When a Short Sale Buyer Blows Off a Nationstar Auction . . .
This is a story of a Nationstar short sale for which the buyer did not register during the online auction and, as a result, did not participate in the online Nationstar auction. I always advise in-contract buyers to register for the online auction and to place a bid, even if it’s the identical amount that they’ve already offered, during the last few minutes of the auction. There are advantages. First, no 5% premium applies to a buyer who is in contract with a seller to buy a short sale. Second, upon winning the bid process, Nationstar promptly issues an approval letter within the week — OK, maybe another week or so when the investor is Fannie Mae, but still.
These particular buyers did not want to participate in the online auction. OK, they don’t have to. Nationstar doesn’t force them to register nor to bid. But the consequences that happen when they don’t is the approval process starts over and can take another 3 months to obtain the approval letter.
My experience has shown that a Nationstar auction typically doesn’t get a lot of action, especially when the reserve price is set so much higher than the initial starting point. I heard that N.A.R. has stopped shill bids from Nationstar now, so that helps as well. Plus, when you have Fannie Mae as the investor, you can be fairly well assured that Fannie Mae will set a reserve price on the high side of market. But buyers don’t always listen to the listing agent’s advice.
We had already lost one buyer in September who had made an offer and then immediately reneged. Some lame excuse about his parents not wanting him to buy a home. When my seller finally entered into a purchase contract with our new buyers, it was October of last year, a few weeks before Halloween. The Nationstar auction process did not take place until the last few days of December, that quiet time between Christmas and New Years when I flew off to Vanuatu, probably the very worst time of the year for an auction. But like I mentioned, the buyer did not register for the auction.
Green Tree was the second lender, the collection agency that has made enormous profits buying bad paper. Green Tree had previously issued approval, but since Nationstar had dragged its feet on the process, that loan went to charge-off status. Now, Green Tree wanted more money. On top of this, Nationstar came back to say Fannie Mae would not approve the buyer’s closing cost credit, and raised the sales price.
All of this happened because the buyer did not bid at the auction. Good thing the buyer still wanted the property from my seller. Six months from the date of the purchase contract we closed, and the buyer had to pay a higher price, plus wrap the closing costs into the loan. The moral of this story is if you’re trying to buy a short sale and are faced with an online auction from Nationstar, you may want to register and participate. You have nothing to lose but time. And quite possibly, money.