If you do a title search and find that your customer owes more money against the property than he will net from the sale, you can still take a listing in some circumstances only. You must then look to see what the debt is for in order to determine whether you can still list the property.
1. If it is a Genworth insured high ratio mortgage, Genworth will co~operate with you as listing realtor under their new short sale “home assistance progann”. You need to contact Genworth through the bank and they will allow the home owner to list with you at fair market value and sell the property if your customer fulfills their program requirements.
They will agree in advance with you that your commissions can be paid and that they will discharge the mortgage in exchange for the net sale proceeds. You can call the Genworth Home Assistance Program at 1-800~511-8888 or e-mail them at homeassist@genworth.com.
2. If the debt that eats up the equity is mortgage payout penalty, you can often contact the bank and get them to waive the penalty. This is especially so since banks can no longer charge a penalty after a foreclosure is commenced. Also, what the banks quote to you as an initial penalty is sometimes wrong. Furthermore, the penalty will reduce after time
and depending on what happens with interest rates in the future, so there is flexibility there. Sometimes if you contact the bank they will co-operate in the sale even if the shortfall is not created by a penalty but for other reasons, although this is rare.
3. If the debt that eats up the equity is a Writ of Enforcement (that is, a judgment against the owner) you can still the property if you do it properly. The seller’s lawyer can often force a Writ holder to discharge their Writ in exchange for the net sale proceeds after payment of commissions and closing costs.
In any case, unless you’ve got the agreement in writing from the mortgage company or Genworth in advance, you must make any offers subject to a seller’s condition; namely, that the mortgage company (or Writ holder if that is the case) agreed to discharge their encumbrance in return for the net sale proceeds after commissions and closing costs are paid. Leave that condition date open for as long as the buyer will allow you to, even right
up to sale date if they are willing to accept this and investors some times will.
This condition is critical for your protection as a listing realtor. Otherwise, the deal my collapse, you won’t be paid, and you may be liable to the selling realtor for his or her commission and maybe even to the seller themselves for failing to protect their interest.
These files are difficult for you as a listing realtor, but however, these situations are becoming much more common and in particular if it is a Genworth insured mortgage, they can be well worthwhile for you to pursue.
If you do a title search and find that your clients owe more money against the property than they will net from the sale, you can still take a listing in some circumstances only. You must then look to see what the debt is in order to determine whether you can still list the property.
If the debt is for a Genworth insured high-ratio mortgage, your clients may qualify for Genworth’s new program for short sales. If your customer co-operates with the program’s requirements they will allow you as realtor to list and sell the property at fair market value and will agree in advance to discharge the bank’s mortgage that they insure in exchange for the net
sale proceeds, among other things. Genworthwill allow your commission to be paid in priority to their mortgage.
This is a real Opportunity for realtors to list and sell properties that otherwise they would not have been able to sell. It is a win-win situation for Genworth, the bank, the home owner and you as realtor. In this way Genworth avoids the costs of a foreclosure by getting you to sell the property early in the process. So you should check with your clients whether they have in fact a Genworth high~ratio insured mortgage. Then you and your clients should call their mortgage company and call Genworth directly at 1-800-511-8888 ext. 5341 or by e-mail to patrick.leefaggenworthcom.
In my next post I will write about other circumstances where you may be able to list a property even if there is more money owing against it than it will net on a sale.
-Bill Fric