Case Study

NEW: A HAFA Short Sale Success Story

Some people think it’s cake walk to go through a short sale.  Not really.  But it’s always worth it at the end.

Last September I closed a HAFA short sale in the North Lake Tahoe area.  My client loved her beautiful home but due to unforeseen job changes, she couldn’t afford her sizable monthly mortgage payment.  Foreclosure wasn’t an option so she contacted me….(Click to Read Full Story)

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RENO-TAHOE SHORT SALE CASE STUDY: A detailed description of our past success in dealing with short sales.

*note: I changed some basic information to protect the privacy of my clients. But everything else I report as it happened.

Introduction: I chose this particular client because I think many would be able to relate with their situation (hardships, used their savings to try to keep the house, came from California, etc..). They are also a good example to follow—submitting their documents on time and devoted all the way to the end.

Homeowners: Dan & Judy McCabe

Property: Single family home in Galena, South Reno—Primary Residence.

Date: June 2008 (Our first meeting. They were referred to me.)

Background of the short sale property: Last mortgage payment was February 2008 (5 months delayed). Moved to Reno in June 2006 after selling home in San Diego, CA that they lived in for 23 years while raising their family. They had used most of their equity (home in CA) to put kids to college.

Seller Hardship: Dan & Judy both got laid off. Dan, in January 2008 ; Judy, in November 2007. Took out retirement money with the intention of using it to pay their mortgage until they found a new job. Couldn’t find a job in Reno, so they planned to go back to San Diego to find a job.

Bank(s):

Ist lien holder: Wells Fargo Bank

2^nd lien holder: Wells Fargo Home Mortgage

Plan/Strategy: I priced it $20,000 below the nearest comparable. I understood the risk that the bank would certainly counter at whatever current market value they would get for the house. But when I saw that the demand in the South Reno area was high and the competition was low, I priced it to be “seen”–top 3 in the neighborhood. It also helped that Judy and Dan kept the home pristine. I knew in my gut that this home would get a decent offer that wasn’t too far from what the banks wanted.

Market conditions at that time (June 2008):

Median Price Sold in the area: $577,500

Months Supply of Inventory: 15.7 months

*Inventory is at a whopping 15.7 months! What this tells me is to be aggressive in positioning the home in the top 3 in the neighborhood. If not, the home will pass like a ship in the night.

Negotiations:

• We got a cash offer on June 21, two weeks after we first listed it. $19,000 below asking.

• Counter offer: “Sellers to keep the refrigerator, washer and dryer. All other terms and conditions remain the same.”

• Buyers signed counter offer. We have a deal.

• I make sure all documents are ready to be sent, including a special addendum requested by Wells Fargo to be signed by both parties.

• Documents: Authorization, hardship letter, financial information worksheet, bank statements—2 months, pay stubs—n/a due to unemployment, tax returns—2 years, listing agreement, signed purchase agreement, estimated closing sheet / HUD1, CMA—comparable market analysis, buyer’s proof of funds from banking institution.

• July 1, 2008: Sent all documents to Wells Fargo.

• July–September: Repeated calls to get updates on the deal.

• Significant Updates: From assuring me that they received the package, assigning me to a negotiator, establishing contact with negotiator—giving her everything she asked for, waiting for the final approval letter.

• September 16, 2008: Received approval letter.

• Here are the highlights:

• “We will amend reporting to the credit bureau to reflect ‘agreed settlement short of full payment’ which should be reflected on the credit report within 60-90 days from date of notification and waive any deficiency rights, if applicable ”
• “All parties understand and acknowledge the purchase contract may not be amended without our prior written approval; the property is sold “as is”; the purchaser is not related to the seller, and any relationship between a participating Broker/Realtor has been disclosed prior to issuing this demand statement. It is further understood this transaction may not involve any third party who received a deed from mortgagor at, prior to, or after settlement, and the purchase contract may not be assigned.”
• Enclosure: We are required by the fair debt collection practice act to inform you that if your loan is currently delinquent or in default, as your loan servicer, we will be attempting to collect a debt, and any information obtained will be used for that purpose. However, if you have received a discharge, and the loan was not reaffirmed in the bankruptcy case, we will only exercise our right as against the property and are not attempting any act to collect the discharge debt from you personally.”

Testimonial: October 7, 2008

My name is Judy and my husband is Dan. We moved to Reno in 2006 to follow our daughter and her husband. We both got good jobs there and bought a new home. Seven months later the company Dan worked for suddenly laid off all of the middle supervisors. I was laid off from the state in November of 2007 due to major budget cuts. We were no longer able to make our house payments as the job market was just beginning to get worse and worse. We did all we could to get employed but were not able to. We had had excellent credit and did not want to foreclose. We were in our home in San Diego for 23 years and always paid on time.

I was strongly advised by many people including my real estate agent in San Diego to try to short sell our home and get the bank to forgive the difference. It was at a time when the housing market was greatly suffering as it is now. We owed more than we could sell it for. My agent in San Diego found Joe Salcedo in Reno for me and told me he has a lot of experience in short sales. I called him and we met and he told me how he was going to help us. He priced our home at a very realistic price in relation to the market values at the time. We were informed that a short sale can take several months and we just had to be patient. We soon realized that Joe and his team had to do a lot of extra paperwork and follow up in a short sale.

They both were very professional and before we knew it we had an offer on our home. His office was very considerate in calling us ahead of time when our home was going to be shown. Joe and his team kept in close contact with us and in September of 2008 our home closed and the bank forgave the difference.

My husband was fortunate enough to get his job back in San Diego and we happily have moved back (our home). We are renting for a couple of years and in two we should be able to buy again thanks to the diligence and hard work of Joe and Ian. A short sale comes off of your credit in a much, much shorter time than a bank foreclosure.

We will be forever grateful for the assistance of Joe Salcedo and his team.

Sincerely,

Dan & Judy McCabe

Please feel free to call me for a reference at 775-303-&#@! (if you want to call her, you can email me to get her complete phone number. -Joe)