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Why Is This System So Broken? A Wells Fargo #Fail
Posted by: | CommentsI know there is no shortage of Realtors out there who are talking, blogging, yelling about some experience where their client has been wronged by the government or some big bank. And as inclined as I would normally be to avoid such a saturated topic, I truly believe these stories need to be out so the general public can hear them.
Recently, one of my very best clients came to me to discuss options for one of her properties. In 2007, she had purchased this home and shortly thereafter, as her situation changed, she needed to leave it. Determined to do “the right thing”, we sat down and discussed the possibility of the home as a rental. She ultimately decided to rent the home at a significant loss each month so she could either wait out the market or see what the future held for her. That was a year and a half ago.
Grossly under water on her negative cash flow rental and after almost 18 months of doing “the right thing” something had to give. Finances would no longer allow her to carry the rental at a loss and it was time to look at the property as a potential short sale. Again, we sat down and discussed the options- Short Sale, Deed in Lieu or Foreclosure. And once again, prepared for the uphill battle associated with “the right thing”, we listed the home as a short sale.
This client is a Short Sale listing agents dream- meticulously organized, logical, intelligent and motivated, she wanted to get out from under this property and was prepared to do what she needed in order to make it happen. We had genuine hardship, and could show that rental values did not come close to covering the mortgage even with zero vacancy.
The property was purchased for $217k in 2007- no refinances, just plain old purchase money. The bank, Wells Fargo- A company who (in theory) should be at the forefront of the initiatives to help struggling homeowners. A look at pricing puts this home somewhere in the low to mid $90’s given the array of terms and conditions associated with a Short Sale.
We list at $99k and wait… and wait… and wait some more. Finally, Bam- Offer time! We receive an offer at $89k from a well qualified Buyer, owner occupied, motivated, all the good stuff. About this same time, I see the same floor plan in the same subdivision, with similar amenities close escrow at $87k! This is too good to be true I’m thinking- I’m gonna slam dunk this thing and make my client’s day (or year)!
The offer, along with a novel of documentation gets submitted, reviewed, and is found to be complete, so now we wait… and wait… and wait some more. Finally, I hear back:
Response from Wells: “I am working on the above referenced file and we have received the value back from the investor. The offer presented is too low. The offer you sent in nets $81,906 and the investor is requiring a net of $106,480. Please communicate with the buyer and get back to me within 48 hours.”
What?!? Are they serious? Are they looking at the same house I am?
I go back to the Buyer, present the info and get them up to $91k. I also put together a letter of explanation, complete with comparable information and stats from MLS making THIS deal right, and resubmit.
Response from Wells: “Thank you for the new documentation. The offer presented however, will not meet the net required by our investor. At this point, I will pass the file to negotiations for review to see if they can proceed. Thank you.”
Ok- Surely the negotiations department will be able to, well negotiate.
Response from Wells NEGOTIATOR: “Your offer submitted was reviewed and rejected by the Investor. As you were informed by the Processor, the Investor requires an offer which will net at least $106,300. Please be advised the Investor has instructed us to remove this file from Short Sale.”
Ugh! Dejected, disappointed, confused and just plain pissed, I return to all parties and kill the whole thing. Dead! Seller, still (bless her heart) offers a deed in lieu which Wells Fargo graciously accepts, taking the property back to add to their impressive portfolio.
Here’s where it breaks- A few days ago when my trusty MLS search popped up showing that the property has been listed, this time as a Lender Owned home:
List price- $97,900 WITH 3.5% closing cost assistance and a $1,500 bonus for the Selling agent. Net contract price (assuming full price) is $92,900. With a few basic assumptions and facts on the cost associated with the process to get the property to this point, commissions, upkeep and the such; I think that we can assume that this property will now net considerably less than the offer I had to kill just 2 short months ago.
Wells Fargo, I suppose I should thank you for the story- unfortunately, it’s another in a long line those ending in a fail for someone trying to do “the right thing”.
Short Sale Story (Cont… #5)
Posted by: | CommentsClient X: “I got a very reassuring email from my attorney a couple weeks ago. He received a phone call from my mortgage company letting me know that they had received all of the documentation necessary to start the paperwork on their end. Apparently the representative with the mortgage company mentioned that everything seemed like it was in good order and, unless there were any unforeseen circumstances, they would be able to move forward with the short sale. One of the best things about having an attorney is that they have to take all of the phone calls, receive all of the letters and get all of the email because I’m “represented by counsel”. No more harassing phone calls!
I understand that nothing is guaranteed until the paperwork is signed and the “For Sale” sign comes down, I’m extremely pleased to know that at least things are progressing smoothly. I was really hoping to have everything taken care of and have the house sold before the end of the year but I understand that these things take time. The saying that a short sale should be called a long sale seems to be very true. All in all though, I suppose things could be worse. The offer we accepted was more than our listing price. Although my lawyer speak is bad on a good day, my Realtor has suggested that the terms of the sale are the best out of the offers that were presented to us.
It’s still difficult for me to admit that I’m losing my house, despite the fact that the technical term is selling the house. At this point, I’m just trying to be patient and move on to another property in a few years. Until then, I will be lying low and paying off other bills to put myself in the best possible situation for the next time I move.”
Short Sale Story (Cont… #4) Hardship Letter
Posted by: | CommentsSo client X thought it would be helpful to share the hardship letter he sent in to his lender along with his short sale package. It’s kinda scary to say that this letter hasn’t been changed in any way, nor has it been embellished- this is all true stuff:
“Dear Loss Mitigation Manager,
I have been paying the debt on loans xxx and xxx to the best of my abilities at the address; xxx. The amount of these two loans totals approximately $174,000.00 and the property value as I have seen through comps of the area is roughly $55,000.00. Despite the difference in these numbers I continued to make my payments in hopes that the economy would rebound and bring my property value back up.Unfortunately, the best intentions can still have unpleasant outcomes and I am currently unable to continue to pay for my house. My wife lost her job for a few months a year ago and things have been a struggle ever since then. She was able to get another job later but with a reduced income. To the best of my knowledge she is still employed but I was laid off from my job about four months ago and haven’t been able to find anything that will provide the same income that allows me to take care of my mortgage. Since then, my wife also left me and I’m currently going through a divorce. Needless to say, between being unemployed and not having my wife’s income my money for bills has been reduced to almost nothing.
I tried to reduce my costs in hopes of maintaining ownership of the house by disconnecting my cable, disconnecting my internet service and not using my air conditioner or heater unless necessary. I even sold all of my furniture to use the money for bills. In addition I have been applying for jobs in and out of my field of expertise and have not had any leads come to fruition. I’m sure you don’t need me to tell you what the unemployment numbers are like in the country and especially Arizona but it has been extremely hard to even find places that are hiring.
Due to this, I honestly feel that the best solution is to attempt a short sale of my house in an effort to repay as much debt to the mortgage company as possible. Although I understand that a short sale of my property isn’t ideal, I do not wish to foreclose on the house or file bankruptcy if I can avoid it. I feel that a short sale would be the best alternative to these options and hope that a compromise can be reached.
Thank you for your time in reading this letter and considering the information above. If you have any questions or would like details on anything I would urge you to contact my attorney at xxx.”
SHORT SALE STORY (CONT… #3)
Posted by: | CommentsShort Sale Story (Cont… #2)
Posted by: | CommentsClient X: “I met with Joe a couple days ago to start filling out paper work to do the short sale on my house. Since I have already started to get rid of furniture we decided to go to a restaurant across the street so we had a decent table to work at. The fact that I had a coupon for free chips and guacamole helped a lot in this decision. The paperwork seems fairly straight forward with the main exception being the portion for the lawyers. I understand the main gist of it but I don’t want to focus on it too much I guess. According to the lawyer paperwork there is a fee that goes along with their paperwork which I believe I will have to produce before I can meet with them and have them go to bat with the mortgage company for me. I honestly have no idea how I’m going to make this happen since I currently don’t have a job but I’m hoping I will figure something out.
If everything goes according to schedule I will be listing the house one week from today and will be moved out of the house at the same time. It’s really hard to live in a house for one week because there are certain things that should need to be packed but I can’t pack until I leave. That being said, it’s almost like camping in a house right now. Despite the fact that I will be losing a lot of money by going this route I still feel that it will be better for me in the long run as compared to doing a deed in lieu of foreclosure or just a foreclosure. I’m trying really hard to not think about the amount of money I will lose and focusing on the next residence and the next opportunity that presents itself.
I am very curious to see how much interest there is in my house. I have always loved it but I suppose this really opens it up to public opinion. I also have some work to do on the house over the next week or so to get the house presentable. I don’t believe there is much to do as far as fixing things so much and just a solid cleaning of the house. Most of the things the Joe suggested weren’t a surprise to me and were things I had planned on taking care of anyway. Ideally I want people to fall in love with this place just like I did when I came to look at it. That can’t really happen though if I’m not taking care of it.”
Short Sale Story
Posted by: | CommentsSo I, like the rest of you see a lot out there about Short Sales- they are everywhere, especially if you work, live or breathe around the world of Real Estate.
However, what I have NOT seen much of is the impact of Short Sales (financially, emotionally and otherwise) on Sellers from the Seller’s point of view. I think that most people have very specific opinions of who these people are, what their situations are and what led them to those situations. I also think that in many (most) scenarios, those opinions are probably not entirely accurate.
So without further ado I present “Short Sale Story” a series of posts written by and told through the eyes of Client X. This IS intended to be a discussion as well, so if you have questions for me or Client X, please feel free to leave a comment.
Client X: “Due to a number of different issues involving divorce, jobs (or lack thereof), finances and the economy I’m forced to give up my house in hopes of salvaging what little I can of my life and hope to start over someday. Obviously this is not an ideal situation and I will be losing a substantial amount of money “on paper” during this process. However, it is clearly better than going into foreclosure so I’m giving this my best shot in hopes that I can find a buyer and I can get out of a loan that I am severely upside down on (thank you to the people that helped destroy the economy. I owe you one…seriously.)
At any rate, I’m currently reading through the paperwork and trying to wrap my head around the different items that will need to be accomplished. The thing I keep going back to is that just because it’s a short sale doesn’t mean that I shouldn’t have the house completely presentable. I have a few things that I need to take care of which will help the house be more presentable and hopefully sell faster.
The other item I keep reminding myself is that there is really nothing to be embarrassed about in regards to taking the short sale route to remedy this situation. I think at this point selling the house is the most responsible thing I can do as compared to ignoring the problem at hand until I’m given an auction date and eviction notice. I’ve never been one to stick my head in the sand and I fully intend on facing this head on. I truly feel that with my realtor, my family and my friends on my side I will make the absolute best of a bad situation.
That being said, the plan is to list the house next week and hopefully get some interest and see where it takes me. Right now “hopefully” seems to be the key word for me.”
Client Appreciation Event #4 Has Come And Gone- Why These Things Rock!
Posted by: | CommentsSo my 4th client appreciation event (The long awaited PJ Party) is now in the history books… phwew! Tons and tons of work, planning, confirming and too many thoughtful touches to list (thanks to Jenn) culminating in a 3 hour “professional” party- Not a bad way to spend your marketing budget!
These events have been an absolutely incredible and invaluable part of my business. They are my opportunity to reconnect with and most importantly to thank my friends, family and clients for all they do for me and my business. The days of Realtors showing appreciation through calendars and magnets are behind us, (IMHO) they are impersonal, static and they don’t send a message. Well, they don’t send the right message- they say “Think of me everyday, send me business everyday and I will think of you once a year to keep you thinking about me”.
Sure I want business from my clients, but I want to talk to them more often than when they are sending me a referral. My events are all about sending them the right message- the ”I want to talk to you, maybe over a drink, maybe next to the music, but I want to talk to you- And not just about Real Estate” message.
So what are these events all about- They are soooo totally simple it is amazing. Get a bunch of really cool people together, give them yummy food and drinks all centered around a really cool, central theme (again, thanks Jenn) and let them hang out. It’s such a cool thing to look around a room full of people and see your friends, your family and your clients all interacting, networking, learning and just having fun. There is no pressure to ask for or give referrals- that stuff happens way more naturally when you have connections like this.
What am I missing you ask? See for yourself! How do I get to go you ask? You get to know me or my super marketing genius wife, Jenn and we invite you 
My Wife Kicks Ass!
Posted by: | CommentsYou know that feeling you get when you know that you know your stuff? You can be in any situation, field any question and come out feeling like you are truly an authority in your field… that feeling. My entire professional life, I have taken pride in that feeling. I work my ass off to get that feeling and it’s great!
Today, I got to feel that for someone else- My wife Jenn. I sat in on one of her classes this morning and was totally blown away at how damn good she is. It was such a cool feeling and it totally occurred to me… this IS the feeling of being proud. Not the “thank god she turned that wallet in, I am proud of her” thing, but the “that’s right, my wife kicks ass!” thing.
Absolutely Awesome!
Short Sighted
Posted by: | CommentsWhy is it that people are so short sighted? I am amazed at how many people consistently try to squeeze out a bit more money from a job, a client, a friend. Does no one realize that they will get that money, but they WILL completely screw themselves out of the opportunity for more business from that contact in the future?
I am convinced that this is one of the final stages of the economy crapponizing and must indicate that things will turn up.