Fannie Mae short sales- Valuations

(Quote) A classical work doesn't ever have to be understood entirely. But those who are educated and who are still educating themselves must desire to learn more and more from it.

"Karl Wilhelm Friedrich Schlegel"

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There have been a lot of issues with the Fannie Mae short sale valuations. They are countering offers at a very unrealistic price. Fannie Mae is basically trying to push prices up to minimize their loss. Here is an example:


Lets say you list a property and within 5-10 days you receive an offer. It may or may not be an offer at fair market value but you want to get the short sale package submitted to the lender as soon as possible as shorts sales can take up to 6 months to process maybe even more than that. Even with the shorter time frames we have been seeing with the lenders we will still run into the more difficult deals pushing our time frames up as every deal is unique. The full package gets submitted and because Fannie Mae deals take longer to underwrite we typically do not get a response back for 60-90 days plus or minus to only learn that they are countering at $150,000 hire than your offer. Frustrating, I know but there some actions you can take in the beginning of the process before the short sale gets submitted to the bank. We have talked about this before but with Fannie Mae deals moving forward you really do not have a choice and need to take the following steps if you want to have a successful out come .

Here are some tips to help you structure these deals properly:


1. Use the seller questionnaire in the listing agent packet I created to help you pre qualify your clients. One of the questions on there asks if their loan belongs to Fannie Mae. If they do not know you can log onto the government site to punch in the name , address and social and the system will automatically generate and answer for you.


2. If there is not a sale date ( hopefully you are not taking on transactions with sale dates 2-3- weeks away) we need to market the property for a substantial amount of time. The starting price should be what is owed on the property. I know it will be unrealistic however; we have to create a listing history for Fannie Mae. Keep it at that price for 30 days and then set up two price reductions on the 1st and the 15th of the month. You may need to do more. The goal is to show Fannie Mae where you started ( at what was owed) and where the offers started coming in with the price reductions. You have to be able to back up the offer you are bringing to the table.

3. There are going to be times that you need to take it a step further. If you have a strong listing history and Fannie Mae is still not budging then an appraisal should be ordered. A buyer is not going to pay more than a home is worth period, and at the end of the day the bank gets nothing if all parties cannot come into agreement.


So, having said that; It is important that you understand the potential pitfalls going into a Fannie Mae deal. There may be times you have a smooth experience but I have heard from a lot of frustrated agents and sellers, myself included who are experiencing difficulty. Agents, we need to set proper expectation with a buyer and a seller on these deals . If they don't understand the time frames and what kind of fight we may be looking at you run risk of killing your deal before you even start.
Please note; we can go through all the proper steps and still run into pitfalls. We do the best we can with the information we have at hand.


Short sales are always going to be challenging. That's not going to change and you cannot control what the bank or the investor is going to do on the other end. What you can control is how you effectively and efficiently pre qualify, market the property and create a solid short sale package with no holes which will minimize the pitfalls that you encounter.


Please contact me with any additional questions or concerns you might have.


REALTORS, what is in your business plan this year? What are you doing to create a system that will allow you to build your short sale business? How often are you out there prospecting and how do you know if you are taking the listings that are going to be successful and not a waste of your time?


Call us today and let us show you a system that works to help you expand your business and effectively and efficiently close short sale transactions.


LOTUS REALTY GROUP
PROFESSIONAL SHORT SALE NEGOTIATORS



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