What’s a ‘Short Sale’? This is the hottest topic in real estate today. ‘Short Sale’ (also known as ‘Short Pay’) is when a property being offered for sale is worth less than the mortgage in value, and based on the assumption and attempt that the bank will accept less than what is owed on it when it is sold to a new buyer. Simply put, the money will become ‘short’ when it’s sold. Now bear in mind, this is money short, not time. Usually a ‘Short Sale’ can take up to months and months to complete.
A Real Case Study:
Recently one of my clients came seeking my professional help regarding purchasing a very desirable property on the market: A 2 houses on a lot for sale at $525,000 in Arcadia. (That’s right! Arcadia.) This same property was sold by our company, RE/MAX Premier Properties, a little over 1 ½ years ago for $960,000. And, incredibly it was offered at a staggering 45% drop in price in less than 20 months. Can you believe this? And, this is in Arcadia with prime Arcadia School District? This property was not offered in the local MLS (Multiple Listing Service), and has been ‘Pending’ (meaning an offer had been accepted pending the close of escrow or ‘sale’) for nearly 3 months. Now, no one knows when the escrow will close, for how much its final price will be, or even the ‘Short Sale’ will be successfully completed. Like in every ‘Short Sale’ it may be going through a very tedious process of negotiations, waiting for banks’ (very often more than one involved) approval, and every party needs to be satisfied and each party has very little control in the entire situation.
As a Realtor, I have been actively involved with many transactions, working with different sellers/buyers, and sold many different properties in our area. Even I have a difficult time believing this is happening (until I got involved with this), especially of all places, right here in Arcadia.
Why ‘Short Sale’?
Usually a ‘Short Sale’ offers a way out for property owners who are faced with any of the following situations
- Unable to make mortgage payments (due to loss of job/income, spouse, illness, bankruptcy, etc.)
- Home declined in value, now worth less than the loan on it and owner is attempting to ‘walk away’
- Mortgage payments adjust to a much higher rate (this is especially true among the sub-prime borrowers)
- Unable to sell the house for the amount to pay off the loan, and to satisfy the lenders and other creditors
- Stop lender from calling, and avoid getting into foreclosure and/or eviction
- Minimize damage to the owner’s credit history
- Get out of debt obligation, and begin a fresh start
Clyde, if you know anybody who is behind on their payments, or may have difficulties making payments in the future for any of the reasons stated above, they may want to seriously consider ‘Short Sale’ as a way out of it. In any default situation, time is very critical. Property owners who are facing financial difficulties are strongly advised not to ignore the situation. Avoid dealing with it will only make the matter worse, and provide less options later on.
For Realtors doing ‘Short Sale’, it’s not much fun. It’s time-consuming, dealing with lots of uncertainties, having to work many times as hard, and with no guarantee of getting paid. Let’s put it this way… it’s like applying for a driver’s license at the DMV with 90% of the staff laid off (by our Governor), and the applicant in front of you has been waiting in line for a month. Now you get the picture.
A recent Washington Post article reported that only 1 out of 20 ‘Short Sale’ in Northern Virginia got completed. A Realtor in San Diego, a Strategic Partner of mine, just finished her ‘Short Sale’ and she received a check for $100 from the bank for her 3 months of hard work. Now, at least she could be proud, and having the satisfaction that a property owner was rescued from a much worse ordeal later on.
Important Things To Do:
Anyone considering doing a ‘Short Sale’ should pay special attention to the following:
- Immediately seek professional assistance. Very few Realtors have experience in ‘Short Sale’. Be sure to work with one who has the knowledge, negotiation skills, and one who is willing, and cares enough (that’s right) to take on this task.
- First try to see if the lender can restructure the loan (to a lower rate, forego a few monthly payments, renegotiate the terms, delay foreclosure, etc.) This is also called Loan Modification.
- Gather all documentation regarding financial hardships, unforeseen circumstances, loan adjustments, etc. And be prepared to write an emotional appeal called the ‘Hardship Letter’.
- Consult a reliable financial advisor on how to best handle the difficult situation, seek other alternatives, sources of funds/income, and avoid unnecessary, excessive purchases.
- Prepare to put the property on the market ASAP. In this market condition, my opinion—the sooner an offer is received, the better the owner’s position will be, and easier for the agent to negotiate with the lender or bank.
- Remember there should be no cost for a ‘Short Sale’ service that you receive. There are other companies who offer this service.
It’s very important for owners facing difficult times to beware of con-artists, and especially people asking for ‘fees’ up-front. NEVER, NEVER, NEVER sign anything without knowing its full ramifications, and be sure to consult with a reliable professional first. We have heard many tragic stories about property owners in distress sign their deeds away. Watch out for those who promise to ‘take care of everything’. Really, in ‘Short Sale’ nobody knows what will be ‘taken care of’ until everything is completed. Owners Beware: Be careful, get educated, be proactive, and work only with a trustworthy and qualified professional.
At RE/MAX Premier Properties, I’m privileged to be partnering with other professionals (like experienced Escrow Officers, Title Companies, Loan Officers, other agents, etc.) to help owners navigate through the very complicated and painstaking process of ‘Short Sale’. There are so much more pertaining to this. I have prepared a Free Report called ‘How to Protect Yourself and doing a Successful ‘Short Sale’. In this Free Report, you will learn about:
- What other options besides a ‘Short Sale’?
- How to price for a ‘Short Sale’ property?
- How long does it a take to complete a ‘Short Sale’?
- What are required by the banks (or lenders)?
- What are the financial and credit consequences?
- Is there tax liability from a ‘Short Sale’?
I’ll send a copy of the Free Report to you or to any property owners facing uncertainties ahead. Or anyone you know wanting to learn more about ‘Short Sale’ can call a Free Recorded Message at 888.556.6118 Ext. 911.
A Real Case Study:
Recently one of my clients came seeking my professional help regarding purchasing a very desirable property on the market: A 2 houses on a lot for sale at $525,000 in Arcadia. (That’s right! Arcadia.) This same property was sold by our company, RE/MAX Premier Properties, a little over 1 ½ years ago for $960,000. And, incredibly it was offered at a staggering 45% drop in price in less than 20 months. Can you believe this? And, this is in Arcadia with prime Arcadia School District? This property was not offered in the local MLS (Multiple Listing Service), and has been ‘Pending’ (meaning an offer had been accepted pending the close of escrow or ‘sale’) for nearly 3 months. Now, no one knows when the escrow will close, for how much its final price will be, or even the ‘Short Sale’ will be successfully completed. Like in every ‘Short Sale’ it may be going through a very tedious process of negotiations, waiting for banks’ (very often more than one involved) approval, and every party needs to be satisfied and each party has very little control in the entire situation.
As a Realtor, I have been actively involved with many transactions, working with different sellers/buyers, and sold many different properties in our area. Even I have a difficult time believing this is happening (until I got involved with this), especially of all places, right here in Arcadia.
Why ‘Short Sale’?
Usually a ‘Short Sale’ offers a way out for property owners who are faced with any of the following situations
- Unable to make mortgage payments (due to loss of job/income, spouse, illness, bankruptcy, etc.)
- Home declined in value, now worth less than the loan on it and owner is attempting to ‘walk away’
- Mortgage payments adjust to a much higher rate (this is especially true among the sub-prime borrowers)
- Unable to sell the house for the amount to pay off the loan, and to satisfy the lenders and other creditors
- Stop lender from calling, and avoid getting into foreclosure and/or eviction
- Minimize damage to the owner’s credit history
- Get out of debt obligation, and begin a fresh start
Clyde, if you know anybody who is behind on their payments, or may have difficulties making payments in the future for any of the reasons stated above, they may want to seriously consider ‘Short Sale’ as a way out of it. In any default situation, time is very critical. Property owners who are facing financial difficulties are strongly advised not to ignore the situation. Avoid dealing with it will only make the matter worse, and provide less options later on.
For Realtors doing ‘Short Sale’, it’s not much fun. It’s time-consuming, dealing with lots of uncertainties, having to work many times as hard, and with no guarantee of getting paid. Let’s put it this way… it’s like applying for a driver’s license at the DMV with 90% of the staff laid off (by our Governor), and the applicant in front of you has been waiting in line for a month. Now you get the picture.
A recent Washington Post article reported that only 1 out of 20 ‘Short Sale’ in Northern Virginia got completed. A Realtor in San Diego, a Strategic Partner of mine, just finished her ‘Short Sale’ and she received a check for $100 from the bank for her 3 months of hard work. Now, at least she could be proud, and having the satisfaction that a property owner was rescued from a much worse ordeal later on.
Important Things To Do:
Anyone considering doing a ‘Short Sale’ should pay special attention to the following:
- Immediately seek professional assistance. Very few Realtors have experience in ‘Short Sale’. Be sure to work with one who has the knowledge, negotiation skills, and one who is willing, and cares enough (that’s right) to take on this task.
- First try to see if the lender can restructure the loan (to a lower rate, forego a few monthly payments, renegotiate the terms, delay foreclosure, etc.) This is also called Loan Modification.
- Gather all documentation regarding financial hardships, unforeseen circumstances, loan adjustments, etc. And be prepared to write an emotional appeal called the ‘Hardship Letter’.
- Consult a reliable financial advisor on how to best handle the difficult situation, seek other alternatives, sources of funds/income, and avoid unnecessary, excessive purchases.
- Prepare to put the property on the market ASAP. In this market condition, my opinion—the sooner an offer is received, the better the owner’s position will be, and easier for the agent to negotiate with the lender or bank.
- Remember there should be no cost for a ‘Short Sale’ service that you receive. There are other companies who offer this service.
It’s very important for owners facing difficult times to beware of con-artists, and especially people asking for ‘fees’ up-front. NEVER, NEVER, NEVER sign anything without knowing its full ramifications, and be sure to consult with a reliable professional first. We have heard many tragic stories about property owners in distress sign their deeds away. Watch out for those who promise to ‘take care of everything’. Really, in ‘Short Sale’ nobody knows what will be ‘taken care of’ until everything is completed. Owners Beware: Be careful, get educated, be proactive, and work only with a trustworthy and qualified professional.
At RE/MAX Premier Properties, I’m privileged to be partnering with other professionals (like experienced Escrow Officers, Title Companies, Loan Officers, other agents, etc.) to help owners navigate through the very complicated and painstaking process of ‘Short Sale’. There are so much more pertaining to this. I have prepared a Free Report called ‘How to Protect Yourself and doing a Successful ‘Short Sale’. In this Free Report, you will learn about:
- What other options besides a ‘Short Sale’?
- How to price for a ‘Short Sale’ property?
- How long does it a take to complete a ‘Short Sale’?
- What are required by the banks (or lenders)?
- What are the financial and credit consequences?
- Is there tax liability from a ‘Short Sale’?
I’ll send a copy of the Free Report to you or to any property owners facing uncertainties ahead. Or anyone you know wanting to learn more about ‘Short Sale’ can call a Free Recorded Message at 888.556.6118 Ext. 911.
1 comment:
Wow...Arcadia is a REALLY nice area.
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