Tag Archives: short sales

There are a lot of misconceptions about short sales in the real estate marketplace. Here are just a few of them:

1)  Short Sales are impossible and never get approved.  FALSE

TRUTH: Short Sales are more difficult, but they are NOT impossible.  While there are no guarantees in any transaction, more and more short sales are being approved monthly.  However, a Real Estate Agent MUST be educated on the process, or it will be nearly impossible.  I am tenacious and I don’t take no for an answer but always look for a solution to any problem.

2) Banks are NOT accepting Short Sales; They are waiting on a bailout.  FALSE

TRUTH: The reality is that banks have already been bailed out, and are really trying to do anything they can, within reason, to avoid foreclosing on a property.  More banks are aggressively pursuing Short Sales and Real Estate Agents who understand how to process them.  It is strictly business, it costs the bank (in most cases) far less to short sell than to foreclose.

3)  You must be behind on your mortgage in order to negotiate a short sale.  FALSE

TRUTH: At one time this was true, but today, this has almost all together reversed.  Today lenders are looking for verifiable hardship, monthly cash flow shortfall or pending shortfall and insolvency.  If you meet these three requirements and are in a position where you can not or will soon not be able to afford your mortgage, now is the time to pursue a short sale.   There are a few lenders who still hold on to this rule, but they are few and far between.    In fact, most lenders in any circumstance would rather sell short than foreclose.

4)  Buyers are not interested in short sales and avoid them.  FALSE (mostly)

TRUTH: Some buyers are not interested because of the time it takes, especially with time constraints like the  First  Time Homebuyer Credit.  On the other hand, many agents are getting calls from buyers who say “I only want to look st foreclosures and short sales.”  These have become synonymous with the term ” Good Deals”.

5)  Listing a home as a short sale is an embarrassment.  FALSE

TRUTH: Most sellers don’t want the world to know they can’t pay their bills, but according to recent estimates, 1 in 5 homeowners in the United States owe more on their house than it is worth.  Even wealthy owners have to stop the bleeding somewhere.  Most sellers are to be congratulated for admitting they need help, taking action and finding a professional who can work toward a solution.

6)  The bank would rather foreclose than bother with a short sale.  FALSE  FALSE  FALSE!!

Truth: This myth started with collection people working for lenders on commission.  The reality is that banks do not want to foreclose on property, it costs too much.  An average foreclosure can cost the bank up to $40,000 and they still have holding costs, insurance, real estate brokerage fees, etc. and then they still get less than market value.  Do the math, which would you do?

7)  There is not enough time to negotiate a short sale before a foreclosure.  FALSE

TRUTH: This is a myth that hurts homeowners.  Many don’t realize that the foreclosure process is lengthy.  It can take a year or more, and if an attorney gets involved, it can be stalled far longer.  Almost all lenders will stall a foreclosure with a legitimate contract for short sale.  So if  Lis Pendens has been filed, no worries, that’s just the beginning.  If it is slated for the courthouse steps, hurry up, if there is an offer you may be able to stall.  Don’t wait that long.  Go get it on the market today with a competent Real Estate Agent who knows how to work short sales and avoid foreclosure.