Seller Cash Contribution in Short Sale

Do Not Tell a Seller They Will Not Have To Pay Any Money in a Short Sale

Cash ContributionI can’t tell you the number of times, I’ve dealt with agents who have told a homeowner that because they are doing a short sale they wouldn’t have to shell out any cash contribution at closing. Granted, there are sales where homeowners are paid money at closing, but lately, they are few and far in between.

What many agents don’t realize is how the seller’s financials impact the sale. The first thing the lender will look at our tax returns, a financial page, a hardship, and then based on that information and the seller’s bank statements and pay stubs, they will make a determination on whether they feel the seller can contribute to the short sale. Is the seller working?  Do they make good wages?  EXACTLY WHAT is going on in the seller’s financial picture has a direct result on whether on not the lender will be looking for $$ at closing or ask the seller to sign a promissory note.

Also, if the seller has MI on their loan, this is detrimental.  In about 90% of the cases I’ve seen where MI is present, the short sale will result in the homeowner paying some cash or signing a promissory note at closing.  Many times the MI company wants their deductible covered.

Agents should NOT be telling homeowners that they won’t have to pay any money in a short sale.  Each short sale is different and the best thing you can do is prep a homeowner by being honest and saying, “It’s possible the lender will ask you for some type of cash contribution when the short sale is approved.”

CLOSED! Beverly Massachusetts Short Sale!

For instance, the homeowner in our most recent short sale in Beverly Massachusetts was very forthcoming about his financial picture and when he and I did my intake call I knew almost immediately the lender would likely require him to pay money or sign some type of promissory note.

Now, when we were getting verbal approvals, we knew they were looking for something from the homeowner and were able to have an honest discussion with him.  It’s EXTREMELY important you don’t tell a homeowner they will not have to pay.  NOT every homeowner is in severe financial distress.  Also, keep in mind whatever amount the lender first requests, you have every option of renegotiating back to them.  So on this sale, they wanted $66,000 in a promissory note or $22,000 in cash.  We were able to get the deal done with a $10,000 cash contribution and full waivers of deficiency were issued.

I have to thank Mike Quail on this sale, who, let us stay in the driver’s seat.  He had never worked with us before and I’m very grateful that he was open to working with a third party firm and let us explain the disclosures to the homeowner.  Mike never told the seller he wouldn’t have to contribute. Thankfully the sale closed last week and all parties were happy.

My seller was so happy in fact, he offered the following testimonial:

Mike Quail Short Sale Agent

I want to thank everyone at Short Sale Mitigation for helping me sell my home.  After an extensive search for a company to assist me with short selling my home, I came across your company.  Prior to speaking with Maryann Little, I inquired with several companies that claimed to be able to assist me in selling my home.  Call after call after call, I was left feeling that I was talking to used car salesmen and not someone that would take the time to help me through the process from A-Z.  All of that changed when I spoke with Maryann for the first time.  After just a few minutes of talking to Maryann, I knew Short Sale Mitigation was the company that would help me. 

Thank you, Maryann, for making me feel comfortable with your straight forward and honest approach to the short sale process.  Your extensive knowledge and experience were obvious from our first conversation.  I also want to give you credit for building a great team of individuals who all went above and beyond to help me through this process.

An important part of your team is Julie Baker.  In my opinion, Julie, you were the heart and soul of the operation because YOU got the deal done for me.  You took on the big responsibility of negotiating with my lender (Chase), on two loans, and getting the approval on my short sale.  Without your diligent efforts, I am not sure if the deal would have happened as quickly and smoothly as it did, if at all!

Last, but not least, I would like to praise Noreen Cowdrey at Grugnale Law Office, P.C.  Once my lender approved the deal, Noreen stepped in and became an integral part of the process.  Noreen, I can not say thank you enough for your work on the HUD and communicating with my lender as the closing date approached.  Because of your professionalism and hard work, I had total confidence that we would close.  You may not know this, but oftentimes YOU were my point of contact for getting updates on the process, even before my own realtor.  You were always there to take my call and give me information.  Just like Maryann and Julie, you never let me down!

As a business owner, I know what it takes to run a successful, productive business.  I also know a business that takes pride in the quality of service they provide to their clients.  The things that matter most are to always be there for your client and provide answers, updates, and support and to ultimately get the ABSOLUTE BEST DEAL done for your client.  From day one of this process, each of you, Maryanne Little, Julie Baker, and Noreen Cowdrey did all of these things.  You should all be very proud of your efforts!  I have never had a company, and specific individuals, work so hard on my behalf.  Beyond a shadow of a doubt, I will HIGHLY recommend Short Sale Mitigation to anyone I ever know in need of short selling their house!  Thanks again Maryann, Julie, and Noreen!

This is the type of email that I am just extremely honored and grateful to receive.  We work with the best homeowners around and will work to get EVERY sale approved!


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