Where is the “I” in Team as it Relates to Short Sales?
It is very important for all real estate professionals to work as a team and exercise certain elements of control if they want to be successful with Short Sales.
What some people preach, but fail to practice, is that repeat business from happy customers is earned. In order to earn the opportunity of a renewed client in as little as 12-24 months the client must follow our credit strategy and the team must execute on a plan together.
I am going to offer you an example that will help everyone understand what is at stake and what can happen when even small elements of teamwork are not present.
On September 10th a Short Sale for one of our Full Service clients was due to settle after four hard months of negotiations with two lenders had been completed. This was a particularly grueling negotiation because both lenders had taken the position that they were insulated from the housing crisis and didn’t have to agree to anything. Let’s just call this laughable and belligerent. After four months both lenders took a more realistic and constructive approach and both Short Sale Proposals were finally approved.
Each lender had a different agreement with mandatory deadlines to receive the approved figures and funds before agreeing to release the liens. The second trust agreement was particularly onerous and our team strongly suggested that all parties use our affiliate settlement company, New Era Title. We knew that if the deadlines were not met that this transaction could suffer. Further, our affiliate title company guaranteed competitive fees with a fee match program so the purchasers were treated fairly. The only issue at stake was the necessary level of control and experience to satisfy all variables required by the lenders to successfully complete this transaction.
In spite of our argument and suggestions, the purchasing realtor demanded that we use their title company to represent the purchaser, and they assured everyone that their title company was experience with short sales. Well that apparently was not the case.
The contract went to settlement and everyone showed up with their money. Our title company represented the seller and played traffic cop in an attempt to help the other title company complete the transaction. After settlement the other title company demanded an agreement by the second trust lender be changed before they would fund. Some of the agreements are vague, and at time ambiguous, and always subject to interpretation based on the previously approved numbers. We were not able to get the agreement changed. After significant efforts from all other participants the purchasers’ title company finally agreed to fund the transaction. However, there was only one problem. The deadline for the second trust has passed by three full business days. The entire transaction was now potentially in jeopardy.
From this point, when the title company finally sent the money, the second trust lender rejected it and decided to take $4200 out of our seller’s bank account with no notice. The seller had already put up the necessary funds required to close and was only left with $10.29 in his bank account after the seizure of funds. The homeowner now didn’t have money to pay his bills, which for all intensive purposes left him short of funds to reclose the transaction. The 2nd lender went on to make it clear that the seller had missed the deadline and that they really didn’t care to hear arguments of fairness. The second trust lender dictated that they were owned the money and that it would not be returned and that any agreement would have to be reworked for approval.
Due to the delays, the next thing that happened was that the purchaser got cold feet and withdrew from the transaction. In a period of 12 days, a solution for a distressed homeowner and his family, came completely apart because of a greedy self righteous realtor demanded that they use their inexperienced title company.
Everybody lost in this scenario. The client recently called me and asked what was going to happen to him and his family. I told him that the first trust lender was restarting foreclosure immediately because their deadline had now also passed. I explained that the lender has this legal right to foreclosure and that we have a very small window to get a new contract and resurrect the transaction.
Personally, I have a difficult time understanding why some people are so against the team concept. When you know the risks ahead of time, and you still chose to force a rookie paralegal on a short sale when they have no experience, I think that is just selfish. I was told it came down to the purchasing realtor having a limited partnership or controlled business arrangement financial interest in the title company that was chosen for the purchaser.
If you are so against teamwork, and you have no room for compassion for the distressed homeowner that is trying to provide a solution for their lender, maybe you should reconsider participating in Short Sales.
The Short Sale Solution, done properly, is an excellent means of avoiding foreclosure and everyone can win if we keep the “I” out of Team.
GHunter.
