This question goes out to those who have tried but failed to complete a SS with a lender. What went wrong? I often read on this and other forums about the sale not working out. So tell me what went wrong. I guess 99% of the time it comes down money. Right? I’m just looking for reasons why a deal that you worked would not workout. I’m trying my first SS and expect to hear from the bank next week.
Some banks are stubborn about taking their chances with the foreclosure. They feel they can buy the property at the auction then sell it for more than what’s owed. That or they feel it will be bid up to an acceptable level at the auction. I had this happen with the 2nd. Yeah, they ended upgetting ZERO since only the 1st showed up at the auction and got the house for what their stake in it was.
I’ve only tried 3 shortsales so far because from the onset I’ve been extremely picky about what I try that on.
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Worked. 1st was going to lose money no matter what, so they were willing to deal with me. There was no 2nd.
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Failed. 1st was going to lose money no matter what and was willing to deal with me, but 2nd wouldn’t play ball. He was wrong. It reverted. I may try to snag it as REO.
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Failed. 1st was PROBABLY going to lose money, and 2nd initially blustered but soon came to his senses and was ready to play ball. But because it was only “probable” that the 1st would lose money, a SS hadn’t dawned on me right away. When it did, the homeowners couldn’t be reached for a week. By the time we all got our act together, it was too late and the 1st wouldn’t postpone. It reverted. I may try to snag it as REO.
Clearly I wasn’t aggressive enough on those last two cases. At least 2 out of the 3 were the right situations, but I was too damned wimpy thereafter. My bad. Lesson learned.
As for SSing in general, I suspect that a lot of shortsellers fail because they ask the bank to lose money when there’s little if any reason to believe the bank will otherwise lose any. “No problem, we’ll just shortsell it and CREATE equity!” I was cheerfully told by a guy who now works a tech job. If that’s what people are doing in the current market, then I say: don’t ask the bank to do stupid things. Stupid things gain you nothing, waste everyone’s time, and may even make lenders more gun-shy of real offers.
Let me put some gurus out of business right now by telling you that if there’s a secret, THAT has got to be it: only try it on properties where the bank is already going to lose money.
Then your job is to convince them to lose a little more so you can profit.
Flush all the unconscionable guru-crap about emotionally manipulating the lossmit department. “Use the borrower’s first names”, bleats one lady who has a goofy first name. The rationalization is that lossmit are people like everyone else. Yeah, and like everyone else with a job, they have to justify their decisions to their bosses.
Don’t waste time trying to influence the BPO. He’s a pro, he knows the area, he can run real comps, and he has been hired to examine the facts of the property–precisely BECAUSE you have already shown an ulterior motive to buy it cheap. Do you really think you’re going to fool him, or something?
The BPO is only one part of the picture, anyway. In my own SS1 above, the BPO come in around 40k. The bank sold it to me for 31k. I presume because they realized how long it would actually take them to get their 40k on the open market. But that’s just my guess. The certainty is that the BPO didn’t set the price.
They knowingly and willfully took a loss of over 50% of the original loan balance. Because it was a foregone conclusion that they had already lost about 40% of it.
That’s my two cents (but I’ll take 1.5).