Tip 43-2011: Short Sales—Price Negotiations, Part 2

Last week’s Tucker’s Tip discussed how the initial contract price will usually be changed due to the subsequent negotiations with the Short Sale Lender.  All parties to the transaction need to be flexible and willing to renegotiate the contract price and terms based on what the Short Sale Lender will accept.

In a Short Sale, the normal Short Sale Seller should the consider the following goals: (1) Avoiding a Foreclosure, and (2) Avoiding any Deficiency from the unpaid balance of the loan.  For the Seller, it is not important “what the original contact price is” as long as these goals are achieved.  Remember, the Short Sale Lender will determine for what price they are willing to allow the house to be sold.

Likewise, the normal Short Sale Purchaser usually has a main goal of purchasing the house for as low a price as possible.  As long as there is no deficiency for the Seller, the Short Sale Seller should not care what price the Purchaser ultimately pays for the house.

In fact, it is better if the Short Sale Purchaser has not submitted his best offer with the original executed contract.  The Short Sale Lender may ask for an additional price increase (based on the “BPO”) and possibly contributions (release of “deficiency”.)  Accordingly, as long as the Purchaser still feels he is getting a good deal, the best Short Sale Purchaser is someone who is willing to increase the original price or contribute to the deficiency negotiations. 

Please contact our firm if you have questions or need legal advice.  

Tucker Griffin Barnes - Where deep insight equals powerful advantage.

Senior Partner

William D. Tucker, III
Tucker Griffin Barnes P.C.
Charlottesville, Virginia
434-973-7474
Tucker@TGBLaw.com
www.TGBLaw.com

Facebook
Twitter
YouTube

Tip 42-2011: Short Sales—Price Negotiations, Part 1

In the normal real estate transaction, the Purchaser and Seller usually negotiate the contract price, with multiple counter-offers, in order to obtain the highest price the Purchaser will pay.  With a short sale, especially if a foreclosure is looming, what is needed is an executed contract with the Purchaser still willing to negotiate should the Short Sale Lender require a higher sales price.

With a short sale, it does not matter what price is initially agreed to in the contract.  It is still up to the Short Sale Lender to approve the final contract price.  So rather than initially negotiate the highest price the Purchaser will pay, leave some room for further negotiations.  With short sales, the original contract price and terms are rarely the final numbers agreed to by the Short Sale Lender.

All of the rules and practices we have learned with real estate contracts and negotiations are usually “moot” when dealing with a short sale.  Once the contract is signed and the inspection is complete, all the parties to the transaction (Purchaser, Seller, both Realtors) have one main goal.  That goal is convincing the Short Sale Lender to accept the contract price and terms.

Please contact our firm if you have questions or need legal advice.  

Tucker Griffin Barnes - Where deep insight equals powerful advantage.

Senior Partner

William D. Tucker, III
Tucker Griffin Barnes P.C.
Charlottesville, Virginia
434-973-7474
Tucker@TGBLaw.com
www.TGBLaw.com

Facebook
Twitter
YouTube

Tip 41-2011: Columbus Day—October 10, 2011

The banks, courts and all the local Clerk’s Offices will be closed next Monday, October 10, 2011.  Accordingly, any closings which have to record by Friday, October 7 should start as early as possible Friday morning, or preferably on Thursday, October 6.  If the closing can not be recorded by Friday, October 7, then it will have to wait until Tuesday, October 11. 

Please enjoy this last long summerlike weekend. The weather will be great — sunny and in the seventies.  The Parade of Homes will be in its second and last weekend.  Hopefully everyone will have a safe and fun weekend!

Please contact our firm if you have questions or need legal advice.  

Tucker Griffin Barnes - Where deep insight equals powerful advantage.

Senior Partner

William D. Tucker, III
Tucker Griffin Barnes P.C.
Charlottesville, Virginia
434-973-7474
Tucker@TGBLaw.com
www.TGBLaw.com

Facebook
Twitter
YouTube

Tip 40-2011: Short Sales & PBO

Several prior Tucker’s Tips have discussed the importance of a reasonably valued BPO (Broker Price Opinion.)  If the BPO is too high, the short sale lender will not approve the short sale and the house is destined for a foreclosure.

Although the BPO is supposed to represent the current market value of the house, the realtor performing the BPO may determine a value significantly higher than the current contract price.  As the BPO normally requires several comps to assist in determining the price, the listing realtor could consider providing listing and comps information to the BPO realtor to support the short sale contract price.

Attached to this Tucker’s Tip is a “BPO Checklist for the Listing Realtor” with information on how to assist with the BPO valuation.  Hopefully some of the suggestions will be helpful.  Remember, every successful short sale is “one less foreclosure.”

PS:  Unfortunately nothing can be done about the “Drive-by BPOs” which are becoming more and more common.  It’s unbelievable that a short sale lender will make short sale decisions worth hundreds of thousands of dollars on a valuation which does not include an actual inspection of the property.

Please contact our firm if you have questions or need legal advice.  

Tucker Griffin Barnes - Where deep insight equals powerful advantage.

Senior Partner

William D. Tucker, III
Tucker Griffin Barnes P.C.
Charlottesville, Virginia
434-973-7474
Tucker@TGBLaw.com
www.TGBLaw.com

Facebook
Twitter
YouTube

Tip 39-2011: Refinance Stimulus Program

As reported in many recent media sources, interest rates on real estate loans are at historic lows.  According, it is an excellent time to refinance everyone’s personal residence.  Unfortunately with the decline in real estate values, some properties are “upside down” or will not appraise at a high enough amount to qualify for a refinance.  But as long as the borrower’s credit is good, there are still opportunities to refinance. 

There are  several loan products available through Fannie Mae or Freddie Mac that allow high loan to value financing. The amount allowed under these programs can be up to 125% of the value of the property.  These programs also may qualify for no mortgage insurance (DU Refi Plus).  Homeowners may even consider reducing the loan term (for example from 30 years to 15 years.)  With the lower rates for a 15 year loan, the new payment may be close to the old 30 year payment, while cutting years off the mortgage.  Another possibility is to pay down the principal balance in order to qualify for a reduced loan amount. 

The main message with this Tucker’s Tip is to tell “everyone you know” to call our excellent local lenders to discuss their specific situation and the availability of a refinance.  A refinance at lower interest rates will usually mean lower monthly payments and more disposable money to help stimulate the economy.  Let’s all do our part!  Refinance now and Stimulate the Economy!!

Please contact our firm if you have questions or need legal advice.  

Tucker Griffin Barnes - Where deep insight equals powerful advantage.

Senior Partner

William D. Tucker, III
Tucker Griffin Barnes P.C.
Charlottesville, Virginia
434-973-7474
Tucker@TGBLaw.com
www.TGBLaw.com

Facebook
Twitter
YouTube