There are no guarantees in life and when it comes to negotiating Orlando short sales, this is especially true. Although lenders have come a long way in terms of approving more short sales, easing up on there guidelines and even offering cash incentives to homeowners that are willing to cooperate, there are still when can fall apart. These are some of the most common reasons why short sales fall apart.
Delinquent HOA fees are one of the biggest reasons for a short sale not getting approved. Many times the lender in 1st position will only allow the home owners association to receive 12 months of payments as a settlement. Unfortunately, sometimes delinquent HOA fees can be in the tens of thousands of dollars and they would rather let the home go to foreclosure, than to take such a big hit. And If you can’t get either side to budge then the deal will not happen.
Stubborn Junior Lien Holders
The 1st mortgage holder in a short sale is always in first position with the exception of tax liens. Typically, all lenders will only allow a fraction of what is owed to be paid to junior lien holders like 2nd and 3rd mortgages. The problem is that not all second lien holders are willing to negotiate and if they are willing to take a discount, it’s still not enough to please the 1st mortgage holder. Unlike HOA liens that will be paid 12 months of fees if the house goes to foreclosure, a junior lien holder could potentially end up with nothing if the house goes to auction.
A BPO aka “brokers price opinion” is a report completed by a local broker or realtor who comes out to the home and gives their opinion of what the home is worth. The BPO then becomes the starting point of the negotiations between the listing agent and the short sale lender. It seems that lately there’s been a rash of bad BPOs. When the BPO value comes in too high then home will be over priced and have little or no chance to be sold. If this happens, then your only chance of making something happen is to convince the bank to order another BPO.
Lenders In Denial
After all the progress that’s been made in the short sale industry, there are still lenders out there that choose to remain stubborn about accepting accepting short sales. It makes absolutely no sense to me at all. For some reason lenders have trouble realizing that if they don’t negotiate, they end up losing a lot more money than they need to. They have to pay attorneys big money to take a property through foreclosure and if it does get sold at public auction, it ends up selling for much less than what’s owed anyway!