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 Welcome to our Short Sale Group!

Created by: John Reilly, Educator,  San Diego,  CA

Date: Aug 10, 2008, Number of Replies: 10


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Message from John Reilly, e-PRO:

The topic of Short Sales has been a lively one on RealTalk. One of our active participants, Catherine Myers, has organized a RealTown Group entitled Short Sale Strategies. You'll find it at www.RealTown.com under the Groups tab or go to http://www.realtown.com/DiabloValley/groups/short-sale-strategies/view/3211


The following group discussion has been shared by John Reilly, e-PRO.

To Top Reply

David Bisbee Licensed Real Estate Broker,  Hyannis,  MA

Date: Aug 21, 2008

I am in Real Estate on Cape Cod, short sales have been in our market area for past 6 months.  biggest problem has been, Realtors not getting all of the infomration to the lender and having all the contacts in line, prior to listing the property.  Just saying this is a short sale need lender approval is not enough, make sure you contact the listing agent, if he has not contacted the lender or is just starting, this is going to be a problem.  As a Buyers Agent be demanding and expect results fromt the Listing Agent.

Tips on getting involved.  1.  If listing get all the mortgage information from owner, get written permission to contact lender on the owners behalf.  2.  Get an attorney involved who will be workign to clean up the title.  3.  In presenting your market analysis to lender, prepare a proposed HUD statement, so lender can see the bottom line.  4.  Do not discount listing or buyer agent fee's, again show what you expect out of the sale and what you expect that the buyer agent will be expecting.  5.  Get all your contact, mortgage lender information, phone, fax, and email information and ask them, what is their turn around on accepting or rejecting a deal.

Remember the lender really does not want to deal with foreclosure, so work on realistic values.

David Bisbee dbisbee@realtyexecutives.com

 

To Top Reply

Lonnie Shapiro Licensed Real Estate Broker,  Ridgefield,  CT

Date: Aug 23, 2008

I'm really glad to join this group. Here in Connecticut I am just starting to deal with short sales as a way of helping my seller clients. Does anyone have experience dealing with Bank of America?  Apparently Connecticut is a state whereby if you go the short sale route, you still owe the difference of what is owed on the mortgage to the lender.  I have a seller who does not have the money to repay the bank.  The bank is willing to give him a preferential interest rate, but he just doesn't have the income to cover it.  Does anyone have any suggestions of what to do next?  We are short about $30,000.  The commission is being paid by his wife's employer as they have been transferred.  Thank you in advance. By the way, it is a home equity line of credit that will be short.

To Top Reply

Linda Newton Licensed Real Estate Agent

Date: Aug 27, 2008

Hi Lonnie....

Your sellers are still responsible for the 30k they owe, as a line of credit it will be treated as debt (kind of like a credit card), they will have to either make arrangements with the bank to make payments or file for bankruptcy.   I live in AZ and many many people who are in short sale or foreclosure are in trouble because of lines of credit they took out when their house value shot through the roof, they SPENT it, they owe it PERIOD, the line of credit does not go away. This has nothing to do with what state you live in, its universal through the country, seconds and LOC's don't go away

Hope this helps,

 

Linda Newton

RE/MAX Achievers

Chandler Arizona

To Top Reply

Pat klock Parker

Date: Aug 28, 2008


Everyone still owes the bank on a short sale, it's not unique to
Connecticut. I presume that someone discussed with the wife's employer, it
would not be in their best interest to let this sale fall thru. A
distracted employee cannot focus on their next job.
 

Just my thoughts, Thanks,
Pat Parker 305-773-6343

To Top Reply

Greg Humphrey Licensed Real Estate Agent,  Twain Harte,  CA

Date: Aug 29, 2008

     The blanket statement "everyone still owes the bank on a short sale" is not at all accurate.  On a purchase money loan, where the original loan amount to buy the property is now more than the home is worth, and the buyer has gone into default, it is possible that the bank or lender may approve the sale of the home for less than the amount owed, provided the seller has completed the short sale requirements showing an irreconcilable hardship, proof of income and assets showing the hardship, and provided the seller receives zero proceeds from the sale.  Upon completion of the sale, the credit report for the seller will reflect "Amount paid in full for less than the amount owed."  This may cost the seller 40 to 80 points on a credit score, instead of 200 to 400 on a foreclosure. The seller is done with the bank, but should consult their tax preparer regarding any tax consequences.

     There is a difference between recourse and non-recourse financing.  If a seller has used his property like an ATM machine, leveraging during appreciation with cash out refinancing, all the money over and above the original purchase money loan taken out could have devastating consequences for the seller.  The seller may still be able to sell the property through a short sale, but all the money pulled out of the home after the original purchase that is "short" will most likely be considered ordinary income by the State and the IRS, and taxed accordingly.  In California where I am an agent, I have seen sellers in positions where they have pulled out 100's of thousands of dollars, and whether they sell through short sale or lose their home through foreclosure, will most likely be facing the music with Uncle Sam soon.

     There are advantages and disadvantages to short sales, and if we plan to be professionals and serve our clients properly, it would behoove us to become educated through certification programs so we know how to analyze the needs of each individual, and not guess about the consequences.  It has been estimated in my market area that by mid 2009, as much as 50% of all sales may be short sales.  I would hope that I am dealing with other professionals that are up to the task.

Greg Humphrey

REALTOR®, e-PRO, GRI

Twain Harte, CA

Mailto:Greg@GregHumphrey.com

To Top Reply

Gina Sprenkel Licensed Real Estate Agent,  Temecula,  CA

Date: Sep 4, 2008

I'm in Southern California, have a Short Sale listing with clients who had two loans. The Second was completely forgiven (and not issued a1099 as income, nor given a deficiency judgement). The remaining debt from the First loan (after accepted offer price, commissions, fees, etc.), will be issued to my clients...BUT, for a period of time, "due to the current market", they are able to be forgiven of that as well (completely) when handed over to their certified public accountant who knows the proper documentation to complete on their behalf.

Most situations, that I can see, that have a second or third lien, and will not forgive the debt, will most likely be issued a deficiency judgment of some kind, or the Short Sale will simply not obtain full approval from all parties, and will be forced into foreclosure.

Each and every case is different.

To Top Reply

Michele Vanhorn

Date: Sep 11, 2008

I am having issues with the buyers jumping out of the contract within 24 hours after getting the acceptance from the lender or lenders. I call the agent of the buyers regularly and say we are close to approving, are you sure your buyer's want the house and they all say "yes, the buyers really want this home"  than within 24 hours they back out. I'm suspecting they are making more than one offer and they just decide that it is not Really the house after all. Four times I've had this happen in a month.

Michele Van Horn REALTOR, ABR,CRS,GRI,PMN,SRES

 

To Top Reply

Mary rose Olejniczak

Date: Sep 12, 2008

Hi Every one,

this is all new to me, but I had taken 2 listings that I think may be a short sale. The 1st one the payments are still current but when he bought the home, the market was high, he is now loosig his job and is force to sell. The home is now worth 30K less than when he first bought it. He does have a first and 2nd, I have it listed for him to brake even with the bank but still to high for the area/market. How does this work? I think he still hasd to come up with the differance, right?

To Top Reply

Iris Finn Licensed Real Estate Agent,  Virginia Beach,  VA

Date: Sep 17, 2008

Hi Every one,

this is all new to me, but I had taken 2 listings that I think may be a short sale. The 1st one the payments are still current but when he bought the home, the market was high, he is now loosing his job and is force to sell. The home is now worth 30K less than when he first bought it. He does have a first and 2nd, I have it listed for him to brake even with the bank but still to high for the area/market. How does this work? I think he still has to come up with the difference, right?

With everything I learned thus far in Short Sales, it is very important to have a good real estate attorney on your side. They will take care of speaking with the bank, handle the transaction and negotiations. An attorney will protect you from saying something that might not be correct. In Virginia, the fee to hire an attorney is $500.00.

Iris Finn, Realtor

EXIT REALTY PROFESSIONALS

Virginia Beach, Virginia

To Top Reply

Bart Foster Licensed Real Estate Agent,  MA

Date: Sep 17, 2008

I suppose your biggest mistake here was not executing extensions for the validity of the offer. Due to the banks slow response to offers, which may in part be due to the offers not having all the documents to support it, by the time you get a counter offer or acceptance, the offer is no longer valid. Get everything in writing. If the bank informs you that they need a week, make it 1 1/2 weeks.

Hope this helps

To Top Reply
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