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Tuesday, May 20, 2008

Talk about trying to squeeze water from a turnip, I am currently assisting in the negotiation of a dozen short sales.  We currently have 5 of them under contract and none of them are nearing the settlement table.  Why, you ask?  Let me give it to you in a nutshell:  It’s called the “back burner” syndrome.

What is the “back burner” syndrome you ask?  Well, it’s when you have all of the documentation to the lender: the HUD-1, the hardship letter, the financial information sheet, paycheck stubs, tax returns, a fully executed contract, the listing agreement and the rest of the kitchen sink and you finally get a hold of the negotiator.  They look over the paperwork and then counter the offer, or tell you that the seller needs to decide whether or not he/she is going to bring funds to the closing table or sign an unsecured promissory note for a fraction of the outstanding sum owed.  You take this as a positive sign and a sign that the bank is ready to close the deal, except for some last minute “t” crossing or the dotting of the “i” to only find out that no matter how many times you try to get a hold of the negotiator thereafter, they no longer have you as a priority and your case has now been moved to the back burner on the stove!

Although to a lender this might seem like the logical methodology to have in place for the volume of transactions they are faced with, this, in no way, is working to solve any of the problems for the sellers, or even the investors, for that matter.

I have one transaction that we went back and forth with the negotiator, cutting away at the closing cost assistance, the sellers settlement fees and even the Realtors commission, when all parties were ready to move to the next level and close the transaction, the bank had one other change: a counter offered at a price $75,000 higher than the offer!  What a waste of everyone’s resources!

The buyers are losing their patience and who can blame them.  A transaction that should/could happen within 30 to 45 days is taking longer than 90 days and the outcomes are only hurting the lenders.

I had one situation where a property had three separate offers on it, all within about $5,000 of each other.  The lender counter-offered $30,000 higher than the best offer based on what they felt was an accurate B.P.O. (Brokers Price Opinion).  When all three buyers walked away, the bank eventually foreclosed.  That property is now on the market for $35,000 LESS than the lowest offer!  How does that make any sense at all!!!!

Okay, I feel better now!  It’s all about venting.  At the rate that my business is running, the best psychiatrist that I can afford right now is this blog, thanks for listening!

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