Credits and Concessions can loosen gaps in some Short Sales

When it comes to Seller Concessions, the area of debate is gigantic. Both debate and Strategy; I capitalize Strategy here because in the world of Short Sale, Seller concessions can overcome monetary gaps in multiple lien sales (when they are devised with reason), A Seller credit to the Buyer for closing costs is considered almost customary in some markets of issue in others. In a Short Sale, while approving Banks do not favor them with some known to outright decline them, some Banks will pay these concessions. It is important for both Agents to have a formulate strategy whether they disclose them to each other or not.

The rules of the game here are not scientific or curriculum text. The game itself is to bring Buyers and Sellers together and within that process, there are issues that need to be creatively matched to affect the closing scenario.

Let’s take the following example.

The property has two liens. The first was a purchase loan, 100% financing and the junior lien was a concurrent equity line second for improvements prior to occupancy. The first is $400,000 and the junior is $65,000. The value of the property has declined to $300,000. The Buyer is very interested in the property, doesn’t really the concession of Seller paid closing costs, though the Listing Agents has confided to the Selling Agent in advance that there are 2 lien on the property and that a ‘getting the deal approved strategy might be the buyer contributing to a junior lien holders shortfall. In this situation, we know by experience that senior lenders, especially the giants, will not pay anymore than $3,000 to $5,000 to junior lien holders for their title interest. In this case, we will use the amount of $3,000. We know that most junior lien holders want more and in the more savvy Investment arenas, a typical settlement on a junior loan is 10% of the value of the note. In this case, that would be $6,500. Now we have a $3,500 shortfall to satisfy the junior lien holder. If this picture were property presented to the Selling Agent and the Buyer prior to writing the initial offer, this shortfall could be creatively factored into the transaction in a way that make a difference of a closing in 90 days or a failure after waiting 14 months.

Real Estate Agents must learn to communicate more effectively with each other to employ the benefits of debate, inquiry and investigation if they wish to receive the success opportunities that got them in the real estate game. With all that said, you’ll just have to wait for my next dissection article of process for your success or amusement.

Copyright © 2010 Bryan Ridgley

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