Adriana West

Another Great Success Story for my client in Roswell, GA. I've been working with this client on a Short Sale transaction for 8 months now, and we had wonderful news this week.

First, some background on the scenario. The market value of the property was $900,000. There were two mortgages with different lenders. As I noted in an earlier blog, in the beginning my client thought it would be easier for me if he hired an Attorney to negotiate with both lenders. In the earlier article, you can see why that made me decide never to let an attorney negotiate for me again.

We worked with an offer for over three months - a great offer at the time. The lienholder in second position wanted, and even demanded (how funny!), to net $42,000 from the short sale, and have a deficiency note in place on the borrower for the balance of the loan. Oh, and my commission could only be 1% (which the lawyer agreed to, by the way).

Even when both lenders agreed on the transaction, I managed to increase my commission back to a reasonable amount, and my client was tempted to accept the deficiency note, the second lienholder took a month to send me their acceptance letter. During this time, the buyer got tired and walked away.

I took control of the negotiations away from the attorney when my commission was ridiculously reduced, and started over from scratch after the buyer withdrew his offer. Months passed, and finally I received an offer $100,000 BELOW the initial offer - just three days before the property was to be foreclosed. I contacted the lenders, and Lender 2 - even when they knew they were going to lose everything - demanded a specific amount in order to accept the transaction. The next day, when I received the Acceptance Letter, it included a deficiency note that at this time was not part of the agreement (they had not mentioned it in the phone call).

They were offended when I told them it was not going to work. They stated they would not negotiate any further. I thanked them for their time and hung up. The next day at 7:00am, I received a phone call from the same negotiator stating that they had reconsidered the offer and were open to agree to the original amount and no deficiency note. Because the second lienholder was lazy and made unrealistic demands, at the end of the day we closed the transaction paying them just $16,000 and no deficiency note whatever.

The Lender in the first position was always very helpful and open to work through the transaction. My client is thrilled that after 9 months they sold their house and do not owe anything to any lender. Now at the end of the transaction, do you think the Attorney was working in my client's best interest? Or working for an outrageous hourly fee for their own benefit?

Share with me your stories. I would like to hear from you. I love to share this kind of success story with my current and future clients, and remind them: you are in great hands with me working on your behalf.

I respect the companies who negotiate Short Sale transactions for agents, but in my personal opinion, I prefer to handle my own negotiations. Let me illustrate why. A few months ago, one of my clients thought that it would be easier for me if he hired an attorney to negotiate his Short Sale with both lenders.

After three months of frustration, with my client paying ridiculous fees to this attorney, here is the settlement that he reached:
- My client was going to have a deficiency note from the second lender in the amount of $160,000
- My commission would only be 1%
- The Buyer's agent would only get a 1% commission
- He would get his fees, directly from my client's pocket

After discussing this with my client, who could not handle the deficiency notice, I stepped into the negotiations and tried to fix it as soon as I heard, about a week before closing. The second lienholder did not give us the acceptance letter, and we ended up losing the buyer. If the client would have to declare bankruptcy because he couldn't pay the deficiency note, a foreclosure was his better option. But I kept on trying.

I do not have anything against anybody, but I truly believe I am in this business to help people in a fair and honest way, on all my listings and transactions. This is my livelihood and I need to be paid for all the effort, time, and help that I offer to my clients. This is why I believe that all the parties involved must work with honesty toward the same goal: Helping a homeowner in distress to create a new future on the financial level.

I applaud all those of us who strive to achieve our goals of helping people, and being paid for our work. I can say with pride that none of my clients has ever received a deficiency note after the short sale has been settled. And this is why I will never accept a listing where I need to allow an attorney to negotiate on my client's behalf again.

We learn from our experiences. Tell me how you work, and what kind of responses you get from your lenders. The end of this story is an incredible success, and I will tell you all about it in a couple of weeks when we close this transaction.

Well now, after my Reality Check marathon, I have GOOD NEWS.... Lenders have realized (not all) that Foreclosures are not the solution... And they have moved some of their people from the Foreclosure departments to the Loss Mitigation Departments. They are making them stronger, more effective, with trained people. YEEAAHH, this is GREAT NEWS, Agents. This is the YEAR OF THE SHORT SALE.

Let me give you one of my examples: I had a house in Sugar Hill in the Short Sale process. The owner had 2 loans with the same lender, and I presented an offer to the Lender (a good offer). I had been waiting for about 10 days to pass before calling them back and asking for feedback about my Short Sale packet - and to see if they had assigned a negotiator to the file. Well, on day 10, before I called them, I received a fax with an Acceptance Letter for the second lien. WOW! That was a new world for me. I called them very astonished about what I had received. The person who answered me, a very professional gentleman, told me that Yes, he had seen in the file that this was the letter for the second lein, and to call back in a week to ask about the first lien. On the 20^th day, I received another fax - the Acceptance on the First lien!

I called again and congratulated them on their process, telling the person who answered tha the last time I had done a Short Sale with them (6 months ago) they had taken three months to close, and that I was astonished at how much they had improved their service in 6 months. The man told me that in the last 6 months, they had brought in more than 300 people, and that was the reason for their great service.

Well, this is happening more and more. Small lenders have thought about how to implement and improve their Loss Mitigation Departments all the time, and when we agents send them a complete Short Sale packet, things go very well. Short Sales are going to be the way forward in this market for us Agents during 2009 and 2010.

The interesting part of this story... We had to close a month later because my Seller had not had time to find a house to rent!

Leave a comment and let me know if you are seeing the same improvements over time as I am. Are there "star" lenders out there doing a great job? Laggards who haven't seen the light yet? Let me know your experiences.

Before the end of the year, I wanted to finish my Reality Check series. I think I have VERY GOOD NEWS for the new year!.

But I think it important to make a remark about the responses I've received from this series - like Gene Allen: "Seems like everyone will be a short sale expert by the time all this is said and done."

Ladies and Gentlemen, I have to say that there are very FEW experts in short sales in this market. Recently I have come across several agents who think they know short sales, such as the case of one of my Alpharetta Short Sales. The client was referred to me by an agent in Illinois. Her ‘strategy' was to list the property for 10% below the cheapest in the subdivision, and lower it 5-10,000 every week.

Another case is one I ran across yesterday. I was looking for a condominium for my buyer in Atlanta. I found a Short Sale for $20,000 below the foreclosures that sold in the same building, and that agent proudly commented that she had multiple offers on the property.

OK, so you are all going to ask me: And what does it matter? For me, a lot. The mentality of many agents that start working in Short Sales is to reduce the price of the property, without studying the area and the subdivision to have a clear idea of how much the lender will be likely to accept in an offer. Since they do not do this homework, their idea is to get the most offers under that percentage, send them to the lender, and the buyer waits for a month or two without a response thinking that the lender is going to accept it. When the lender comes back with a counter for more than the listing price of the property, the buyer is so involved in the transaction that he'll accept the increased price.

If I were the buyer, making an offer for the listing price, and after two months I am told to accept a price higher than the listing price, I would not buy that property. Why? Because I would feel like I was being scammed. Nor would I ever work again with the Agent "representing" me, the one who involved me in this transaction.

If I as the buyer have the option to choose between several equal properties (such as a cluster home, townhouse, or condo) on the market, and I have to wait for months only to have the price increased on me, I would rather buy one of the foreclosures where I don't have to wait for months for a transaction that is never going to happen.

Now: do you think the agent that listed the Short Sale was really helping their client? Acting in their best interest? How many of these offers have a realistic chance to work? Lenders pay for appraisals and BPOS, and if the numbers do not make sense, they foreclose anyway.

Negotiators have way too much work to review all the offers submitted by agents who follow this shotgun strategy - especially when those offers do not make sense. It is difficult to sell Short Sales, and these kind of agents are not helping the market at all.

Let me know your opinions, now that we know we are going to all be experts... Or maybe just a little more realistic about the market, lenders, and short sales.

A week ago, I was working on a Short Sale in Sugar Hill, GA in which the Seller did not have any equity and the fair market value of the house is $140,000. This house had not did not need significant repairs and was in good condition.

I received an offer, which requested a reply. The offer was for $40,000. By law, I have to present this to my client. But isn't it incredible that Buyers think that banks are giving away houses? I had already begun the short sale process on this property with another, higher offer, and I'll tell you how the story ends in January, when we close.

When working with buyers who want a ‘deal', I ask them first what for them means a ‘great deal' because if for them it means that the bank is giving away houses, my idea of a great deal is completely different.

For me, a great deal - especially when I am representing a Buyer - is giving them the opportunity as a Short Sale Specialist giving them my expertise and knowledge to find a property which is below market value, which will appreciate in two years or less, and in which my client can have a good equity in that same period.

But I still haven't found the waiting line where the bank, just because I'm so nice, will decide to give me a house. If any one of you out there know where that line is, please let me know. I have several clients in distress that would love a house for the next few months.

I realize that 2008 and 2009 are the years of opportunity, but these opportunities are made by people who want to work hard and make a difference. Not for those who want to make themselves rich in a day. Or maybe I'm the one mistaken, or in the wrong line.

Share your experiences with me and let me know how mistaken I may be.