufficient time to resolve them.