When we receive a low offer on our listings, we will counter back to a price that we deem a good value to the buyer and reasonable to the lien holder.  We also counter out the costs that we know the lien holder will not allow and we counter with information to the buyer and buyer’s agent that enables us to know that the buyer fully understands the nature of short sales.  Sometimes the buyer decides to reject our counter.  That’s OK because it’s likely that buyer wasn’t going to be patient enough to endure the process.  We would rather leave the home on the market to attract another buyer that will endure and help us to close the escrow.  If the buyer agrees to our counter offer, then we know we have a quality buyer that will be there when we get an approval from the lien holder.

When I’m working with a buyer that chooses to make an offer on a short sale, I will pull the comparable sales to evaluate the fair market value just like the lien holder will do upon receiving the offer.  This gives my buyer the information well ahead of a counter we may get later in the process.  My buyer will be prepared for the idea that the lien holder will likely counter back at a number that is close to fair market value and my buyer is prepared to accept that counter and proceed.  If the lien holder doesn’t counter and accepts my buyer’s offer, even better!  My buyer gets the great deal!

 The homeowner purchased her home at the height of the Las Vegas boom.  She scraped together her down payment and stretched her budget to the max.  Times were good and it seemed like the right way to go before the prices got higher and homes were out of her reach.  She was able to afford a $250,000 home.  Her mortgage was adjustable and the payment barely affordable, but with both her and her husband’s salaries, they could make it.  Of course, her credit was spotless.  The American dream was realized.

 After they settled into their home, they worked hard on finishing it with backyard landscaping, a covered patio, and all the things they felt they needed to make it a home.  Things were going great.  Then, WHAM! Las Vegas was changing- times were tough, business was off, and consequently, her husband was laid off.  She was lucky – she had a great boss who cut everything else but kept her at her current salary.  In addition to her husband’s layoff, her loan rate adjusted and her payment went up.  Her neighbors also hit on hard times and abandoned their homes.  The average $250,000 price in her neighborhood dropped to $95,000.

 She was in a quandary.  Should she join the group of neighbors and go into foreclosure or try to do the “right thing”?  She had heard about this new thing called a “loan modification”.  She contacted The Big Bad Bank and the process began.  She filled out all the paperwork and had the right qualifications.  It looked like a sure thing.

After several months, lo and behold, her loan modification was approved!  Her payment was reduced $500!!  Now, remember her loan period was extended another ten years, but it still seemed like the right thing to do.  She began to pay the lower payment as they instructed.  Being a vigilant person with regard to her credit, she decided to check her credit report after three months.  The Big Bad Bank had reported her late to the credit bureau THREE TIMES!

When she called, she was told that her loan modification was a “trial” or “temporary” modification.  She said, “But I paid what you asked!”  The Big Bad Bank said, “But you paid less than your original agreement.  We accepted it but it was not what you agreed to when you bought the house.”  The homeowner is disputing the late payments with the credit bureau and is hoping for the best.

This homeowner was trying to do the right thing.  The moral of the fable “The Wolf and The Crane” is “In serving the wicked, expect no reward, and be thankful if you escape injury for your pains”.  The moral of my story is “When you try to do the right thing, the wolf still may eat you”.

By the way, This story is NOT fiction…