Short Selling A Property With A 2nd Mortgage?
Has anyone had any success with short selling a property w/ a 2nd? I've attempted several and the only time it has worked is when the owner has a first and second from the same lender. It seems to me that when I contact the second that they just try and buy out the first. Or something like that. I don't know for sure, it just seems that way because they are not bery responsive. Is there anyway to prevent this? Should I try to schedule a closing the day before the auction, then contact the second the day before to try and force them due to the lack of time? any suggestions or someone who has completed a shortsale w/ a 2nd give us your opinion.
Thanks
Shorts occur most often with 2nds behind a foreclosing first. It would be presumptious to schedule a closing without first having written, short sale approval.
Non responsive? If you follow protocol, and your Proposal presents a compelling, argument, you should not have any trouble getting a response, and an invitation to negotiate.
Thanks for the response. I think the trouble is that the 2nd's now realize it is in there best interest to try and buy out the first mortgage so they won't loose any of there equity. I have came to this conclusion because every second I have ever dealt with wants the name of the lender of the first and a name and contact # of the people I've been dealing with. After doing this several times and having the no luck with the second returning my calls (not to mention the first then has a change of attitude), I have stopped giving them the contact info. I'm just wondering if I should even mess with any homeowner who has a second held by a different lender than the 1st?
I don't know your method of approach, but I've had best successes on shorts with 2nd mortgagees.
It goes without saying that if your Proposals are to be taken seriously, they must be in writing, and should accompany the mortgagor's short sale request application. The more comprehensive, compelling, and professional your Proposal, the more approvals you'll get.
Here is the approach I take. If I'm doing anything wrong, or you have any suggestions, please let me know.
After the foreclosing lender has agreed to a shortsale, they then want me to contact the second and offer them $1,000 to $2,000 to satisfy the loan. I then do that and state who I am and that the first mortgagor has agreed to take thousands off of the payoff, and they wanted me to contact them and offer such and such amount or that their second will fall off at the auction. The 2nd then wants the contact name and # for the first. I submitt all the paperwork and make it look very professional. About this time is when it seems to fall apart with the second. Any suggestions?
I presume that for you to be able to communicate with the second mortgagee, you must have a valid LOA. Is your Offer to the second mortgagee in writing? Is it a complete short sale application & Proposal? Perhaps offering $1,000 or $2,000 is both laughable and insulting (unless it's junior to an FHA first) . Simply because a first is foreclosing doesn't necessarily mean the second will "fall off the table"
The same Proposal format made to the foreclosing first must be 'tweaked' and presented to the second, and third, and any others.
After you've prequalified the short sale candidate as having potential for a short sale, you should ALWAYS initiate a short sale request with the most junior of liens and work your way up. Perhaps your mistake is in the order in which you seek short sale approval.[ Edited by TheShortSalePro on Date 08/18/2003 ]
I agree with all of you.
You DO need a compelling reason why the 2nd should not buy the first. Here is the best one:
"Why put good money behind bad"
Making the 2nd understand that buying the 1st isnt in their best interest. What about the repairs, marketing, commissions, etc? Remember most banks have to report to shareholders when all these houses come back on the books.
Dealing with 2nds is fun. See, if the house goes to T/S who knows how much will be bid.... I guess its important to know how much equity is in the house. If the 2nd is guaranteed to get paid if the house goes to T/S, why would they bargain? Ill tell you why, sometimes its easier for the 2nd to cash out now.
I've made the mistake of putting together a 1 or 2 page short package for a 2nd, because that's all they asked for.
Big boo-boo. I offered them 2K on 13K, and they came back with a firm 7K, and would negootiate no further.
If I had given them the lit of repairs, low comps, etc, I would have been in a much better position. Thoughts?