Home Selling in Santa Rosa>Question Details

Donna, Home Seller in Santa Rosa, CA

Short sale approved, buyer backed out

Asked by Donna, Santa Rosa, CA Wed Oct 29, 2008

If we do relist the house does the process start all over again. We're planning on moving in the next 30 days, would it be better to just let it foreclose?


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It would depend on your tax situation. The best thing to do is call your CPA speak to them. Your credit will take a hit either way. My understanding is that a short sale will be less of a hit than the foreclosure. I will take 1-3 years to clear in a short sale. It also depends on whether or not you refinanced the property. So read your mortgage contracts because it is possible for the lender to come back to you after the sale and sue you personally for the difference. Attached is the irs.gov website with questions and answers about short sales and foreclsoures.
1 vote Thank Flag Link Thu Oct 30, 2008
The short story here is that a short sale will ding your credit score 80-120 points on average, a foreclosure 150-250 points, meaning you won't be buying anything for a long time.

Per FICO themselves, there is no difference to your credit score between foreclosure, short sale or deed in lieu. See link.

Best I can tell the only difference between these options is the length of time one will have to wait before qualifying for a Fannie/Freddie-backed mortgage again.
1 vote Thank Flag Link Thu Oct 30, 2008
I think all who are considering selling via a "Short-Sale" owe it to themselves to actually interveiw the Realtor/Agent with this specific goal in mind. Many just grab an agent, put it on the market and hope they get an offer the lender will take. It is MUCH MORE than that! We have a team in our office who interview the SELLERS to determine if the property will be suitable for a short-sale. They look at the "hardship" of the Seller and then the amount of loans owed on the property and WHO the lenders are they will be dealing.
This is a critical step in the process. Secondly, they are geared up to the process of working a short-sale and communicating with the lenders on a continuing, consistent basis. So you really need to pick a Realtor/Agent who has successfully closed a Short-Sale transaction.
But in your case, with an approval already given, you need to sally forth and get it done. However, I would look at the approved lender "pay-off" and make sure it is now realistic to the marketplace. These take so long and you may find your home/pay-off OVER market value at this time! So revise your market analysis, talk to your Realtor/Agent and get the deal done. It will be better than a complete walk-away foreclosure.
1 vote Thank Flag Link Thu Oct 30, 2008
Donna -

Your agent can advise you best in regards to your specific situation. I agree with others that a short sale will be better than a foreclosure from a credit standpoint. The short sale process is obnoxious. Absolutely obnoxious. The game has no real rules and certainly does not run by logic. In my humble opinion the loss mitigators have large egos and are incredibly short sighted. They seem to take no responsibility as a representative of the company who made the loan in the first place.

With that complaining aside, I agree to list that house again at the "approved" price. Have your agent call back anybody that was interested before but didn't make an offer. The goal is to get a second offer asap. In the mean time, try not to worry about it. There is not much you can do and your agent should take care of the details in order to spare you as much stress as possible. I recognize it may hard to let go, but save yourself the stress and try to think about how good it will feel to finally be rid of the burden.

Good luck,
Web Reference: http://www.TalkToCJ.com
1 vote Thank Flag Link Thu Oct 30, 2008
I cannot guarantee this information and recommend you should seek tax and legal advice from appropriate professionals. Since the short sale is approved I would give it a shot to relist since and try to avoid foreclosure. I believe that a short sale is better than a foreclosure on your credit. Lastly, I agree with one of the previous postings that the banks would rather try and negotiate on a short sale than to take on the great expense and time of foreclosing and taking this property into their inventory. Good luck.
1 vote Thank Flag Link Thu Oct 30, 2008
many buyers can not wait the time it takes the bank to make an approval, you can now get a new buyer and if it is at the same price or higher than they agreed and within 30 days you will not have to wait that length of time all over again. however you should note if you move out, teh bankj will cionsider it abondoned and stop teh short sale dead in its tracks. good luck in getting a new buyer and working it out.
Web Reference: http://www.ScottSellsNH.com
1 vote Thank Flag Link Thu Oct 30, 2008
Hello Donna,

Many buyers are shying away from short sales and many agents are not showing short sales because of the expected length of time for the lender to approve the sale. This is especially true in Sonoma County where we are still in a declining market. Now that you have your lender approval, I would definitely put your home back on the market and have your agent put in the listing that the bank has approved the sale for your list price. This is much more appealing to a buyer as it pretty much guarantees that the sale will go through. Having completed many short sales this year, I am seeing an increase in the lenders cooperation to get these deals done and avoid foreclosure. Have your agent check the comps to see if your current list price is still appropriate for your area. And once your agent does put your home on the market, they should launch new advertising indicating your recent lender approval.
Good luck - I expect that with your lender approval, and if you are priced right and in good showing condition, you will see another offer soon.
1 vote Thank Flag Link Thu Oct 30, 2008
Who is your Realtor? I would think that they would be in the best position to help you.

The short story here is that a short sale will ding your credit score 80-120 points on average, a foreclosure 150-250 points, meaning you won't be buying anything for a long time.

If you would like I would be happy to refer you to an expert in short sales in Santa Rosa. You can contact me via my Trulia profile and I'll do my best to help you. They can analyze your situation and then you can decide what's best for you.

From the lender's perspective they would rather have a short sale than foreclosure. It is simply a matter of money. So if I were you I would still try to sell.
1 vote Thank Flag Link Thu Oct 30, 2008
Keith Sorem, Real Estate Pro in Glendale, CA
I think the post I wrote on my blog is very relevant to your situation. I can' t guarantee a thing but as long as you can, I would avoid foreclosure.
1 vote Thank Flag Link Wed Oct 29, 2008
Hello Donna, If your home has been approved for a short sell, and the bank has approved the price, I would re-list the home and put in the listing, Bank Approved Price @ whatever they have agreed. No doubt the agent working with you on this has spent a considerable amount of time to get to this point. It may be that your buyer may not show up in 30 days, depending on your time frame, the price may still be up for negotiation. In that case, foreclosure may be inevitable. I'm so sorry that your going through this difficult time. Take Care
1 vote Thank Flag Link Wed Oct 29, 2008
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