Please note: This is the CHRE Short Sale Program Summary for Virginia, Maryland and Washington, D.C. For the program summary for Colorado, please select the link to the left.
CHRE SHORT SALE PROGRAM SUMMARY
Exclusively available for clients of
Certified Home Rescue Experts (CHRE)
What is our philosophy?
Our program succeeds because we focus on individual needs. We provide professional, calming support and guidance in short sale transactions through our training and understanding of the unique needs of the individuals involved.
We provide empathy and trained support for sellers who have been thrust into crisis by circumstances they did not cause or create. We provide clarity and purpose for buyers who would simply like to buy a home that’s listed for sale.
It’s unfortunate that short sales are now a part of our real estate reality. They’re a challenge because too often there seems to be no logic or reason to what happens, why it happens or how long it takes to happen. With compassionate support and professional focus, we guide buyers and sellers through the uncertainty to closing.
How does it work?
We strictly adhere to proven systems so that we succeed where others fail. We manage the short sale process to closely resemble a traditional home sale transaction thus reducing frustrations and increasing the likelihood of Lien Holder approval of the short sale request. In simple terms, we control what we can control and we don’t control what we can’t control.
To begin with, we properly establish our expectations by sharing the reality of how this process works and what outcomes we can reasonably expect. We provide straightforward, factual information to help everyone make knowledgeable choices.
Next, we manage the quality and strength of each purchase offer to consistently demonstrate to the Lien Holder(s) that this offer is the best they can expect to receive based on current market conditions. Short sales commonly fail because lenders receive many undesirable offers. Too often a short sale offer is either 1) a low ball offer; or 2) an offer where the buyer intends to flip the property to make a quick profit at the expense of the Lien Holder; or 3) an offer that hides private deals between the Seller and Buyer that are designed to exclude the Lien Holder from the benefits of the deal. In other words, Lien Holders have many reasons to believe the offer being presented is not to their advantage to accept.
We refuse to work with those offers. We will only work with Buyers who want to buy, and Sellers who want to sell, based on legitimate fair market terms and conditions. Because we can prove the legitimacy of each offer to the Lien Holder(s), we have a very high approval ratio.
We prove the value of the offer by presenting fair market, full price, “as-is” contracts with a motivated buyer who is ready to close. That’s why all parties must agree to our program terms or take their chances doing a traditional short sale on another property with an unpredictable outcome.
How do we prove that the offer is fair market, full price?
Short sale negotiations regularly stall because each side has a different “opinion” about the value of the Property. The Lien Holder relies on Broker Price Opinions (BPO’s) while the Seller relies on comparables provided by the Listing Agent. Each is nothing more than an opinion but, unfortunately, the Lien Holder’s opinion is more weighted because it’s their money.
Every CHRE offer includes an appraisal from the buyer’s lender. All buyers must agree to complete their appraisal early on just as they would in a traditional home purchase transaction because the best evidence of fair market value is the actual money in the deal (which is determined by the buyer’s lender appraisal).
In addition, we don’t accept offers that are not within five percent (5%) of the current list price (net of seller concessions). We may ultimately drop the list price to a level commensurate with the original offer price but we can then demonstrate that the market set the price, not the offer.
For example, if a property is listed at $300K, we will not accept an offer for $220K because a Lien Holder would not likely accept such a “low” offer. But if scheduled price reductions brought the list price down to $215K and we then accepted an offer for $210K, a Lien Holder would likely accept that offer because the market was allowed to do its work.
In other words, we find the market price. We don’t make the market price.
As long as the buyer is arm’s length (unrelated to the seller) we are always able to demonstrate that while the BPO might indicate a higher value, nobody came forward to pay that price and the only legitimate offer comes with a limit on the amount of money in the deal (as imposed by the buyer’s lender).
Lien Holders actually appreciate our attention to detail. They know that BPO’s are not always reliable but a traditional short sale doesn’t offer any better indicator of value. However, the appraisal must come from the buyer’s lender in order to be reliable. Independent appraisals are tainted with the possibility of conflict of interest depending upon who provided the appraisal.
In an odd and somewhat illogical way, buyers who finance the purchase price are preferred over cash buyers in a short sale transaction because their offer gives us the added negotiating tool of a lender’s appraisal. Cash buyers are perceived by Lien Holders to be fishing for a “deal” at the expense of the Lien Holder.
How can we guarantee that each offer is an “as-is” offer?
The buyer must complete their property inspection(s) at the time of contract ratification (as they would on a standard home sale transaction) and not after Lien Holder approval. It’s important for the buyer to have inspections and feel comfortable with the condition of the Property. However, Lien Holders want to know that if they say yes to an offer that there won’t be any surprises or additional requests, only a closing. Contract offers are not very reliable when the Buyer waits until the Lien Holder approves the request to complete their inspections.
When the buyer completes their inspections prior to our negotiations with the Lien Holder(s) it creates several advantages.
First, the buyer is satisfied with the Property condition so it removes the fear and uncertainty of the unknown. Imagine how frustrating and unfortunate it must be to wait 4 to 6 months for a short sale approval only to then find out that there are legitimate concerns about property condition that could have been known months earlier.
Secondly, if the buyer discovers concerns about the property condition during their inspections, the parties can mutually agree to amend the purchase price (if so desired) prior to negotiating with the Lien Holder(s). All surprises are eliminated.
Lastly, we are able to safely represent with every offer that the buyer has completed their inspections and accepts the current condition of the property. This distinction is critically important in gaining a Lien Holder’s approval of the short sale request.
How do you find motivated buyers who are “ready to close” when the deal is a short sale?
We allow the buyer to experience the joys of home buying and try not to rob them of any emotional gratification. Home buying is a very emotional process (and it should be). It can be exhilarating, nerve racking, frustrating, surprising and, hopefully, joyful. It should always be exciting and should never be disappointing. Think about all the raw emotions a buyer experiences between the time they submit an offer and the time they receive the seller’s response. Try to recall the pure excitement you’ve felt (during your last home buying experience) when a seller finally ratified your offer.
Traditional short sales tend to take the joy and excitement out of the home buying process. Who would want to buy a home if it wasn’t a joyful and exciting time? Can you blame buyers for giving up before receiving a Lien Holder’s response after 4 months of waiting?
CHRE agents want buyers to be engaged and committed from beginning to end and we need their full participation to increase the chances of gaining Lien Holder approval. That’s why we want, and need, the buyer to complete their appraisal and property inspections early. It strengthens our negotiating arsenal and helps the buyer become a committed participant to the process.
In addition, CHRE short sales require that all buyers be pre-approved for financing so that they are able to move quickly to closing within 30 days of Lien Holder approval. Lien Holders naturally want more money than an offer can provide so we enhance a market value offer with the ability to close quickly. Lien Holders may not like what they’re receiving but at least they’ll receive it in 30 days or less.
Say it in 100 words or less!
With each ratified contract, our CHRE short sale system always produces a qualified buyer, who 1) has knowingly accepted the condition of the property and 2) has provided their lender’s appraisal which validates the offer price. As a result, every offer we make is a fair market, full price, non-contingent, “as-is” offer with a motivated buyer waiting to perform within 30 days. Can you see how a Lien Holder would favor that offer? We’re always able to prove that it’s the best offer the Lien Holder can expect to receive and that any alternative (foreclosure) will bring significantly less and take significantly longer.
What does the buyer need to know?
As a buyer, you have chosen to make an offer on a home being sold as a short sale. In order to increase the likelihood of approval from the seller’s Lien Holder(s), we need your assistance and cooperation.
We (the Home Rescue Institute, LLC) require that you agree to the terms and conditions contained in the Addendum to Contract as a condition of accepting your offer. It is not our intention to create additional burdens or restrictions but to successfully get to closing so that you may enjoy this home as your home.
The seller is represented by legal counsel to professionally manage the negotiations with their Lien Holder(s). Prior to listing the Property for sale in the MLS, the seller has:
1. Submitted all of their financial information to their legal counsel for review. The seller’s legal counsel has determined that the seller meets all standard eligibility requirements for Lien Holder approval.
2. Had a preliminary title report reviewed by their legal counsel who has determined that there are no known title defects which should interfere with securing Lien Holder approval.
3. Obtained copies of the most current association resale package(s), if necessary, which will be provided to you upon ratification of a Purchase Contract (if necessary or required).
4. Agreed to create a $1,000 performance escrow to provide you some comfort and assurance and allow you to proceed with your inspections and appraisal at the time of contract ratification, rather than waiting for Lien Holder approval.
With your cooperation and participation, we believe that we can successfully obtain Lien Holder approval for all the reasons set forth in this summary. For your convenience, we’d like to highlight some of the features, benefits and requirements of the program. As with all legal documents, if you have any questions or concerns about our program, or the Addendum to Contract, you are strongly advised to consult independent legal counsel.
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We will not accept any offer that is more than five percent (5%) less than the current list price as stated in the MLS (net of Seller concessions). We must approach the Lien Holder(s) in good faith with a fair market offer or it will undermine the credibility of the offer.
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Contract ratification occurs when the seller and buyer agree and NOT when approved by Lien Holder(s).
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Lien Holder(s) don’t often “reject” short sale requests. Very often, they respond with conditions that simply cannot be met.
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The seller, and their counsel, will work hard to get a swift decision from the Lien Holder(s). Negotiations are more likely to succeed when the seller offers a bona fide fair market, full price, non-contingent, “as-is” contract such as the one being requested of you.
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The $1,000 performance escrow provided by the seller is a very unique feature designed to provide you comfort and assurance while wading in uncertain waters. We acknowledge your risk in paying for anything without the certainty that a closing will occur.
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If the seller receives a written rejection, or a written approval with unattainable conditions, from the Lien Holder(s), you will be reimbursed your actual cost for inspection(s) and appraisal(s) up to $1,000.
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If your loan appraisal is less than the Purchase Price, the seller will agree to sign an addendum reducing the Purchase Price to the appraised value.
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If your appraisal exceeds the Purchase Price by more than five percent (5%), it is recommended, but not required, that you increase your offer to within five percent (5%) of appraised value. Alignment with appraised value increases the likelihood of the Lien Holder(s) approval of our short sale request.
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The seller will receive no proceeds from this transaction therefore there will not be an opportunity to negotiate property condition at closing. If your inspection(s) require you to receive consideration for known defects, the only available remedy is to adjust the sales price prior to completing the appraisal and prior to negotiating with Lien Holder(s).
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As you might know, the Settlement Agent/Closing Company plays a vital role in obtaining Lien Holder approval. The seller recognizes your right to choose the Settlement Agent/Closing Company but wishes to offer an incentive for you to choose that company who has been working hard to help obtain the necessary lien holder approval.
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The seller has offered to pay for the cost of the owner’s and lender’s title insurance if you choose the Settlement Agent/Closing Company recommended by the seller.
What does the seller need to know?
As a seller, you have chosen to sell your home as a short sale. You have made difficult decisions to get to this point and we acknowledge your fears, concerns and frustrations. Your agent has been specially trained as a Certified Home Rescue Expert (CHRE) in the techniques and details of our short sale program. The challenges and uncertainties of a short sale should have been explained to you.
Your CHRE agent/broker will assist you in obtaining a contract with price and terms acceptable to you and your Lien Holder(s). With your cooperation and participation, we believe that we can successfully obtain Lien Holder approval for all the reasons set forth in this summary. For your convenience, we’d like to highlight some of the features, benefits and requirements of the program.
Please read the Addendum to Listing Agreement and Addendum to Sales Contract carefully before signing. As with all legal documents, you are strongly advised to consult independent legal counsel with questions or concerns.
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Your CHRE agent/broker will not negotiate any terms of the short sale approval with your Lien Holder(s).
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Your CHRE agent/broker’s expertise is in marketing and selling your home. Negotiations with your lien holder(s) are beyond the scope of their duties and obligations in the sale of your home.
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Short sales have legal and tax consequences. As a condition of listing your home with a CHRE agent/broker you are required to retain independent legal counsel to represent you in those negotiations with your Lien Holder(s).
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You may select your own legal counsel or your CHRE agent/broker will be happy to recommend counsel to you. The National Real Estate Law Group, PLLC, (“NRELG”) is recommended because of their experience in negotiating short sales and working with homeowners in crisis. Their fees are set forth in the Law Firm Engagement Letter provided to you by your CHRE agent/broker.
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Short sales often fail because of a late discovery of known information. Your legal counsel will thoroughly review your financial eligibility for a short sale, as well as your title report, prior to agreeing to represent you in negotiations.
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By mutual agreement, your CHRE agent/broker will only enter your listing information into the MLS database within 48 hours of your securing legal representation.
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The listing of your home in the MLS is a public proclamation that you are ready to sell your home.
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Because you’ve completed an important review process, we can assure prospective purchasers that you are fully committed to a successful outcome and that you are eligible for Lien Holder approval.
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Your CHRE agent/broker is NOT affiliated with, nor do they receive any financial benefit from, NRELG.
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If your property is a condominium, or part of a planned community, you are required to promptly order any association resale package as a condition of listing with your CHRE agent/broker.
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Failure to promptly order association documents could jeopardize the successful settlement of your home. It is important to treat this requirement seriously.
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If you do not retain independent legal counsel and/or promptly order any association resale package (if required), your CHRE agent/broker is permitted to terminate the Listing Agreement.
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By mutual agreement, once you ratify a contract, your CHRE agent/broker will have no further obligation to bring you other written offers or counter offers.
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Short sale negotiations can be slow and complicated. Most Lien Holders(s) prefer to work with only one ratified contract to eliminate unnecessary confusion.
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Once you ratify a contract, you will not have to allow showings of your home to prospective purchasers.
- Because time is of the essence to obtain a negotiable contract, you must pre-authorize your CHRE agent/broker to reduce the List Price according to the schedule established in the Listing Agreement.
- Once you ratify a contract, you agree to establish a $1,000 performance escrow with NRELG (or your chosen law firm) according to the terms set forth in Paragraph 4 of the Addendum to Contract provided by your CHRE agent/broker.
- The $1,000 performance escrow will be returned to you after closing of the short sale (which means that we successfully obtained Lien Holder approval for the short sale.
- If we receive a written rejection, the performance escrow will be used to reimburse the buyer for their out of pocket expenses related to the appraisal and property inspection.
- You must select a Settlement Agent/Closing Company to assist your legal counsel in the collection of documents and negotiations with Lien Holder(s). Your CHRE agent/broker can assist you with this selection, if desired.
- You agree to offer to pay for the buyer’s title insurance as an incentive for the buyer to choose your recommended Settlement Agent/Closing Company to assist with closing.
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It is important to obtain the buyer’s cooperation with the selection of the Settlement Agent/Closing Company.
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Payment for title insurance, if any, will occur on the HUD-1 Settlement Statement at closing and will be paid from the seller proceeds.
- You agree to pay $50 to Settlement Agent/Closing Company at the time of signing the Listing Agreement so they can perform a preliminary title search to assist your legal counsel.