SHORT PAYOFFS     

"Short payoffs" are becoming more prevalent in today's real estate market. What is a “short payoff”?  It is when we ask the lender to accept less than what is owed.  The lender does this in return for avoiding the complete foreclosure process.

 

It has been estimated that when a lending institution does implement foreclosure procedures (takes the foreclosure full term, obtains ownership of the property, prepares the property for market, markets the property and sells it), they may net as little as 40% of the original appraisal.

 

In order to alleviate this problem for the lender and to possibly save the credit of our clients, we have implemented a program of negotiating with lenders on a market value sale that is accomplished by listing and selling the property at a price that many generate a loss to the lender.  During this marketing period, the lending institution has little to do with the short sale.  However, we do make sure that they are at least aware of it, that they will consider it, and that a file has been opened.

 

The lending institution is only interested in negotiating once an offer is received.  By pricing this property at market value or a little bit less than market value, we should be able to obtain that offer and send it to the bank for their consideration.

Many things will be required from you at that time.  First, when considering your request for a short payoff, the lender requires a financial disclosure.  Obviously, this document should be truthful, but it's acceptable to include all of your discouraging financial news in this financial statement.

 

Second, we will need a letter of explanation telling why you are requesting this short payoff, which will include your reasons for moving, how long the property has been on the market previous to our relationship, the failures you've had with previous real estate agents, and any other disturbing news that has caused you to move and prevented the sale of your property.

 

A third item requested is an authorization to work on your behalf toward this short payoff, meaning the bank must know that you have authorized The Rodney Logan Team to negotiate the terms of the short payoff and your release from the loan.

 

Finally, you are required to submit employment verification, pay stubs, two-years worth of federal tax returns, and verifications of deposits or bank statements for the last three months.  If you don’t want to do this, the bank will not consider letting you off the loan.

 

These documents will be required only when we actually receive an offer, but we gather them now so that we can submit them immediately with the initial response.  To start the process, I have enclosed is a financial statement and a self-addressed, stamped envelope for your return.

 

Thank you for using The Rodney Logan Team. Our experience is without equal in Los Angeles, and we hope to prove to you that we are an asset and a resource to your real estate future with a goal toward building clients for life.  We will get you out of your current property and in one that is more in keeping with your current comfort level.

 

Sincerely

 

Rodney Logan

Bankers Realty\Logan Systems & Strategies