Listing a short sale is a little like venturing into the wild, wild west. There’s only a little order, lots of imposters, and laws are broken without much penalty.
Real estate agents bring a little stability to the transaction, but a short sale’s success depends on a variety of variables. This type of transaction is constantly evolving; however there are a few things that remain the same, and that every agent needs to know when working with short sales.
Market Value Matters
Short sales sell for market value. That’s right. A bank will typically agree to a short sale if the numbers make sense. Banks understand that homes need to appraise. Banks also need to mitigate their loss.
Listing a home for well below market value is not the best strategy for getting a short sale accepted. Sure, you may get plenty of offers, but if the bank won’t accept any of them you end up having wasted a ton of energy, not to mention paper, and facing quite a few angry potential buyers.
Banks are no longer in the business of giving away houses. If you send the bank numbers that make sense, you increase your likelihood of a successful short sale closing by 90%.
Only Real Hardships Get the Help
I’ve lost count of the number of times potential sellers have told me the only reason they are pursuing a short sale is because everyone else is doing it. Purchasing a house during the housing boom is not a legitimate hardship. Purchasing a house during the housing boom and being unable to pay your mortgage is a hardship.
Strategic default is never a good idea! Banks actually analyze short sale sellers’ hardships, and most center on the economy, so the bank is going to make sure that a short sale is in their own best interest. Acceptable hardships include medical issues, divorce, disability, significant loss of income, death, unemployment, and relocation.
Laws are local
It’s important to know your state’s foreclosure laws because there are currently no national short sale laws on the books. There are federal guidelines, but they can be applied when and how a bank wants.
States, however, can either have recourse loans or non-recourse loans. A recourse loan allows the bank to demand a borrower pay the difference between what the property is sold for and what is owed on the lien. Many recourse states allow lien holders (banks) to pursue judgment liens against the borrower for the deficiency amount. This process allows the bank to garnish a borrower’s wages until the debt is paid off. Garnishments can be as much as 25% of non-exempt disposable earnings, and bankruptcy doesn’t always save a defaulted borrower from judgment liens.
Real estate agents are not allowed to practice law, unless they are actually licensed to do so. However, agents do need to be aware of possible penalties for short selling a home and also be able to direct their clients to the right resources to discuss the possible consequences and solutions.
Short sales, just like the once-wild west, can be scary to navigate. That’s why it can pay to learn the lay of the land. If you do, there can be a few successful commission in it for you, and some much-needed relief for your clients.
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Legacy Comments
Great article Sarah!
Question: What if the seller decides to negotiate his own short sale? Is this going to work? Or bound for failure? Advise pls, as my buyers are in this unusual dilemma with a seller.
Why does the seller want to negotiate himself? Is he an attorney or involved in the real estate industry? Most banks deal with borrowers differently than they handle real estate agents. Without knowing specifics, my gut would tell me this is a recipe for disaster. It could work, but I’m not willing to tell my buyer to put their hopes and dreams in the hands of a defaulting seller’s negotiating skills. In my opinion, it is always better to have an unemotional/ uninterested party negotiate the short sale.
The lenders require a licensed real estate agent in order to approve a short sale. And, most important, it has to be a arm’s length transaction.
if ever a seller needed your help, it’s during a short sale. if ever there was a situation where the seller doesn’t even need to be concerned about the 6% Real Estate commission, it’s during a short sale. I am just about to close on one that has taken me 2 years, there is no way the seller could have made this journey alone. You should ask your seller to ask any lender, ask any experienced Realtor who does short sales, ask any seller who has done one, would they even consider doing it alone? You will earn your fee x 10 it’s a great deal for the seller to have your expertise and your help and the lender will pay your fee. If they try to do it alone, the odds are 99% they will get foreclosed on.
Tim Sweeney, Realtor 512-762-5896 cell
I completely agree with your article. Being in Las Vegas, short sales make up over 50% of our market and it’s important that you work with an agent who has a good grasp of the short sale process. Just like your article says, I’ve assembled a team of legal and tax professionals to give my clients advice. Each scenario is different with a short sale.
Felipe Crook
Realty One Group
6475 S. Rainbow Blvd Ste 102
Las Vegas, NV 89102
Good and informational article Sarah. I’ve learned that communication up front with the lenders is key in a successful short sale transaction. Also, putting a complete packet together with the offer is essential in getting an accepted contract.
Thanks, Lisa Bullerman, Keller Williams Realty
Diamond Partners, Inc.
Lawrence, Kansas 785-218-3195
Thanks for the article Sarah; great advice on the short sales. Especially highlighting the fact that short sales are not a huge difference than a regular sale when it comes to price. Also that they are only right for an owner in financial hardship. I think this is a very common misunderstanding!
Grat information! I have done some short sales, and all of them have been approved. Making a reasonable offer, send all the documents requested in one packet, including the Loan’s pre-approval letter. Also putting at least 2% of the earnest money to show how serious the client is about purchasing the property, follow the exact instructions are keys for the approval of the offer. After all there is no much different buying short sale than any regular sale but the fat the client is buying a good property, for a great price! Make sure you emotionally prepare your client for the outcome of the offer. Communication with all the parties is extremely important.
Rosa Camille Burk
Prudential Gary Greene, Realtors
832-265-4242
I love the article Sarah!! Good stuff and I also agree with Lisa.
Nice informative article. I have completed quite a few short sales and the most important thing for me is to properly pre-qualify the seller and have them complete their package for the bank before the property even comes on the market.
Nancy Makowsky, Coldwell Banker
e-Pro, SFR, CDPE
Laguna Beach, CA 92651
949-683-0269
Hi Sarah:
Great article, just one thing I disagree with you on:
Market value. Typically, in my area (Massachusetts/CT) short sales are selling for LESS than move-in ready REOs! I find this is in part to condition (we have the oldest homes on the market, and many buyers that used 80/20 splits or ARMs bought below-average condition homes or have not been able to afford maintenance) and the fact that wait times for approval are on average 90-120 days. 90-120 days is an appraisal nightmare, and loan locks expire, particularly for FHA/VA/USDA rural loans and the paperwork for these loans are very burdensome. This in turn results in a sort of “pentaly” in the sale price. Buyers are much more willing to pay MORE for a comparable REO which they will get an answer on in less than a week, and can close in an average time frame (30-45 days). I complete, on average, about 100 BPOs a month in the MA/CT area, and more and more BPOs are requesting NO short sale transactions to be used as comps, they just are not in the price range. However, I am finding a lot of specific properties are ONLY short sales, in certain towns with colonials built between 2000-2007 these are always upside down and unless the buyer put 20% or more down or can bring money to the closing table, these are short sales. Same with multi unit properties bought in the city of Worcester MA from 2005-2007. The values are upside down by 50% right now. As long as you have comps to support the sales price, and the reasoning behind it, I find the lender realizes it is not going to benefit them to incur an additonal 50K to foreclose on someone. The only snag I am finding, and really is worth mentioning, is small, local banks. For the most part, they have very few delinquent loans, they did not write crazy ARMs or splits, and most of their portfolio is held and serviced in house as 95% LTV with PMI. What many realtors fail to realize is the PMI company is really the one calling the shots, because many of these banks will make more foreclosing and filing a PMI claim then they will by doing the short sale. They have so few they can take the hit. If you are dealing with one of these banks, it is in your best interest to talk to them and find out UP FRONT if they will do short sales, and if so, what is the absolute percentage of loss they are willing or able to take. Most of them will NOT discharge the difference either, and want a promissory note from the borrower.
Thanks!
Danielle Therrien
RE/Max 300
Webster MA 508-344-3481
Great article. Especially the part where you talk about the hardship aspect. This is very important to soliciting the banks help. They DON’T allow short sales simply because the house is worth less than someone paid for it back in 2005-2006.
Sending the right info to the bank is paramont. When we send in short sale requests, we substantiate our offer with comparable sales.. and always encourage our clients to discuss their situation with both their attorney and their accountant prior to proceeding. We typically see them the following week with the “all systems GO” look on their faces. Short Sales are not for the faint-hearted. But the banks cooperation with short sales, helps them and keeps home values from declinging further.
Jeff Burnham -”The Wizard”
Encore Realty Group
(702) 682-2002
http://www.VegasRealtyWizard.com
Short Sales are extremely unique…We have managed to close over 40 short sales in Massachusetts…each and every one of them different than the previous one..some with IRS liens, State Department of Revenue Liens, Credit Card liens…and some with all of the above. If the Sellers qualify we can get the owners released from the deficiency and 3k in relocation funds..We can not stress enough that there is a future…and to have a well thought out plan, makes most people a lot more comfortable..~laura
Great Article Sarah! And I completely agree with Nancy’s comment. It is very important to work with a qualified seller & submit the complete offer package for short sale approval.
Kal Johal
530-713-5711
Many states have laws that lenders can enter deficiency judgments against the alert after a foreclosure. A big factor in doing a short sale vs. letting the home foreclose is for this very reason. Many people facing hardship already have their credit destroyed and feel like that is the only thing that happens in a foreclosure is that it will be on their credit. 8 out of the top ten lenders offer relocation expenses to qualified Sellers that do a short sale. When I read your article it almost confused me; I read it to mean short sale consequences but I believe you are referring to recourse loans as a foreclosure, not as a shortsale, this defeating the main reason for short selling in the first place. Thanks for letting me add my 2 cent.
Sarah
Are you going to hold this webinar again as I have prior commitments on that day. I would love to hear what you have to say.
Thank you
Linda S. May
Hey Linda,
We are looking into a second date for the webinar now. When we have it, we’ll post it here to the Trulia Pro Blog. If you haven’t already, subscribe at the top of the page to get our alerts.
Good points. It’s important to realize that in many cases the lenders won’t allow a short sale unless the borrower has tried (and failed) for other loss mitigation options, such as a loan modification, forbearance, etc. Also, it’s important to realize that as a real estate broker you have a fiduciary duty to get the highest price for the seller, while at the same time you’re trying to find buyers to buy (at the lowest possible price). If you are doing all of that, it’s tough to find time to negotiate with lenders, and it’s also tough to find time to discover “what’s wrong with the property” Why has the value dropped so much? Why can’t it sell at the value of the mortgage? What’s my tax liability if the second mortgage gets 6% of the unpaid value? Does the judgment lien get satisfied if I pay them to release the lien from the property? Can I do a short sale if I declared bankruptcy? What about the PMI holder? All things to think about when working on short sales. I always suggest to agents to do what they do best (sell, market, find buyers), and let the others do the rest, negotiate with the lenders and creditors, find flaws, etc. If you want, use me as a resource. Send me an email to chat. Best regards, Pete Wagner, Horan & Wagner, P.C. wwww.horanandwagner.com http://twitter.com/horanwagnerpc
I couldn’t agree more Sarah. We try to educate our costumer and pears on the ever evolving issue http://www.TallahasseeForeclosureSolutions.com
I disagree with the part about the short sale being successful if there is a reasonable market price. Banks can and do request cash “contributions” from either or both the buyer or seller, above and beyond the negotiated sales price, to offset their losses. This has nothing to do with market value of the short sale.
David Barr, Broker Associate
Sandals Realty
941.870.0656 Twitter: @sarasota_homes
Agree to a point, WSJ has written many articles on strategic defaults and the Mortgage Bankers Association short sold their headquarters for a $30 Million Loss, they weren’t facing hardship – Here’s a link to that. http://wp.me/1MLJl
You hit the nail on the head that it is a numbers game. Knowing those numbers help. Here is a good blog about short sales… http://wp.me/P1MLJl-54
Well said in your short and smooth article.
I disagree with your second paragraph. Purchasing a home during the boom that took place in the past decade should be considered a hardship. Home values were and in some places still are (Thanks to many bogus government programs) artificially over inflated, drastically. People who bought homes for a quarter million dollars that were worth 50 grand at the turn of the century were defrauded. Not all of these people had a choice, don’t forget many people need to buy real estate for many reasons, a death in the family, a newborn, divorce, marriage, etc. Not just because they wanted to, and it wasn’t their fault they had to pay such over inflated prices. Many industry professionals conspired together with corporate America to rip off these good people and for that they deserve whats coming to them, defaulted mortgages and distressed properties by the millions. If these people have wised up and now wish to pull off a strategic default then I say more power to them. If I hire an electrician to fix my light switch I am at his mercy because I know nothing about his field of work, and I rely on him to do his job right and to the best of his ability, I most certainly do not expect him to rip me off, and then continue ripping me off long after he leaves.
I agree with you on what should be, but banks will often not consider what are actual hardships are hardships. Banks also take their sweet time with short sales, lose paperwork as a matter of course and ignore real offers.
One short sale (I represented the buyer) took nine months from PA to close. This was a cash offer at list price.
I had a list involving a recent widow with a six-year old daughter. She agreed to try a short sale. We got an offer $10K over the bank-OKed list price but after three months, with no response from the bank, the buyer withdrew the offer and the bank forclosed. The house was then listed for $30K less than they were offered.
The bank, you understand, was ruining the life of widows and orphans. Yes, banks should be more open to negotiations, both for humanitarian and for economic reasons. They’d make more money and help distressed home owners and the economy. But many of these bankers are short-term thinkers, poisoned by their own little black hearts.
Great set of articles! I agree with all of the comments that followed. With regards to Danielle in Mass., I believe her observations would hold true in all areas due to thwe nature of short sales. Short sale buyers are fewer between simply because of the unknowns they will experience after the homeowner “accepts” their purchase offer. They could wait several weeks only to discover their “deal” won’t go through. This alone leads to necessary market discounting as compared to conventional sales.
Out of dozens of successful short sale closings all have been discounted below conventional fair market transactions.
Nice Arrticle but a little elementary for advanced short sale agents who want to know something new.
the nuances now developing between Equator and non Equator short sales, Chase giving homeowners thousands of dollars to do a short, homeowners who decide not to honor their committment to leave are just some of the new challenges we face.
The banks are now trimming HUDS to the bone begore approving too.
Would like to hear from other agents dealing with these issues.
jUST WONDERING IF ANYONE ELSE IS DEALIMG WITH BOA SELLING THEIR 2NDS TO
BOTTOM FEEDERS WHO WILL NOT ACCEPT WHAT BOA OFFERS?
COMPANIES LIKE REAL TIME SOLUTIONS.
With two more short sales in the works, I find that making up a set of labels with the borrowers name, loan number, address and last 4 of social, then labeling every page, also helps tremendously with requests for previously sent forms. I have never had a short sale not close, setting reasonable expectations for buyers and seller from the beginning can make the who transaction so much less stressful!
Victoria Frieberg — that is a brilliant idea — to label every page. Thanks for the tip!
I negotiate short sales for agents all over the country, and MOST of the above is true:
Market value matters IF there is no mortgage insurance, and IF teh BPO agent is not on top of the list for the REO listing….too much to explain on this short space, but, 100% true.
Hardships – NOT necessarty, it does make things easier, BUT, if you know how to negotiate with teh right person, the ONLY thing the bank turly cares about is this:
Will i lose more money foreclosing, or, doing a short sale.
Though hardships ARE easier to get done, if teh bank thinks teh Seller WILL walk, they suddenly get VERY receptive to a short sale
Other than this, good stuff, great points.
All my best to everyone battling the banks on short sales, let me know if you need any help.
Sincerely,
Ben Benita, Alltech Title and Settlements
http://www.ShortSaleBeach.com
I completely disagree with all of this. I’ve been a Realtor for 22+ years and I’ve seen all of this before. RTC/FDIC fallout etc… This is no different, just on a much larger scale. It is all the lenders’ fault that the country is in this mess and by going along, we’re only rewarding them for misbehavior and bad loan practices.
Bank of America Vice President Dave Sunlin was recently quoted in a USA Today article as saying that “short sales are a very positive solution.” My question is, for whom?
The distraught homeowner falling behind in payments wants to avoid foreclosure to retain some creditworthiness so they can repurchase at a later date; however, a homeowner must be in default on the loan (imminent foreclosure) or most lenders will not even consider a short sale. If the homeowner is still making payments regularly, regardless of how much they’re struggling financially, the lender will not be eager to budge. That doesn’t seem to equate to helping homeowners in distress. The lender typically only reacts when the foreseeable future looks like a problem for them – they really don’t care about the homeowner.
Problem number one for the lender is that time is not on a their side after a foreclosure because they’re dealing with a vacant house – a welcome to vagrants, mischievous teens and other criminal elements who can raid the home for appliances, fixtures, copper wiring and plumbing, etc. – not to mention a potential fire hazard and the risk of receiving a property that may be a huge liability such as an empty swimming pool. That can become a big problem for the lender. The short sale solves that potential problem for the lender but does nothing for the defaulting homeowner. According to the same article only almost ½ of all short sales are completed with the original homeowner receiving a bill for the balance in addition to bad credit.
The next problem is that the cost of a foreclosure to the lender is much higher than accepting a short sale price. The costs involved include rehab and repairs to the property and resale at the market value (which is what the short sale price would be anyway). Time on the market during an economic recession that is additionally plagued with tighter lending guidelines that should have been in place in order to prevent the market fallout (bubble) that occurred in the first place equate to additional costs to the receiving lender. The homeowner, in the 11th hour is already going to suffer a severe credit score dip and will eventually stop pouring buckets of water from a ship that is ultimately going down. At that point the homeowner begins to look for rental property (before the credit score goes down so far they don’t even qualify as a tenant), and has already figured that it will take all of 90 days to a year for the lender to actually foreclose and therefore they can save the “payment” money to help them move and secure a new home. Once the homeowner’s credit rating takes a dive so does their willingness to continue to pay the mortgage.
Does the buyer on a short sale receive any gain or benefit? A recent article in USA Today quotes RealtyTrac second quarter figures of short sales discounts vs. foreclosure discounts applied to the overall sales market. The short sales reported accounted for an overall 21% discount and the bank owned (foreclosed) property sales showed a 40% discount overall. On the surface these may seem like attractive discounts to potential buyers looking for a deal. But what is this discount and how does it apply to the market? If the market value were at or above the mortgage balance plus the cost to sell the home (7-9% depending upon escrows etc…), there would be no need for a “short sale” and therefore no problem exists. Existing market sales data would have to be compared to each and every short sale counted in this calculation in order to call this 21% a market price discount. The figures represented can only be measured as a percentage of the original debt and are not compared to the open market values of recent sales in a given market area. In fact, by the time foreclosure is underway this 21% more than likely consists of additional interest, attorney fees and penalties applied to the outstanding balance, making the figure of 21% discount to the buyer, erroneous at best. Logically if there is a twenty-one percent savings from market value, that would imply that there was 21% equity in the home at the time of the sale and in that case there would be no reason for the seller to even apply for a short sale. That means that the buyer in a short sale is paying full market value (100%) for the property, thereby helping the lender defray the foreclosure cost while insuring that the property is not standing vacant subject to theft, vandalism or fire. Additionally the buyer must painfully wait until the lender gets around to deciding whether they will take the loss and complete the short sale or proceed with a foreclosure. This can take up to 245 days . Meanwhile the buyer is missing out on better deals on foreclosed property, transferee sales etc. It’s not a good deal for any buyer at all. But erroneous percentages tossed into public view by RealtyTrac and others data tanks may lead buyers to believe they’re actually getting a good deal on a short sale. It’s not a 79¢ on the $1.00 deal if the dollar you’re talking about is only worth seventy-nine cents in the marketplace. There is no 21% relative to the buyer’s choices in the marketplace.
Lastly, and near and dear to my wallet: Is “short sale” business good for real estate agents? Not only are Realtors waiting inordinate amounts of time to close short sales, they typically spend more marketing dollars advertising them, they have the extra burden of dealing with a lender for vast amounts of time on the phone (time that could be better utilized making other sales), and many short sales don’t go through because the foreclosure rug gets pulled out from under their marketing feet. Let’s face it, many of the Realtors I speak with who have short sale listings are doing a favor for a friend who has fallen behind or they sold the house to the homeowner when they purchased and feel sn obligation to them as past clients. In addition to the grim and daunting workload involved, lenders expect the Realtor to cut the commission down to complete the sale paying little or nothing compared to the time and effort involved. It’s amazing how many Realtors get involved with short sales under these conditions. You get to do tons more work, there’s a HUGE risk that the lender will not go along with the sale, and you get paid less at the demand of the industry that caused the market fallout to begin with. On the flip side of it all, after foreclosure, the lender will typically put the house on the market, continually reduce the price until it sells (thereby giving someone from the public the benefit of the below market value), and the lender will normally pay a commission and sometimes bonuses that are in line with commission offerings of other competing properties in the marketplace. In some cases the lender will restore the property to general market condition.
Short sale perspectives:
Homeowner – bad credit, a bill for the shortage, and/or a lien that must be satisfied before another purchase involving a mortgage loan can be made. All sources mention that under a short sale the buyer may qualify for a new mortgage after two years compared to a foreclosure which may be 5-7 years. What they all omit is the shortfall balance must be paid back too.
Fair Isaac released a report that says credit scores are affected about the same, whether a seller does a short sale or foreclosure. Fair Issac says the average points lost on a FICO score are as follows:
• 30 days late: 40 to 110 points
• 90 days late: 70 to 135 points
• Foreclosure, short sale or deed-in-lieu: 85 to 160
• Bankruptcy: 130 to 240
Buyer – pays full market value for a home, waits up to six months to close, passes up possible better deals while waiting.
Realtor – Receives a heavier workload, assumes a higher than normal risk, receives a discounted commission for spending more time and effort.
Lender – Gets the property sold without foreclosure, maintains continuity in occupancy, has less risk and less cost than maintaining and selling a foreclosed property, and still almost ½ the time retains the ability to collect the shortfall difference from the original homeowner at some time in the future.
So the lenders with potential foreclosures want the public to think a short sale is a bargain, the Realtors to think that it’s a viable business model for their future, and the defaulting homeowner to think they are saving their creditworthiness in the process – a process that lenders portray as “doing everyone involved a favor at their expense”. Nonsense! While the lenders are taking a hit on the balance, they are the only beneficiary to such an event but they want everyone else involved to think their benevolence should be revered. They caused the problem, received tons of tax dollars (from you, the public) in the form of federal bailouts, saving them from joblessness and receivership, and now they want everyone to believe that they are offering a grand gesture by taking less than owed on the debt. I’ve got a gesture of my own in mind for them but that would be inappropriate and tacky.
Let’s just leave it at this: The lenders/investors that made bad loans should have been made to suffer the penalty by getting shut down and sold off to smaller, more solvent banks and/or investors across the country. The money would then have filtered into the accounts of smaller banks across the nation, and equity into the hands of buyers nationwide. Realtors would still be used to sell the properties at a full commission, with relatively the same amount of work involved as there would managing any vacant property (certainly much less than the work involved in a short sale). The only losers in that scenario would be the ones who caused the housing mess that we’re in today – and rightfully so!
I am sorry to disagree with the statement that short sales sell for current market value. In my area the short sales sell for less then current market value. Why would anyone want to go through the whole process with all the ups and downs and go arounds of a short sale unless the the buyer was getting a deal?
I am working in the greater Sacramento area in California.
Hey Kari,
Thanks for the comment. You were quoted in Sarah’s follow up post. Check it out (new link) http://pro.truliablog.com/tools-trends/short-sales-gone-wild-more-on-the-great-market-value-debate/
Is there a particular web-site for the appropriate information to be filed with an offer to purchase on a short sale listed home? Thanks.
Each lender has their own requirements for a short sale package. Most of the lenders will post this information on their websites. However, the information changes pretty regularly, so it is always best to call the lender and ask.
There’s really no particular website for all bank info.
Is there a particular web-site to find out the correct paper work to be sent along with an offer to purchase a listed short sale home. Thanks
I believe you have to know the lenders.
I have head high ranking officers at BofA say that if you client is willing to take a foreclosure they will consider the short sale. I have gotten working doctors approved for short sales with BofA. BofA typical requires lot of persistence and a offer fairly close to fair market value.
Your article would be correct with respect to Wells Fargo. Wells can be very concerned about your seller’s financial condition. If your seller is saving money every month, Wells may reject the short sale.
Chase seems to be pretty smart. The more money your seller has the more money they seem to want the seller to “contribute”. Of course that is where the negotiations start. However things are changing in CA because of the new short sale law, CCP 580e.
Some lenders are getting easier and some tougher.
Hey John,
Thanks for the comment. You were quoted in Sarah’s follow up post. Check it out (new link) http://pro.truliablog.com/tools-trends/short-sales-gone-wild-more-on-the-great-market-value-debate/
great info and format, well presented. I agree totally with your content.
Can I please use your post in my web site and blog?
Thanks
Shawn,
Glad it was helpful. Please do share it, we just ask that you give Sarah (the author) the credit for her hard work and link back to us in there somewhere.
I couldn’t agree more….Excellent article. The only other important point is to the buyer’s agent on a short sale. The short sale process is a long one and buyers tend to lose patience. Nothing can jeopardize the process more than a buyer who walks away from a contract: the homeowner is back to “square one” and hopes another buyer comes along very quickly. Having a good buyers’ agent is also key to making everything work and get processed efficiently.
You said their are no national laws. Not true. The IRS does get involved (which you also left out.) The amount the borrower did not have to pay back is treated as taxable income and taxes will be due. President Bush signed into law a temporary exemption and President Obama extended it but it is set to come back. Also, I believe this exemption only applies to primary residences, investors are not exempted.
Shortsales definitely go for below market in many/most cases. Some banks will accept 85% of market value if you know how to work the deal.
Hey DC Realtor,
You were quoted in our follow-up post. Check it out http://pro.truliablog.com/tools-trends/short-sales-gone-wild-more-on-the-great-market-value-debate/
I totally agree with this article. I personally always assist my clients with the hard ship letter so they get the point accross. So many times a client does not even think something would matter and it turns out to be a huge determine factor in getting the short sale approved. I have a 99% success rate.
Great article. I focus on listing short sales and opened up Short Sale Realty of Florida to devote most of my time helping sellers and buyers of short sales. I do not have time to drive buyers all around and give sellers the service they need to follow up with the banks and documentation and EDUCATION. So now I just handle short sales unless I get a referral. There are too many agents who do not have the patience nor the understanding of the lender process. I am a Certified Distressed Property Expert, CDPE and am happy to help anyone with a short sale (pay Broker Referrals too) in the Central Florida and Crystal River area of Florida. See my blog http://www.mylorelie.com Click on Short sale info under the blogroll
Sarah I thought this was a great post and I enjoyed reading it. I am in Massachusetts doing a tremendous amount of short sales. We try to educate clients on many of the facts about short sales including the things you mention. We work on hundreds of them at a given time and close anywhere between 25 and 40 per month in addition to our Retail sales. We filmed multiple You Tube videos about Short Sales and the many false rumors about them. We call it our Fact Series. (Here is a link to our videos: http://www.shortsalene.com/videos/)
But Danielle I disagree with your comments about short sales selling for less than REO’s. Since we share the same MLS I think my data will surprise you. Based on our data analysis from MLS for 2010, short sale homes sold for 27% more than REOs and so far this year they have sold for 24% more. We’ve been working hard in Washington D.C for the short sale cause, trying to inform policy makers on the benefits short sales are having on the market.
(For more information see the full post here: http://www.shortsalene.com/mcgeough-lamacchia-realty-takes-short-sale-washington-dc/ )
For those of you who think Short Sales are not a good option here are my thoughts:
There is no perfect solution for this crisis or for distressed homeowners but Short Sales are a GREAT option. We get a ton of testimonials on a daily basis from past clients who are so happy now that they have done a Short Sale and moved on. We have negotiated over 50 million dollars in mortgage debt forgiveness over the last three years! Here are some of those testimonials: http://www.shortsalene.com/testimonials/