Are You in Need of a Short Sale, But Have a Second Lien?

Are you in need of a short sale, but have a second lien holder on your home? Having a second lien does make it more difficult to do a short sale. The first lien holder will decide how much money the second lienholder will get paid off if the short sale is accepted. So what if the second lienholder won’t take that amount from the first lienholder? It can be a mess!

So you had your Realtor do a short sale. She found a buyer after advertising for months. You and your Realtor and the first lienholder negotiated the contract. Everyone is happy except the second lienholder. You see, if the second lienholder won’t take the payoff from the first lienholder, then clear title cannot be transferred to the buyer, which means the short sale cannot be done. So, the home goes into foreclosure or the sellers have to file bankruptsy. The short sale is over.

In the past I had a seller who was in this situation. The seller, their first lienholder of thier mortgage, and the buyer were all in agreement on the short sale. The first lien holder, the bank, was going to give $3K to payoff the second lienholder. But the second would not take the $3K. They wanted their full amount due (which if the sellers could pay they would not be doing a short sale!) So the home was not able to sale. Everyone loses. The Realtor loses commission even though they found a buyer. The seller loses their home to foreclosure. The bank has to pay additional fees for the foreclosure. The buyer lost the house they wanted and could afford to buy. The second lienholder walks away with nothing. It’s such a shame when this happens.

If you are interested in doing a short sale, please contact your Realtor early on in the process. Once a foreclosure date has been set, it is hard to get the bank to extend it out to allow time to market the property. If you have a second lienholder, tell your Realtor in the beginning so they can start the negotiations between the second and first lienholders. It can be done. I have seen many second lienholders take the settlement from the first lienholder. It usually works out, but unfortunately, sometimes it does not. Make sure you use a Certified Distressed Property Expert if you need to do a short sale. There are so many things that can cause a short sale to foreclose. Make sure you have a Realtor that can get it closed for you! At RREA, we have many Realtors with the CDPE designation that have closed many short sales. Please call today if you or someone you know is having a mortgage crisis. We can help!