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Denver Short Sale Broker Comparison
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Denver Short Sale Broker Comparison

For the last period of time you have had trouble making your mortgage payments. Perhaps your ARM has been reset and now your interest rate has jumped or you have had your hours reduced at work or been laid off. Regardless of the reason, you have tried everything you could to maintain your home and keep your mortgage current but finally it has come to a head and you can no longer meet the debt obligations. Your lender has been sending you past due notifications and finally you have received a confirmation that they are starting a foreclosure process. You have spoken to an attorney about your foreclosure alternatives and have done research on Denver Short Sales to determine how the process works. You have decided to go ahead with a short sale - now what?

The first thing you need to recognize or consider is that a short sale is a time consuming and, at times, frustrating process. In my opinion you should sign up a real estate agent to help you with the transaction. You don't need to worry about how to pay them because their commission will be paid by the bank. A short sale transaction should cost the homeowner nothing.

Once you have decided to move forward, it is imperative to select the correct Broker. This process is the most important decision you and your family may make over the next number of years. It isn't normally a good idea to select your cousin's friend or your next door neighbor because they are a Realtor. Your family friend may be the best Realtor on the planet for equity transactions but if they don't know what they are doing in a Short Sale they could do more harm then good.

Rely on a good broker with lots of short sale experience. Call each of the major Real Estate Brokerages in your area and ask them to send you a list of their most experienced short sale brokers. Some may have 1 or 2, others may have 6 or 10. Get the names and information and do a bit of research online of each of the names. Narrow down the list to a handful and then contact each of them to have a face to face meeting. If they can't meet you quickly and based on your time requirements it should be a major red flag about how they will be able to represent you in your transaction.

During your meeting you should be prepared to ask a few questions.

  1. How many short sales have they completed - it is important to know how many successful transactions they have, not how many short sale listings they have. If they can't close a transaction with the bank you don't want them as your agent.
  2. When was the last one they successfully closed - Short Sale rules vary by lender and change all the time. You want someone who is current and who knows which negotiation tactics are working now.
  3. What was their most complicated short sale transaction - Successful short sale brokers will be happy to tell you all of the crazy things they have seen. It is a good sign if they have lots of stories because it means they are active and getting results.
  4. How often have their listings gone to foreclosure - You must know that approx 20% of short sales actually get to closing. If they are closing better than this average then they should be considered as an option.
  5. Have they ever completed a short sale with your particular lender - As mentioned, many lenders have their own paperwork and process. It is important to know whether they have been successful working with your particular lender. Bank Of America has an online short sale system that requires the Broker to know how to use the system. Make sure they have a history with the bank or you risk not closing your transaction.
  6. How many transactions have they closed with multiple liens (if this applies to you) - Second lien holders can hold a transaction for ransom by not signing off unless they get a good payoff. A first lien holder may agree to a sale based on the second only getting paid X%. You need to make sure your agent has experience with multiple lien holders and how to navigate this if you are in the position of multiple lien holders
  7. How many transactions have they closed that resulted in 0 deficiency or promissory note for the homeowner - Generally the homeowner is still liable for the difference between what you owe and what the bank agrees allow in the sale.

There is a fundamental difference between a release of a lien and a satisfaction of the lien:

A release of a lien is an agreement between a lender and a borrower under which the lender (lien holder) releases the mortgaged asset or property, although the debt obligation remains in force.

A satisfaction of a lien is a fulfillment of all obligations under a lien to the acceptance of a lienor.

Many homeowners don't realize that this is negotiable and a good negotiator can get the bank to waive this amount with a full satisfaction. If you owe $200K and the bank agrees to a sale of $135K then the lien holder will have the homeowner sign a promissory note or a deficiency judgement for $65K.Without this satisfaction you still owe the lender the money. At the time of the short sale transaction you most likely have no assets anyway so the lender may not enforce their right in the case of a lien release. However, in a number of years you may be ready to purchase another home when all of a sudden that promissory note or deficiency judgement may be applied to your new home.

One of the last things you absolutely should ask is whether they will bring you EVERY offer you receive. Some Brokers think it is their job to screen offers for you and decide what is best for you. In a short sale you should be aware of every possible transaction you may be presented with.

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