Posts tagged as:

Massachusetts short sales

How To Achieve Short Sale Success

by Bill Gassett on April 8, 2013 · 0 comments

Closing A Short Sale

Short sales can easily take two to three times longer to complete than a traditional real estate transaction. Keeping this in mind it makes sense to be well prepared if you need to short sale a Massachusetts home. Follow the outline below and you will be well on your way to increasing your chances that you will end up at a closing table.

Hire A Realtor Who Closes Short Sales

Massachusetts Short Sale RealtorChoosing a Realtor who understands the short sale process is a critical one. On of the biggest stumbling blocks to short sale success is hiring any ole real estate agent to represent your interests in a short sale. Trust me there are Realtors taking short sale business who are absolutely clueless. Even though it is against the code of ethics for a Realtor who has no knowledge of short sales to list them, it happens all the time. In other words don’t choose the short sale Realtor pictured to the right!

Some of the first steps of a Realtor representing a short sale candidate include:

  • Conducting a thorough interview of the short seller
  • Establishing whether there is a valid hardship
  • Determining lender/lenders
  • Figuring out approximate remaining mortgage balance
  • Determine what type of loan i.e FHA, Conventional or Fannie Mae
  • Finding out if the seller is in default
  • If so finding out how long in default
  • Figure out if the seller is motivated and cooperative

If the short sale agent you are interviewing is not asking these questions then this could be the first clue this Realtor is not the right agent for the job! Once an agent has done their home work on the seller and has gone ahead with listing the home for sale, they then have to perform the function of finding the right short sale buyer. Finding the appropriate buyer in a short sale is a lot different than a standard real estate sale. You MUST have a buyer that understands the short sale process and is completely invested in the home.

What does invested mean? You want a buyer that is willing to wait the time it takes to complete a short sale and also go ahead with completing their responsibilities just like any other real estate transaction. Responsibilities include getting a home inspection done, signing a purchase and sale, and procuring financing. All of these things should be done prior to short sale approval NOT after. One of the biggest reasons short sales do not close is because of the Realtor not understanding how to properly represent a seller.

Work With An Attorney Who Closes Short Sales

Massachusetts Short Sale AttorneyThe attorney you use in your short sale can have a huge impact on whether or not you get to the closing and also get your desired terms. Just as a real estate agent should have experience in closing short sales so should the attorney if you have one. By the way in my opinion it is vital to have an attorney representing your interests in a short sale!

A real estate agent should not be practicing law which is exactly what happens when you have a Realtor who negotiates a short sale contract and approval letter. Luckily for me I have one of the best short sale attorneys in Massachusetts representing all of my clients! Here are some of the things a good Massachusetts short sale attorney will be doing to get short sale approval:

  • Understand and maintain lender guidelines
  • Secure forms for each lender and/or servicer
  • Run a title exam on the seller’s property
  • Identify any liens and/or encumbrances
  • Identify all individuals on deeds and mortgages

Complete Short Sale Package

Short Sale PackageOnce these things are done the short sale attorney will assist in sending a complete “short sale package” to the lender. The short sale package that is submitted to the lender will include the following items:

  • A short sale “hardship letter” which will explain to the lender why the seller needs to complete a short sale
  • The seller’s tax returns from the prior two years
  • The seller’s current pay stubs
  • An authorization letter from the seller stating the attorney will be communicating and receiving lender docs on their behalf
  • The listing agents contract and purchase and sale if available

The completeness of the short sale package is vital in a short sale and often times can hold things up if the lender does not have all the documentation when they ask for it. A good attorney confirm the lender has everything they need when asked for it. Often times negotiators will claim they never received documentation that was already sent. The attorney will also keep all seller financial information updated and forwarded to the lender every 30 days or as they require.

One of the biggest roles the attorney has is maintaining a constant line of communication with the lenders negotiator. When a negotiator asks for a document the attorney needs to jump on it right away.

Short Sale Negotiation

Successful Short Sale NegotiationFrom a seller’s point of view there is nothing more important than short sale debt removal. Whoever is negotiating the short sale for the seller plays the biggest role in a seller’s financial future. Again I would never recommend using a real estate agent to negotiate a short sale.  The attorney I use negotiates on my seller’s behalf and looks to get the best deal possible from the lender/investor.

For example lets assume for a moment that a seller is $75,000 short at closing. The role of the attorney would be to try to get the $75,000 short sale deficiency eliminated! Today it is a lot harder to get a short sale debt completely removed but that is the goal. In many cases the lender will not agree to a complete debt removal but will accept either a cash contribution at closing or ask the owner to sign a promissory note. In short sales the amount that a lender typically tries to collect is pennies on the dollar.

While every short sale is different, using the example above a lender could ask an owner to bring $5000 to closing and agree to waive the remaining $70,000 balance. Often times in a short sale an owner has absolutely no cash and it would be impossible for them to contribute anything at closing. In this case the lender may ask for a $15,000 note be signed at favorable terms. Again these figures are just examples but show the type of monetary contributions lenders ask for. Keep in mind lenders will check your finances and know when they can’t get blood out of a stone. One the flip side if they see you have money to contribute, the likelihood is strong they will ask for something.

Aside from the negotiation of the dollar amounts the short sale attorney should also be looking to eliminate the possibility the lender can come back after you in the future for any remaining mortgage balance. This should be completely spelled out in the short sale approval letter.

Short Sale Obstacles

Short Sale ObstaclesBefore you ever get to the negotiating table with a lender there can be obstacles that pop up along the way. One of the most common short sale problems is disputes over value with lenders. This is one of the more common issues and can easily derail the short sale if you are not familiar with how to tackle the problem.

In every short sale the lender will send out a representative who will evaluate the current market value. This is either done by an appraiser or another real estate agent. They will do an analysis of value and report their findings back to the lender. The lender unfortunately can treat this value as “gospel”.  You are at the mercy of whatever the agent or appraiser has to say as far as value goes.

Here is where the biggest problem occurs. Most of the time it is not an appraiser that will do the evaluation but a real estate agent that the lender chooses. Here is the rub. The agent who does this work for the lender generally gets paid $40-80 dollars to do hours worth or work evaluating the properties value. Can you guess what type of agent has the time or inclination to work hours and only get paid $40-80 dollars. If you guessed bottom of the barrel then you are right on the money. Sometimes the agent isn’t even from the area and knows nothing about local value and differences between neighborhoods. Pardon the French but it can be a real shit show.

When a lender is given an evaluation that does not make sense they will counter offer at some ridiculous value that makes absolutely no sense. This is where a skilled short sale agent comes in that knows how to dispute a foolish evaluation given by some nit wit who is practicing real estate part time on the side. I kid you not this happens far too often!

Picking the right short sale Realtor and attorney is a vital part of short sale success!

___________________________________________________________

About the author: The above Real Estate information on how to achieve short sale success was provided by Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-435-5356. Bill has helped people move in and out of many Metrowest towns for the last 26+ Years.

Thinking of selling your home? I have a passion for Real Estate and love to share my marketing expertise!

I service the following towns in Metrowest MA: Ashland, Bellingham, Blackstone, Douglas, Framingham, Franklin, Grafton, Holliston, Hopkinton, Hopedale, Medway, Mendon, Milford, Millbury, Millville, Natick, Northboro, Northbridge, Shrewsbury, Southboro, Sutton, Wayland, Westboro, Whitinsville, Worcester, Upton and Uxbridge MA.

Tagged as: , ,

{ 0 comments }

Educating A Buyer Looking To Purchase A Short Sale

by Bill Gassett on February 13, 2013 · 2 comments

Buyer’s Agent Representation For Short Sales

 

Massachusetts Short SalesIn every real estate transaction I am a firm believer of a buyer having representation. It makes perfect sense for a home buyer to have someone in their corner giving them guidance. Unfortunately when it comes to short sales I have found that so many buyer’s agents are not properly educated enough to do a proper job.

Short sales are not ordinary real estate transactions and as such an agent who has no knowledge should no even consider getting involved with one unless they have another agent who does mentoring them. While representing home owners who have needed to short sale their property over the last seven years I have noticed time and again real estate agents who don’t even understand the basics of short sales. If you are a buyer and are considering purchasing a short sale I am going to go over some of the basics below on what you need to understand before entering into one of these transactions.

Short Sales Take Time

Short Sale Closing TimeIf you are considering buying a short sale the first thing you need to understand is that they take far longer to purchase than a non-short sale. On average it takes around 90-120 days to get short sale approval. In some cases it can be a lot longer! For example if there is more than one loan on the property and both are “short” then you will need to get approval from both lenders. This will add time to the overall process of getting to the closing table.

It is also possible that the original  mortgage the owner had on their home was an FHA loan. If that is the case than you can prepare yourself for an even longer journey. As crazy as it sounds, it is quite possible it could take 6-9 months or longer to get to the closing table with an FHA loan. This is obviously a question your buyer agent should be asking right up front. Guess how many buyer’s agents have asked me this question over the last seven years? If you said zero you would be correct!

On some short sales Fannie Mae or Freddie Mac is the investor holding the note. There are many buyer’s and agents who will ask the question who is the lender? Lets assume for a minute the lender is Bank of America (BOA). That does not mean that Bank of America is necessarily the decision maker. They may not actually own the note and are just the “servicer”  for the investor.

There could be 20-30 investors that own notes that BOA services. This is one reason why one BOA short sale could be a nightmare and the next smooth sailing.  This is true of most lenders not just BOA. On some loans there could also be mortgage insurance in which case the insurer also has to approve the short sale. Are you starting to get the picture here? Short sales are one big bureaucratic mess. If you were thinking that short sale approval was as simple as  some dude was sitting behind a desk making decisions then you are wrong!

The long and short of all this is that a buyer’s agent should not get a buyer involved with a short sale transaction unless they have the time to see it through until the end. Keep in mind that a seller going through a short sale is in a tough financial position. The last thing they can afford is an uneducated buyer thinking it is fine to bail on them after a month because they are tired of waiting for a short sale approval to be issued.

Be Prepared To Spend Money

Short Sale InvestmentIn every real estate transaction there is risk. When you purchase a home some of the typical expenses a buyer should be prepared for are home inspections, hiring a lawyer for contract review, and applying for a mortgage. In many short sales I see buyer’s agent’s trying to structure the contract such that the buyer does not have to spend money on any of these things until there is short sale approval.

Sure it would be nice to go around in life to never have any risk in anything you do but that is not how it works when purchasing a short sale. Well actually let me rephrase that. This is not how it works in any short sale where I will be representing the seller! The goal in any short sale is to actually get to a closing. When you try to change the rules of real estate you increase the likelihood you will not be closing. There are reasons why a buyer should get their home inspection done, why they sign a binding contract and why they procure their financing prior to short sale approval. For a complete explanation of why a buyer should complete these tasks up front see reasons to reject short sale offers.  Being educated on the entire short sale process is vital.

Interview The Listing Agent

Massachusetts Short Sale RealtorsWhy on earth would you want to interview the listing agent you may be thinking? The answer is real simple….you want to be able to find out what the chances are that you will actually close on the home you are interested in purchasing. Closing short sale transactions are far more complex that a regular sale. The listing agent in a short sale should have experience closing them! This can not be emphasized enough. There is nothing more important in a short sale than the listing agent having a track record of success.

For example if the listing agent allows you to do a home inspection after short sale approval do you really think they have any clue what they are doing? Would they be representing their clients interest to allow this? Do you think there would be plenty of short sales that bit the dust right before closing if this was allowed?

Here is a detailed list of short sale questions for a listing agent. These questions should be able to help you get a better grip on whether or not the Realtor knows what they are doing. You should at the very minimum be finding out how many short sales they have listed and how many of those have closed. You should also be making sure that if your offer gets accepted the seller signs it and the home is taken off the market. Remember without a signed contract, the seller can accept a better offer from someone else.

Short Sale Low Ball Offers

Massachusetts Short Sale GambleIf you think short sales are an open invitation for you to offer some ridiculous price then you are wrong. The chances of a lender accepting something significantly under value is slim to none. What buyer’s agent and buyer’s need to understand is that the lender is going to verify that the offer the seller has accepted makes fiscal sense. The lender will either send out an appraiser or another real estate agent who will do an analysis of value on the home and send that back to the lender. The lender will use this information to form the basis of their decision on whether to accept, reject or counter offer.

It makes no sense for an owner to accept a low ball short sale offer. When a seller does this they have taken their home off the market for months and are almost assured that they lender will say NO! For a seller to accept a low ball offer would essentially be gambling away any chance they have for short sale success.

A short sale should be a decent value and more often than not slightly under market for what a similar property should sell for. Don’t expect the world though. Lenders are much tougher today with value and getting the most they can.

Short Sales Are “As Is”

Short sales are generally as is transactions. Don’t expect a seller to go out and make repairs after doing a home inspection. The whole reason they are doing a short sale to begin with is because they don’t have the financial means to keep the home. If you happen to do a home inspection and there is a major defect that you were not expecting what you should try to do is negotiate a lower sale price.

The listing agent will want to document the defect to the lender. They will do this by providing the inspection report to the appraiser or real estate agent who does the evaluation on their behalf. Do not expect to negotiate a bunch of silly “punch list” type of items from a home inspection. Go into the sale with an open mind knowing you will need to do some work.

_________________________________________________________________

About the author: The above Real Estate information on educating a buyer looking to purchase a short sale was provided by Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-435-5356. Bill has helped people move in and out of many Metrowest towns for the last 26+ Years.

Thinking of selling your home? I have a passion for Real Estate and love to share my marketing expertise!

I service the following towns in Metrowest MA: Ashland, Bellingham, Blackstone, Douglas, Framingham, Franklin, Grafton, Holliston, Hopkinton, Hopedale, Medway, Mendon, Milford, Millbury, Millville, Natick, Northboro, Northbridge, Shrewsbury, Southboro, Sutton, Wayland, Westboro, Whitinsville, Worcester, Upton and Uxbridge MA.

Tagged as: , ,

{ 2 comments }

Short Sale Realtor Mistakes

by Bill Gassett on February 16, 2011 · 13 comments

Short Sale Realtor Mistakes

As a Realtor who has been successfully completing short sales over the last four years I get to see quite a bit of the inner workings of a short sale transaction.

In many of the articles I have written about short sales, I have expounded on how important it is for a seller to have a Realtor representing them that understands the process completely.

From a buyers perspective it is pretty easy to understand the frustrations of some short sale transactions most notably the extra time it usually takes to get one approved compared to a traditional sale.

The short sale completion time often is due to the particular lender involved and the complexity of the short sale. Things like the number of lien holders, liens against the property and private mortgage insurance can all be factors in whether a short sale will take extra time.

When a Realtor is the cause of a short sale not being approved there is no excuse! In fact this is why there will be short sale lawsuits against Realtors who are clueless.

I want to share my story from a buyer’s perspective on a short sale that I was interested in purchasing for myself and how things have unfolded over the last few weeks.

Unfortunately, I ran into an agent that doesn’t understand short sales! Believe me I would love to broadcast who this agent is just so anyone thinking of short selling their property would never consider using them. In all likelihood this agent will be the direct cause of why this owner gets foreclosed on. It is a short sale botch job beyond belief.

Without giving away too many details this property was not located in Massachusetts. For me it would have been a nice vacation spot where I could get away when needed.

Let me 1st start off my story by explaining to you that the property was listed as an approved short sale for $79,900. If you are not familiar with short sales the vast majority of them are NOT approved by the lender prior to a buyer making an offer on one. Usually a buyer makes an offer and you wait for the lender to either approve, counter or reject the offer.

The property I was interested in purchasing was marketed and advertised as an APPROVED short sale in MLS. Well guess what folks it was NOT an APPROVED short sale.

The Realtor marketing the property clearly was misrepresenting the property in order to make it more attractive to an interested buyer. A clear violation of the code of ethics! This fact alone could get a Realtor in deep #$%@ but I am only starting my sad story.

I got past the fact that the short sale was not approved and made an offer anyways.  I should explain that this property is a condo and is located in a neighborhood where all the units are virtually identical aside from differences in updates, amenities, and whether it has a water view or not.

The last sold comparable property in the neighborhood closed 9 months ago for around $100,000. This becomes relevant because over the last 9 months property values have still been declining in this area.

At the moment there is a bank owned unit for $59,900 that is under agreement in better shape, a short sale that has been on the market for close to a year at $85,000 and another that was recently taken off the market for $75,000 that was also on for close to a year.

Clearly the value of the property is not the same as it was when the appraisal on this unit was done by the lender.

I made a very respectable offer on the property which my agent submitted to the listing agent. The listing agent told my agent that my offer would not fly and that the lender needed $84,200. Really??? I asked why it was being advertised at $79,900 and never got an answer.

The listing agent did submit the offer to the lender and used what is called a request for variance under the HAFA short sale program. The request for variance is used to get a lender to accept something less than what they are required to accept under the guidelines of the HAFA short sale program based on the appraisal they have.

This is what the listing agent wrote in the request: “I definitely don’t want to give this property away but I also don’t want the property to sit there for additional time where it can lose more value. There is currently one listing in this community that is listed in the 70′s and it’s a foreclosure with updates. The subject property is dated. The buyer is trying to use that as leverage and I have explained that the closed sales are what we are looking at.”

Writing this to the lender is wrong on so many levels! 1st of all a Realtor does not work for a lender in a short sale!! The listing agent works for the seller and should be doing everything possible to get the property SOLD. Does it sound like the Realtor is making a good case for my offer being something they should look at or I am just a dumb buyer who is trying to steal the property?

Needless to say my offer was rejected and the lender said they would not accept less than $84,200. The listing agent then raised the price in MLS to $84,200 after having been on the market for months as an approved short sale at $79,900. How damaging do you think that is for the seller!

Folks in a short sale the only consideration from a seller’s perspective is getting the property sold and the short sale debt removed.

Short sale Realtor buffoon

The seller should not care if the property sells for X or Y as long as the debt is removed which they are granted under the HAFA program. It is painstakingly clear that the agent has probably never done a short sale before and does not know anything about short sale debt removal.

You may be thinking how do I even know the listing agent wrote this to the lender? This is where it gets even worse. The listing agent passed along to my agent private information that should have never been shared with anyone.

What was shared were the HUD docs and the FHA variance rejection letter which included the following information:

  • A date in which foreclosure proceedings could be commenced against the seller.
  • The minimum amount the lender would accept for the property.
  • The name and phone number of the short sale negotiator.
  • The name of the HUD officer who signed the rejection of my offer. I already Google his name and could contact him directly as well.

Besides completely botching everything you could possibly do from a short sale perspective and maintaining your fiduciary responsibility to the seller, the Realtor does not even understand appraisals 101.

The listing agent insists that only closed properties are data that the lender should be looking at. REALLY??? You have properties on the market that are not sold that are listed 20-25% under what the last unit sold for 9 months ago!! Please go back to Real Estate school. Ask an appraiser if they use current listings in their analysis….stop acting like the biggest dope going.

I am paying cash so it doesn’t matter but if I was getting a loan my lender would certainly take the fact that there are  units on the market that haven’t sold sitting there at these prices.

Why do I bring the appraisal aspect up? The lender has an appraisal that is 9 months old for $90,000. If a new appraisal was ordered the lender more than likely would change their position.  I would get my vacation spot, the listing and selling agent would get paid, the lender would not own another property and most importantly the seller would avoid foreclosure.

The listing agent won’t ask the lender to get a new appraisal. I have also asked if my attorney could speak to the negotiator directly. I have been rebuffed on all accounts. If the listing agent had submitted the current listings and made a good argument to the lender for my offer being accepted I would not even be writing this article.

Instead I am left thinking about what I should do. If you were in my shoes would you do any of the following:

  • Explain this situation to the listing agents broker of record and make clear that their agent is a walking lawsuit waiting to happen?
  • Try and call the negotiator directly and ask for a new appraisal?
  • Make a copy of this article and mail it to the seller?
  • All of the above?

The seller has a ready willing and able cash buyer who can close immediately.  A foreclosure is a costly situation that the lender could avoid. This would be a win-win for all involved. A new appraisal would make this a simple transaction.

After going through it myself it is even more clear why every seller considering a short sale should be working with a PRO! If you are thinking of purchasing a short sale here are some short sale questions to ask the listing agent to see what the probability you will ever end up at the closing table. Nationally less than 30% of all short sales close! In many cases this can be traced back to a Realtor who has no idea what they were doing.

*** Update – after a few months I finally was able to convince the listing agent to get the lender to order a new appraisal. The appraisal was done and came inline with what I was offering. The lender accepted my offer and we closed. Without my knowledge of short sales this property probably never would have closed and the seller would have ended up in foreclosure. All because the Realtor lacked the proper understanding of how short sales work. The scary part is this agent advertise themselves as a short sale expert.

_________________________________________________________________

About the author: The above Real Estate information on short sale Realtor mistakes was provided by Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-435-5356. Bill has helped people move in and out of many Metrowest towns for the last 25+ Years.

Thinking of selling your home? I have a passion for Real Estate and love to share my marketing expertise!

I service the following towns in Metrowest MA: Ashland, Bellingham, Blackstone, Douglas, Framingham, Franklin, Grafton, Holliston, Hopkinton, Hopedale, Medway, Mendon, Milford, Millbury, Millville, Natick, Northboro, Northbridge, Shrewsbury, Southboro, Sutton, Wayland, Westboro, Whitinsville, Worcester, Upton and Uxbridge MA.

Tagged as: , , , , , ,

{ 13 comments }

Beware of The Short Sale Investor|Short Sale Fraud

by Bill Gassett on August 17, 2010 · 132 comments

Short sale scammer

Any Realtor that regularly works with short sales is bound to come across a proposition from a potential buyer who happens to be a short sale investor.

As a home owner you may have also at one time or another noticed some signs around town that say  something like “we buy houses” or “stop foreclosure” or “We buy homes for cash FAST”

If you are selling a Massachusetts home and it happens to be a short sale let me give you some words of wisdom – make sure you or your Realtor does their due diligence when deciding whether or not to work with an investor.

A short sale investor has one goal in mind and that is to buy your short sale at the lowest number they possibly can. Seems reasonable enough. An investor obviously needs to buy the home on the cheap because more than likely they are going to turn around and flip it to someone else making a handsome profit. As a Massachusetts home owner trying to short sell your home you may be thinking why should you care as long as you find a buyer?

The answer is real simple. One of the biggest reasons why many short sales never reach the closing table is because the seller accepts an offer that is too far under market value and the lender rejects the contract denying the short sale.

When you are short selling your home what you need to understand is that the lender is going to verify the market value of the property prior to giving short sale approval. The lender will send out either an appraiser or ask an independent Realtor to do what is called a BPO (broker price opinion).

The contract price that you have accepted from the short sale investor needs to be within a reasonable proximity to appraised market value or the short sale will be rejected. From an investors perspective they could care less because they have your home tied up and there is no risk to them if the transaction does not happen. They get their deposit monies back if the lender does not accept their offer. A short sale investor knows this and will put offers on many short sales hoping something eventually sticks.

Just by putting a few of these deals together they can make quite a bit of money. Guess at who’s expense though? Trust me their pitch is going to be how they are going to be helping you get out of a desperate situation.  You will be more desperate when it does not happen because you will be that much closer to FORECLOSURE.

Your home will be off the market tied up for months with this investor while you wait for the banks reply. When it finally does come and the answer is no way Jose you will be starting from scratch and the foreclosure will more than likely be right around the corner. This scenario happens all across the country on a regular basis with short sales.

If your Realtor is naive to how short sales work, you could easily get caught in a situation you are really going to regret. I tell people all the time in the short sale articles I write that it is critical to work with a Realtor that has a strong track record of closing short sales.

There are also situations where the investor buyer is the referral source to the listing agent. The listing agent may be given an incentive from the investor buyer to take on a short sale in return for receiving the re-sale listing after the investor buys the short sale home. In essence the Realtor lists the house again when the home is being “flipped”. For performing the transaction for the investor the Realtor is promised they will handle  more of these transactions in the future. The problem with this arrangement is very simple.

Any Realtor who signs a contract with a seller to sell their home is working for that seller! It is the Realtors fiduciary responsibility to get the seller the best terms and conditions. How can a Realtor do this when there is an inherent conflict of interest? THEY CAN’T. This is a short sale scam!!

Financial ramifications of an accepted low ball short sale offer

Going back a few years ago it was not uncommon for many lenders to completely forgive a seller of their short fall. So for example if the seller was $50,000 short the lender would wipe out the debt and the seller would be free and clear. The game and the playing field has changed quite a bit in 2010.

It is much more routine for a lender to require a seller to pay back a portion of their short fall in order to close the property. An agreement to pay back a portion of the debt will become part of the approval letter. Typically the owner will be asked to sign a note where they agree to pay back a certain amount over “X” amount of time.

The reason why this becomes important when dealing with a short sale investor is because if they do manage to get the lender to approve the short sale you will more than likely be on the hook for a larger portion of debt than if you held out for something closer to market value.

Short sale investor/mortgage fraud

One of the other short sale scams that takes place is when there is fraud committed against the lender by efforts of both the Realtor and short sale investor. A simple example would be a short sale that is listed for $175,000. A Real Estate agent receives an offer from a couple that wants to buy the home for $160,000.

Massachusetts Short sale bribe

Instead of submitting the offer to the lender, the agent calls up an investor friend and has them submit an offer for $140,000. The agent does not let the lender or seller know about the $160,000 offer but instead submits the investors offer of $140,000.

The investors offer of $140,000 gets accepted and the investor turns around and sells the property to the couple who was willing to pay $160,000. Folks this is what is known as MORTGAGE FRAUD! The other term for this practice is known as “flopping”. Someone caught doing this will find themselves in Federal Court.

Many of the larger lenders now are requiring a full appraisal before a resale can take place. They are also requiring short-sale buyers sign statements affirming the transactions are arms length, with no hidden buyer-seller relationships, and that there are no agreements to resell the property in place.

Firms such as Bank of America and others have language in their short sale approval letters that prohibit the flipping of a property and after closing they will audit transactions to identify “flips” or “flops”.

Other measures have been put in place by the Treasury Department to prevent short sale fraud by requiring that the buyer and seller have no hidden relationship and banning a re-sale to take place in under 90 days.

Let me be clear on this issue. If the bank knows up front that a flip is going to be taking place it is NOT mortgage fraud.

There is nothing wrong with an investor making money. Being in business and making a profit is what most people strive for. Non-disclosure is a completely different story! A Realtor however, does not get off the hook quite so easily if they have not performed their fiduciary duty to get their client the best terms and conditions in the sale. Realtors that get involved with these kinds of transactions walk a fine line with getting themselves into a situation where they are clearly not working in the best interest of their client.

Block head Massachusetts short sale Realtor

If you find yourself in a position that you are going to need to do a Massachusetts short sale it is highly advisable that you work with a short sale specialist who is knowledgeable, honorable and someone you can trust! There are numerous Realtors that have begun to take short sale listings that have no experience what so ever completing a short sale transaction.

I would encourage you to do your home work when selecting a Realtor to work with in a short sale transaction. The last thing you need is to be stuck with a block head agent that does not know what they are doing!

Many agents do not know the 1st thing about short sales and try to learn on the fly. When you are facing foreclosure the last thing you want is to be stuck working with an agent that doesn’t know about short sale procedures!

If you are needing to complete a  short sale of your home or condo in Ashland, Bellingham, Framingham, Franklin, Grafton, Holliston, Hopedale,  Medway, Mendon, Milford, Hopkinton, Southboro, Westboro, Natick, Northboro, Northbridge, Whitinsville, Upton, Uxbridge, Shrewsbury, Worcester, or Douglas Get in touch! I would love to interview for the chance to represent your best interests.

I am successfully completing short sales through out the Metrowest Massachusetts area. So far over the last three years, knock on wood, I have a 100% success rate for short sale approval! I work hand in hand with a local short sale Real Estate attorney who knows how to get short sales done!

If you are outside of the Metrowest Massachusetts area or even in another state and need to do a short sale please feel free to contact me and I would be happy to refer you to a Realtor in your location that handles short sales and knows what they are doing! I have referred short sales to other Realtors all around the country.

Other short sale articles of interest:

_________________________________________________________________

About the author: The above Real Estate information on beware of short sale investor|short sale fraud was provided by Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-435-5356. Bill has helped people move in and out of many Metrowest towns for the last 24+ Years.

Thinking of selling your home? I have a passion for Real Estate and love to share my marketing expertise!

I service the following towns in Metrowest MA: Ashland, Bellingham, Blackstone, Douglas, Framingham, Franklin, Grafton, Holliston, Hopkinton, Hopedale, Medway, Mendon, Milford, Millbury, Millville, Natick, Northboro, Northbridge, Shrewsbury, Southboro, Sutton, Wayland, Westboro, Whitinsville, Worcester, Upton and Uxbridge MA.

Tagged as: , , , , , , , ,

{ 132 comments }

Short Sale Tax Consequences

May 10, 2010

Tweet As a Massachusetts Realtor that has been doing quite a few successful short sales, one of the things I like to make sure of when I meet a potential client that is looking to do a short sale is to give them a complete understanding of how they work. Short sales can be complicated [...]

35 comments Read the full article →

Make Sure You Get Your Massachusetts Short Sale Debt Released!

April 16, 2010

Tweet If you are an avid reader of my Massachusetts Real Estate blog you probably have guessed that one of my passions is to help out those that are in need of completing a short sale. Massachusetts home owners struggling to make mortgage payments are often turning to doing a short sale as a means [...]

16 comments Read the full article →

Questions to Ask a Short Sale Listing Agent as a Buyer or Buyers Agent

April 7, 2010

Tweet There is no doubt that a short sale is not your run of the mill Real Estate transaction. Anyone who has ever been involved with one as a listing agent knows there are a lot of hoops to jump through! On a national level there is a very high percentage of short sales that [...]

57 comments Read the full article →

Need a Massachusetts Short Sale Realtor? Don’t Pick a Short Sale Buffoon!

March 24, 2010

Tweet One of the biggest mistakes I see being made over and over again by those that need to short sell their Massachusetts home is picking the wrong Real Estate agent to work with. Don’t make this mistake and turn into Realtor road kill! The are an abundance of Realtors that are listing short sales [...]

19 comments Read the full article →

Stop Making Mortgage Payments During a Short Sale?

February 18, 2010

Tweet The question of whether a home owner should stop making mortgage payments during a short sale is a popular topic for sure! There are a lot of myths floating around when it comes to successfully doing a Real Estate short sale. One of the more prominent untruths is the fact that you need to [...]

105 comments Read the full article →

Picking a Massachusetts Short Sale Realtor

February 16, 2010

Tweet Over the years there have been plenty of times I have seen consumers make poor choices in picking a Realtor to represent them in the sale of their home. If the Real Estate market is booming making a bad selection can be less of an issue. Going back to the beginning of the decade [...]

1 comment Read the full article →