Oak Lawn IL Real Estate News

A short sale for an Oak Lawn home has been finalized after many months of waiting for Chase Bank to finally give us the required approval.  Short sales are when the mortgage holder allows the seller to sell their property for less than what they owe.

This particular short sale was even more of a challenge because there were two mortgages, but at least they were both with the same bank.  I still had to go through two different departments to pull it all together.

Short sales are not short

Although 3 months might seem like a long time for a buyer to wait for an answer from the bank, that is actually a rather quick turnover for a short sale approval, especially when there were two mortgages to consider.  I have heard of short sales taking 6, 9 months, a year and longer.  And that doesn’t mean to get to closing - that is just to get the approval or a “No.”

It’s interesting that I have had success with my short sale listings when more than half do not get approved.  And my time frame is around 3 months to get them to closing.

The process

There is a proper way to create the short sale package and it’s different for each bank.  The first thing is that the seller must contact the bank and explain their situation.  The bank will tell them what they need to do and should send them the short sale package, or at least a sheet explaining what is needed.  The seller has to create a “hardship letter” to explain their situation and the reason for requesting a short sale.  In other words, if you’re upset because your home isn’t worth what you paid for it but you’re still able to make the mortgage payments, you will not be approved for a short sale.

Once they give you a verbal go-ahead, you can list your home and you must list it at a price you think the bank will accept (could be anywhere from 10% to 20% of the appraised value of the property - it is a guestimate with each different bank).  You need to price your home low enough to get activity (many buyers steer away from short sales because of the timing issue so you need to make the price tantalizing enough to get them to at least look).

Some agents price the home way too low in the hopes of getting multiple offers and creating a bidding war.  They figure buyers will bid over asking price and hopefully the bank will accept the highest bid.  Unlike foreclosures, the seller can only accept one offer and once the offer is accepted by the seller it is then sent on to the bank along with other required paperwork to get the bank’s approval.  And that’s when the wait starts.

Some listing agents just sit and wait, I am very pro-active when it comes to short sales

Many inexperienced agents fax in the offer and the required paperwork and sit back and hope and wait for a return phone call or e-mail or fax with an approval letter.  I can’t tell you how many times I had to fax and re-fax the paperwork as it was constantly lost.

When I called I was usually transferred around many times.  I would finally get someone in the correct department only to be told they never received the contract.  Of course, I had proof it was successfully sent but that didn’t matter.  I kept a list of the date I called, who I spoke to and what was said.  Most of the time it was the same thing, “We don’t have the contract.”

What happens in the beginning is that they need to find the person who is going to handle the file.  That seems to take a month or more and that’s when I think the multiple faxes just get put in a pile, waiting to be disbursed.  I was told by one of these processors that if he worked 24/7 he still couldn’t get through all of the files on his desk.

I’ve heard stories of rude bank personnel and I have to say I’ve been lucky.  Everyone I’ve spoken to has tried to be helpful and friendly.  Of course, I am very friendly to them.

During all of these calls, I finally spoke to a wonderful gentleman who told me they had indeed received all of the necessary paperwork and were just waiting to assign it to a particular processor.  Of course, after I spoke to him I got other people who insisted they still didn’t receive the paperwork.  Oh well, try again another day.

Once it was finally assigned to a processor there was e-mail communication and I worked quickly to get all of the other paperwork needed to continue with the processing.  Handling the 2nd mortgage was much quicker.  It seemed like we were assigned someone to handle the file very quickly (once I found out that a different department handled the 2nd mortgage).

There were still timing glitches between the two mortgages and it was nail biting trying to coordinate the closing.  We were actually told by the first mortgage that the file would be closed since we didn’t close by the time specified, which was impossible since the 2nd mortgage hadn’t been approved yet.

A letter from the seller’s attorney helped keep that file open and we finally closed!  Of course, the buyer had to be very patient during the entire process and I did keep communication up with the selling agent.

A happy ending

The seller was able to get her home sold without having to foreclose.  The buyer got a beautiful home for a very low price - lower than what I would have considered market value to be.  The home was in very good condition.

Short sales aren’t for everyone

Another thing I had to do during the short sale was help the seller through her roller coaster emotions.  The wait was as frustrating for her as the buyer.  At times she was ready to just walk away and let it foreclose.  Other times she was calm and realized that this was what she needed to do.

Many sellers go through the same thing and some become uncooperative.  This reason, along with the time frame and the constant follow-up needed with the bank and everyone involved with the transaction makes many agents shy away from either listing or selling short sale properties.

But not me!  So if you’re having financial troubles and are thinking about ways to get out of your mortgage debt just give me a call at 708-536-8200 or use the contact form.

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