Luxury Property Short Sales & Strategic Defaults
August 24, 2010 by admin · Leave a Comment
The upper end, luxury real estate market in San Diego, Palm Desert & Orange County has finally taken a significant hit in property values. Prices in the upper end (here defined as properties that were worth at least $1,750,000 or more at the peak of the market), have dropped by as much as 50%, and in some cases more.
Properties that listed and sold in the mid to high $3,000,000′s a few years ago, are now selling in the low $2,000,000′s and even lower. As more and more of these sales close escrow, and the comps get lower and lower, more and more homeowners are questioning the wisdom and business sense of making large monthly payments on properties that they may not have equity in for years to come.
Thus arises the luxury or upper end short sale and strategic default.
$1,000,000+ short sales are truly a different animal than short sales in lower price ranges.
Many high dollar short sales involve “recourse loans” – loans which have been refinanced, and in many cases, where borrowers have pulled out substantial amounts of cash on 2nd’s or equity lines. This means that we need to negotiate a “full and final satisfaction” in order to prevent the seller from being pursued for the deficiency, or remaining balance, by their lender.
We have been extremely successful of late in negotiating high dollar short sales for our clients. A recent deal in the Rancho Santa Fe area resulted in Bank of America accepting a short payoff of $2,200,000 on a loan amount of over $3,200,000. The short sale was negotiated in less than 30 days and was negotiated without the lender requiring any cash contribution by the seller.
In this case, the sellers got out from under the debt of the property and paid absolutely nothing to sell their home.
We have done similar deals with Chase, Wells Fargo, Citi, IndyMac etc.
Every short sale, and especially every high dollar short sale, is unique and requires a unique strategy and approach. One size does not fit all.
In my experience, perhaps the biggest mistake any homeowner can make when considering a short sale is assuming that all agents are the same, and that any agent, (i.e. their neighborhood realtor), can effectively negotiate a short sale.
High dollar short sales are handled differently than lower priced short sales by the banks, and they require a different approach.
Unlike many realtors and attorneys, we do not subcontract out any of our short sale negotiations – we do it all in-house. We have negotiated several hundred short sales and have a documented 90+% success rate.
If you are considering doing a short sale on your home, and have a loan amount of $800,000 or more, do yourself a favor and call me. I am more than happy to answer any questions over the phone, and describe in detail the short sale process I have developed over the past 4-5 years for doing high dollar short sales.
There is no obligation when you call, and whether or not you list with me or not, I guarantee I will give you information that will make the call well worth your time.
I can be reached at 760 930 9898 or 760 390 3895 or via email at matt@battiata.com.
