For Bank’s Short Sale Negotiators, Common Sense is not a requirement

San Diego real estate agents – and agents across the nation – have a hard time understanding the actions of bank’s short sale negotiators. Often, their decisions and demands are completely lacking in common sense.

A conversation that was related to me by another San Diego real estate agent illustrates the kind of thinking that makes us wonder about their real objectives. Here’s how it went:

Bank’s short sale negotiator:
“I can’t process this short sale without the TPG form filled out with the seller’s full name.”

Agent: “Based on my calculations, this short sale will help your company avoid a $17,000 loss, but you’re telling me that unless I can get you a corrected TPG form, you’ll reject the short sale of this home and subject your company to a potential $17,000 loss.”

Negotiator: “That’s right.”

Agent: “But $17,000 is a lot of money. Don’t you agree?”

Negotiator:
“I don’t care about the money. The TPG form is company procedure.”

You’d think there was a serious mistake, wouldn’t you? But no, that wasn’t the case. And the negotiator was the only one with a problem. The Title company and the buyer’s lender were completely OK with the paperwork as it was.

The problem was a discrepancy in the seller’s name. His full legal name was something like “John W. Doe II.” But one form had “John Doe” entered for the seller’s name. The short sale negotiator was going to reject the short sale of this home unless his name on that form was changed to “John W. Doe II.”

She was willing to subject her investor and/or the banks’ shareholders to a minimum $17,000 loss because she wanted a different piece of paper.

You know that no business person dealing with their own money would take that attitude. But the short sale negotiator wasn’t dealing with her own money. So all she cared about were the procedures and the forms. Common sense didn’t enter the picture at all.

The result of this kind of nonsense is that many banks turn down short sales only to lose more money through a foreclosure.

Had this agent been unable to secure the required form, the house would have gone into foreclosure within 6 months. By then, due to the rate at which market values were falling at the time, it would have lost $13,500 in value by the time of the foreclosure. By the time it went through the foreclosure listing process, it would have lost another $7,000 to $14,000.

But the bank’s negotiator was willing to take that loss unless the form was filled out correctly and re-submitted.

If you were a stockholder in that bank, would you have approved?

This scenario leads us to 2 conclusions:

  • First, the banks need to train their negotiators in the art of using common sense and looking at the bottom line.
  • Second, agents who represent sellers in short sales need to learn how to “head these problems off at the pass.”

Short sale request packages need to be submitted in the manner that pleases the bank. And each bank has a different way of being pleased. Short sale agents need to do their homework.

In addition, agents need to check and double-check the forms before submission. A name discrepancy is minor, but in this case, it nearly put the seller in foreclosure.

My careful attention to detail and knowledge of what each bank wants is one of the reasons that in ten years of dealing with short sales, I’ve been successful 98% of the time.

So if you need to short sell your house in California, call 619-929-1413 or write td@tomdunlap.com.

I’ll be happy to meet with you to explain the real estate short sale process and answer any questions you might have.


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