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 Short sale on non-owner occupied property?

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Date: October 5, 2010, Number of Replies: 14

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Just a curious question, does anyone have any insight into short sales on non-owner occupied properties? How do the banks view that? More or less likely to be approved than a short sale on an owner occupied property or does not matter? And yes, this is a US question, not Canadian. Thanks. Ramona www.BurlingtonHomeForYou.com Ramona RE/MAX Escarpment

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Catherine Myers Licensed Real Estate Broker,  Pleasant Hill,  CA

Date: October 5, 2010

I've done many for investor, tenant occupied and non owner occupied short sales. They work the same. Depending on the financial situation of the owner I've had in some cases a cash contribution requested. Seconds were more difficult, but mostly you need to thoroughly understand the recourse laws in the state the property is located in, plus that client needs to understand their tax implications as they likely will not qualify for any tax relief.

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Jim Cummings Licensed Real Estate Broker,  Austin,  TX

Date: October 5, 2010


My understanding from a couple of experiences is banks will NOT do a short sale on investment real estate - it must be Owner Occupied. I think the theory is you have assets if you own a personal residence and have rental property.

Jim Cummings
Austin Distinctive Homes

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Tish Osborne Licensed Real Estate Agent,  New Port Richey,  FL

Date: October 5, 2010

Same here in Florida, Catherine. You have to have a hardship, just like any short sale, and that has been a little more difficult. Otherwise, the steps are the same. Since it is investment property and not primary residence, a 1099C will be issued for the difference in the mortgage and the short sale proceeds. The seller will be responsible for income taxes on that amount.

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Ramona Strojevs, sales representative,  Burlington, Ontario,  --

Date: October 6, 2010

Thanks. He does have an attorney so hopefully he is getting good advice. His daughter bought the property to live in, he co-signed. Daughter moved to CA 3 yrs ago and the property has been rented. They couldn't sell it 3 yrs ago for what was owed (they overpaid), and now are prob $45K underwater. Not a good situation. They both do have other assets, so I'm curious how the bank will view the 2 of them and their situations. Thanks for your comments. Ramona

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Barbara Hill Licensed Real Estate Agent,  Ocala,,  FL

Date: October 6, 2010

Almost all my short sales are non owner occupied homes, and the only difference I see is that the banks are more apt to ask for a cash contribution from the seller. Actually I prefer listing non owner occupied homes because I don't have to deal with HAFA, and it's a lot less work for me.
Barbara Hill, Realtor
Short Sales Specialist
Coldwell Banker Ellison Realty, Inc.
cell 352 572-0556
website: WWW.BAHRealtor4U.com
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Date: October 6, 2010

I have a new listing and submitted an offer to Wells Fargo (1st and 2nd) yesterday. The owner has had to move out of state for their job - one reason they need to sell the property. Paid $970K - now on the market at (above) market value for $750K, got an offer for $530K. I will keep you posted as to what they say.

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Hassaan Mirza Licensed Real Estate Broker,  Corona,  CA

Date: October 6, 2010

HI Everyone!
I have little different experience compare than what below people give reply.
first thing bank never refused for short sale even it is primary residence or investment property.
Main thing if you have hardship or your property value goes down bank always give you approval even some cases specially Bank of America give me approval within 2 business days.
I saw some our friend worried about 1099 which will show your client income so remember at the year end show this paper to your tax prepare person it shows your income but other side you lose your house so eventually is going to no profit and no loss so you don't have to pay anything.
Ofcourse some cases is differ specially investment property but most cases goes same way and at the end your client doesn't pay any tax.
Ofcourse you should ask your tax person or advise tax persone.
Hassaan Mirza
Ower Broker
Web Social Media Course 2.0 e-PRO,
Gradute, Certified Short Sale Agent,
Notary Public(Ceritfied for Loan Doc's)
951-227-0206 Cell
Owner Broker
e-PRO & Web Socail Media Course 2.0,
Notary Public (Certified Loan Doc's)
Certified Short Sale Agent

951-227-0206 Cell
951-603-0646 Office
951-880-1592 Fax
DRE #01756253

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Mark Claessens Licensed Real Estate Agent,  Coon Rapids,  MN

Date: October 6, 2010


I, as others have stated, have done many short sale for sellers that did not occupy the property. Most were investors, othes had already found another house "quick" before they lost the one and got in there and stopped making their payments on the other one.

These are 100% the same as owner occcupied homes. I have had a couple where they ask for a cash contribution, but most have not done this. It i my job to sell the bank on the fact that these people have a hardship and that it is based on not being able to find a rentor to even come close to covering the rent and they just want out. So far, that has worked in 90% of the cases.

However, i do make sure the seller consults with an attorney, and make sure they understand that there is a 90% chance that the bank will come back after the fact and send them a 1099 and also want money. In most of the cases they did not. After about 52 or 53 of these I just had my first investor call me and let me know that the bank was contacting them and wanted more money. It just never happens. It is much easier for them to turn in a loss claim with their insurcance company just like YOU would if you got hail damage on your house. they pay a deductible and are virtually reimbursed.


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Ramona Strojevs, sales representative,  Burlington, Ontario,  --

Date: October 7, 2010

Thanks for all the comments. The tenant has a lease until Feb, so hopefully they will be able to stay until the end of the lease. If the bank takes it back prior tom the end of Feb, I assume the lease survives??? Am I correct in that? Ramona Burlington ON www.goo.gl/UPJH

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Eileen Dubose Licensed Real Estate Agent,  Reston,  VA

Date: October 7, 2010

It is my understanding from a recent short sale class that there are some hardship exceptions. Some circumstances will allow a non occupant owner to apply for a short sale.
Eileen M DuBose GRI CRS ABR e-PRO
Associate Broker
Lifetime Member Million Dollar Sales Club
National Realty, LLC
Reston, VA 20191

Cell 703-403-6030



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Tish Osborne Licensed Real Estate Agent,  New Port Richey,  FL

Date: October 7, 2010

On May 20, 2009, President Obama signed the "Protecting Tenants at Foreclosure Act of 2009." This legislation provided that leases would survive a foreclosure -- meaning the tenant could stay at least until the end of the lease, and that month-to-month tenants would be entitled to 90 days' notice before having to move out (this notice period is longer than any state's non-foreclosure notice period, a real boon to tenants). The exception is when the lender who foreclosed finds a new buyer for the property who wants to live there. Then the tenants have 90 days notice, whatever the lease says. Until that time, renters had no protection here in Florida. They

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Tish Osborne Licensed Real Estate Agent,  New Port Richey,  FL

Date: October 7, 2010

I meant to add a note to Mark Claessens on his post. To the best of my knowledge, the instance you mentioned of a homeowner who bought another house "quick" then stopped making payments on the other one, committed a "buy and bail" and could be in a lot of trouble. I think you can get in hot water also for making false insurance claims.

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Melissa Morris,  WESTERVILLE,  OH

Date: October 8, 2010

From my experience, non-owner occupied homes can be short sold, however, it depends on the investor of the loan. Primarily governmental backed loans like FHA do not want to short those homes and the bank will ask in the very beginning talks if the owner is living in the property. As part of the original agreement with the owner, they aren't supposed to rent the property out as it is set up to be their home. I hope this helps, although it is rather short!


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Kasia Zelichowska Licensed Real Estate Agent,  Concord,  CA

Date: October 11, 2010

Ramona, Yes, they shall honor the lease.

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