What's the next step in short sale?

17 Replies

Hi everyone,

I'm super new to short sales and I'm just learning as I go. I'm not sure what to do next and would like some feedback.

I have a property picked out. The owner of the property is willing to go through the short sale. I've been able to negotiate on the 2nd mortgage and they are willing to take a reduced amount. The owner is going to submit a letter of authorization to Wells Fargo which is 1st position soon.

After that is where I'm not clear on what to do? Do I write up an offer and send it to the owner? Or Do I talk to Wells Fargo first and see if they will accept a lower amount?

Looking forward to reading your feedback.

Thanks


Surprised you got any response with the second, for whatever it's worth, but with WF the property is going to have to be listed, find an experienced agent, and go from there. The second mtg is only going to get what the first gives them, unless you kick in the difference, and sometimes you're not even allowed. There are set in stone rules for how much the second can get, depending on who owns the first..FANNIE, Freddie, FHA insured, HAFA, private, etc. trust me, the best way for you to make sure this deal fails, is to try to do this yourself. You just have no idea, of what you don't about how to close a short sale.

Thanks for the response Wayne. I'm fine with losing this deal I'll just move on to the next. I'm still learning. So what would the next step? :-)

I think it was a waste of time to start with negotiating with the 2nd. The senior lien holder essentially sets the terms of the deal. They decide what they are willing to let the 2nd have, how much they are willing to pay the agent and what other debts, if any, they will allow to be paid. Wells is on top of their game and will expect the property to be listed for a price that reflects the property's true current market value. Do you still want this property if you have to pay FMV or better? Is there some condition or issue that will deter other buyers?

@Kathy Judd Next step?  As I said, find an experienced short sale agent.  You may not care if you lose this one after screwing around for a few months of not knowing what you're doing, but the owner who then doesn't have time to go thru the short sale process again, so they jusst get foreclosed on, might have a reason to care.

Originally posted by @Account Closed :

I think it was a waste of time to start with negotiating with the 2nd. The senior lien holder essentially sets the terms of the deal. They decide what they are willing to let the 2nd have, how much they are willing to pay the agent and what other debts, if any, they will allow to be paid. Wells is on top of their game and will expect the property to be listed for a price that reflects the property's true current market value. Do you still want this property if you have to pay FMV or better? Is there some condition or issue that will deter other buyers?

In this case I have to talk to the 2nd because the own the property. The property needs some tlc so I figured I can use that to negotiate. Well Fargo is also trying to put it up on the one of the bidding sites to the close to the price that I'm willing to make an offer on.

      Are you saying the 2nd mtg foreclosed, and got the property back at the auction (that's the only way they'd own it, unless the owner did a DIL)?  If so, it's not a short sale, they own it subject to the first mtg.  They will have to negotiate with the first.  Is the first foreclosing?

Originally posted by @Wayne Brooks :

      Are you saying the 2nd mtg foreclosed, and got the property back at the auction (that's the only way they'd own it, unless the owner did a DIL)?  If so, it's not a short sale, they own it subject to the first mtg.  They will have to negotiate with the first.  Is the first foreclosing?

 Yes, the 2nd foreclosed awhile ago. The 1st is in the process for getting foreclosed right now.

Oh boy.  If the 2nd foreclosed and got it back at sale they are now the owner, not the borrower.  The borrower is now out of the picture and is not needed to participate in a short sale (other than getting the authorization to release, which makes things a lot easier when working with Wells).  

What is the payoff on the 1st and what is the FMV? It still might end up a short sale if the balance and fees owed are more than the property is worth and Wells is willing to take a discount.

Are there post sale redemption rights in ID?

Originally posted by K.marie P.:

Oh boy.  If the 2nd foreclosed and got it back at sale they are now the owner, not the borrower.  The borrower is now out of the picture and is not needed to participate in a short sale (other than getting the authorization to release, which makes things a lot easier when working with Wells).  

What is the payoff on the 1st and what is the FMV? It still might end up a short sale if the balance and fees owed are more than the property is worth and Wells is willing to take a discount.

Are there post sale redemption rights in ID?

FMV is around 140k. Idaho has no post-sale statutory right of redemption for foreclosures.

Originally posted by @Kathy Judd :
Originally posted by @K. marie P.:

Oh boy.  If the 2nd foreclosed and got it back at sale they are now the owner, not the borrower.  The borrower is now out of the picture and is not needed to participate in a short sale (other than getting the authorization to release, which makes things a lot easier when working with Wells).  

What is the payoff on the 1st and what is the FMV? It still might end up a short sale if the balance and fees owed are more than the property is worth and Wells is willing to take a discount.

Are there post sale redemption rights in ID?

FMV is around 140k. Idaho has no post-sale statutory right of redemption for foreclosures.

 And what is the payoff amount, approx?  You're sure it was a nonjudicial foreclosure (trustee's sale, no court case)?  Idaho does have redemption rights for judicial foreclosure.

Hi Kathy,

Up here in Coeur d'Alene, the title people are the experts on short sales. I think the laws in Idaho are a bit different or maybe it just that Idaho is still 10 years behind (jk). Call up your favorite title company, see if they have a short sale person and then pick their brains. (Ew-zombie scenes just flashed before my eyes)

 And what is the payoff amount, approx?  You're sure it was a nonjudicial foreclosure (trustee's sale, no court case)?  Idaho does have redemption rights for judicial foreclosure.

 The payoff is 130k. So if Wells Fargo is listing the property on website for let's say 100k, does that mean Wells Fargo has already willing to take 100k for it? Or are they just using this trick to get more people to bid it up?

@Kathy Judd You must be missing something.  If Wells is "listing it on some web site" then either they already own it, or that's an advertisement for their foreclosure auction, ie. the way auction.com advertises the foreclosure auction when they are the foreclosure trustee.  You need to know which it is.

Originally posted by @Kathy Judd :

 And what is the payoff amount, approx?  You're sure it was a nonjudicial foreclosure (trustee's sale, no court case)?  Idaho does have redemption rights for judicial foreclosure.

 The payoff is 130k. So if Wells Fargo is listing the property on website for let's say 100k, does that mean Wells Fargo has already willing to take 100k for it? Or are they just using this trick to get more people to bid it up?

Wells can't list or sell the property if they don't own it.  Only the seller can sell it. Is the $100K the minimum bid for the pending trustee's sale?

@Kathy Judd Is it the property in S.? On L. for $100K? If so, that property is an REO owned by Wells and is listed with an agent. You would call them to make an offer. Not a short sale situation. Both the borrower and the 2nd lien holder are out of the picture.

Sorry I should have been more clear. Wells is advertising their foreclosure date and the auction is going to be done by auction.com next month. So their starting bid is close to 100k. They are probably just wanting to get more buyers to the auction.

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