Adriana West

Two months ago, someone called me interested in a Foreclosure. He wanted to make an offer NOW with an FHA loan and the least downpayment possible, as he did not have much cash on hand. This was the only property in which the caller was interested. After speaking with him for 10 minutes, I said that the best way to structure the offer in the current market would be to be pre-approved for the loan from the beginning and being sure that the lender of his choice could truly offer the type of loan product he wanted. The customer told me that he would call me back. He did not want me to recommend any loan officers, telling me that he would call me when he had everything in place.

For the time being, this will be the final installment in my series about why Short Sales fall through. I will likely revisit this topic in the future, as I hear more stories, but I plan to move on to other topics for the next few posts. The purpose of this series is to contrast my approach with those agents who have recently come into the Short Sale market in order to keep their numbers up. As a Short Sale Specialist, I have learned to avoid these mistakes that inexperienced agents have made. I keep your transaction on-track.

As new agents move into this market to keep their numbers up, the ‘numbers' are my topic for this article. They are another reason why Short Sales fail, but in this case with even more disasterous results for the seller because the agent was not prepared.

I read about a transaction where the listing agent did not know that they were responsible for getting a "HUD-1″ to the lender before closing. The HUD-1 is a preview of the closing statement which contains all the numbers that everyone is paying or gets out of the transaction: the lenders, the seller, the lawyers, the agents commissions, all the fees, etc. The agent was caught unaware, and needed to get it done quickly. The HUD-1 was prepared hastiliy and sloppily, showing the lenders getting the full amount of their loan and a negative net to the seller. This would mean that the seller is bringing cash to the closing table - contrary to the purpose of a short sale.

This never happens to me. I know all about the process, and have the HUD-1 prepared well in advance. Beyond that, I have the taxes checked and the property investigated for leins. This saved several transactions, but let me tell you the story of just one.

The closing attorney called me a week before scheduled closing with the information that the property had two leins - people had filed legal paperwork saying the property could not be sold if they did not get their accounts paid by the seller. This would derail the closing if not dealt with. We had 4 days to deal with the problem, and two of them were weekend days.

We found that one of the leins had already been satisfied, and with some effort, got it lifted. The Seller had to find a way to get the money to pay the second one, get a bank check or money order for it, and present it in person to the lein-holder. And he had to get a signed letter from them saying the lein had been settled. But the amount of the lein was more than the Seller could manage. We negotiated a reduction, that the paperwork would be ready when he showed up, and that his credit report would be cleared. He managed to get all this done on the morning before closing, brought the paperwork to the closing table, and the transaction went through.

Imagine a new agent working their first Short Sale faced with this situation. The agent above, the one who did not know about the HUD-1, would not have known about this until the closing appointment. Very few agents would go through the title clearing process far enough in advance to find out about this deal-killer. I do.

Let me help you with your short sale process, so I can help keep this type of thing from happening to you. And if you have horror stories like this, please share them with us all by posting a comment.

Today's installment in my series on Why Short Sales can fall through is about times when the buyer walks away from the deal. As I mentioned before, agents are entering the Short Sale market because the "normal" market is now declining. To keep thier carreers alive, they are turning their eyes to short sales. But their lack of experience can cause the deal to fail, and everyone to lose. As a Short Sale Specialist, my years of experience has prevented this problem for my clients.

Short Sales are a long process requiring patience - from everyone. Sometimes, in this long process, a buyer gets ‘cold feet' or decides there is a more attractive opportunity around the corner. Or they simply get tired of waiting. For whichever of these reasons, they walk away from the transaction. If this happens after the lender's acceptance, of course, they forfeit the earnest money. So more often, this happens during the negotiations with the lender. This process can extend for weeks, and lenders often do not communicate their status throughout this time. Under these conditions, it is natural for the buyer to get nervous or frustrated.

Even worse, sometimes, is when the buyer convinces the agent to put the listing in Pending status when the seller accepts the offer, so that they can be assured of being the only offer. Believe me, it happens with some agents. I don't do that. First, by definition following the terms of my contract addendum, the offer is not a contract, and therefore pending, until the lender accepts the offer, not the seller. Second, a key to success of the short sale process is ensuring that the lender believes they are getting the best offer they will get on the property. Putting the listing in Pending status makes it unlikely that better offers will come in during the process. Finally, as has happened to some of these other agents, the buyer may still walk away after the listing has gone Pending, and the agent needs to start all over again.

Certainly buyers can walk away through the long process, and I cannot claim that it has never happened to me. It has, but very rarely. I make sure the buyer is informed, and that I keep up to date with the lender's status and communicate that back to all parties, calming everyone down.

But let me tell you a story about when a buyer did walk away on one of my transactions. I had a sense that this buyer was getting distracted and unreliable. Just days before the acceptance from the lender was due, the buyer's agent stopped returning my calls - a sure sign of trouble. But I was ready for it.

I got a backup offer in place that resulted in the same net for everyone and closing on the same date. That was one of the most frenzied Short Sales I ever had, but in the end, all worked out for everyone involved. And the buyer, a wonderful immigrant lady, invited us to her housewarming dinner in her great new house just a month later. That dinner, and her obvious pride in owning her first house and participating in the American Dream, made all the hard effort and long hours scrambling to put the transaction together worthwhile.

You can rely on my expertise in Short Sales to help you get through the process without this happening to you. Give me a call and let me walk you through what a short sale is and how it can help you when your mortgage is "upside down". If you have stories about buyers who walk away, or other thoughts on how to keep it from happening, please post a comment here. I'd love to hear it.