How Can I Sell A House With
No Equity?
Sell
more listings and accept ones you previously turned away.
Why is
your seller insisting on a high list price? In foreclosure?
Are your
pre-foreclosure listings sitting on the market at a price
above the market?
Learn to
ask the right questions before taking a listing.
Yes, you
will get paid in a properly structured short sale!
You need
a negotiator to deal with the bank.
Your
seller pays us nothing! They get to walk away without debt
or deficiency judgments. In some cases they can get paid.
I have
buyers ready and do all the bank negotiating. You just get
paid at closing.
Call or
email for more info and downloadable FAQ’s
Frequently Asked Questions
by Real Estate Agents on Short Sales
What is a short sale?
A sale
requiring the mortgage lender or other lienholder to reduce
their payoff. This will create enough equity so commissions
and closing costs can be paid. The homeowner is still the
seller but the lienholders must approve the reduced debt
payoff. Typically, the seller must be at least two months
behind on their payments.
What seller needs this?
One with a
high principal balance or payoff when compared to the value
of the house. If they owe more than the house is worth,
closing costs and commissions would have to come out of
their pocket. Most sellers would rather list the house
above market value and hope for the best. Usually a seller
who is behind on payments won’t have the funds available to
close. A short sale
done correctly will cost the seller nothing.
Attorney costs, commissions and forgiven debt are taken from
the bank’s discount. A seller wishing to avoid the auction
and save themselves from a take back foreclosure on their
credit report will be a candidate for our program.
Why would the bank allow this?
They know the
house is headed for foreclosure. Nationally, this costs
them an average of $36,000 in lost interest, attorney fees,
taxes, insurance, repairs, marketing commissions and
eviction costs. If they can dispose of the property before
a foreclosure with a controlled loss in a few months it
saves them money in the long run. Many banks know they made
bad loans with inflated appraisals. They are willing to
make up for it now. They need to feel some pain before
allowing a loss which is why the payments must be
delinquent.
What should I ask all my clients
before listing any property?
You want to
ask their objectives.
Are they
selling to avoid a foreclosure?
Are the
payments, taxes and insurance current?
Are their any
liens or judgments? Water liens?
Do they know
where the abstract and survey are?
Are there any
structural or mechanical defects on the property?
How will the client benefit?
They may need to
just walk away from this high debt. Not by bankruptcy,
but the more honorable solution of a short sale. Your
client will go further into foreclosure if you don’t help
them sell the house. A high listing price and extended
days on the market will only make this situation worse.
To save their credit and stop a foreclosure you need to
motivate them to act early. They can concurrently
process a refinance, forbearance, loan modification or list
it for an unrealistic price. The short sale process
can take a while so you may as well have them start early.
If another plan unfolds, it didn’t cost anything to think
defensively. If they let this go to a foreclosure
auction, the bank can process a deficiency judgment for
money they lost in the foreclosure. In a short sale,
they usually give up their right to collect for damages.
How will the listing agent benefit?
You are going
to sell this house and get a commission! If left alone you
are looking at an expired listing. If you have to list the
house at an unrealistic price just to cover your commission
the client will get hurt by not selling the house and you
aren’t going to get paid. The bank reduces their payoff to
allow commissions and closing costs to be paid. You need to
be proactive by asking the right questions when you took the
listing. You have probably turned down listings before
which had no equity. Now you don’t have to. Even if the
bank requires a reduced commission, at least it is going to
sell. Expired means no commission.
What is the procedure from here?
Call me to
make sure the house fits the criteria for a short sale.
Having answers to the client questions above will speed this
along. Your client will sign an
Authorization to Release
Information to allow my staff to negotiate with the lender
or other lienholder. Your client needs to collect
their last two years of tax returns, two months of pay
stubs, two months of bank statements, write a hardship
letter, fill in a financial worksheet and be ready to sign
some bank specific paperwork. I will submit the
package with purchase contract, HUD-1 and a letter
explaining the situation. The bank will send their
specific paperwork requirements and schedule an appraisal.
I will accompany the appraiser. This is the most
critical event and must not be taken lightly. This is
why I must be involved directly. If it comes in too
high, the house will go to foreclosure. Once the bank
approves the sale, they generally want to close in three
weeks or less.
What will this cost my client?
Zero. The
bank is taking a reduction in their payoff so commissions
and closing costs can be paid without any money from your
client. They can’t walk away with any cash since the bank
is taking a loss. Occasionally, the bank will limit
commissions to 4-5% to make their required net. Still, this
beats an expired listing.
What can Donavan Pieterse do to
help?
My specialty
as a broker and investor is bank negotiations. I have a
list of buyers ready to purchase your client’s property
quickly. Short sales require special knowledge and
systems. It is time intensive and rarely a listing broker’s
best use of time. You will continue as the listing broker
while we do the bank negotiating for you. Attorneys have
very little incentive to take the time to process a short
sale since the client rarely has the money to pay for their
time. I am in the business of buying houses so it is worth
my staff costs to do the heavy lifting for you. I am not
trying to take over your listing.
What properties will you work with?
My buyers
prefer single family starter homes in the suburbs
surrounding Syracuse. Lyncourt, Mattydale, Camillus, Clay,
Cicero, Liverpool, Dewitt, Nedrow, etc. Any school system
outside of the city will interest them. Occasionally, they
will buy in Eastwood or select city areas. If you have a
property in a good area which is not listed here please call
me with a description. If your listings are in areas we
don’t buy in, I may still be able to help within my extended
investor referral network so email them
to
easy2own@twcny.rr.com.
