Second Lien Wants More Money!

Month by month the issues related to negotiating short sales grow and evolve. One month it all seems to make sense and then crazy stuff starts to happen. So what can you do to get your deal through when you are having some challenges with the 2nd lien?

It all goes back to setting your seller expectations. Over a year ago most 2nd liens wanted at least 20% to release the lien. Six months ago they seemed to work through with 10% or less and now we are seeing a turn back towards the 20%. And the 1st lien of course only wants them to get $2k for everything. I always like to fight and negotiate the heck out of the deal. But there are times when, as the negotiator/Realtor, that it might make sense to let the deal move to close even if it might cost someone in the transaction some money. (I don't even like typing this, feels like giving in but . . . sometimes it will make more sense based on your seller's needs and desires).

We solve this problem by setting our seller's expectations. During our listing appointments we advise the seller that we will work towards a closing that will not require them to bring any money to the closing table. We explain how hard we work towards this end but that they need to prepare for the possibility from the start that some money may be needed. I always suggest they try to save 3% of what the sales price might be. This seems to be the magic number for us at least. During our most difficult negotiations with the 2nd lien this amount would almost always make up the difference the 2nd lien wants with what the 1st lien is going to give them.

As for someone suggesting 'well the problem is they have no money' I suggest you stop assuming some of this. If an owner knows from day 1 they might need a small amount of money and for 3% of the sales price they can clear a hefty debt from their backs, it all starts to make sense to them. And given enough time most owners can find a solution to getting some of that money.

But still fight the fight, nothing is cooler when all seems lost and you pull it all out because of your great negotiating skills, contract knowledge, sparkling wit and amazingly good looks ;-)