If you are a short seller, you must be undergoing hardship not of your own making. such as illness, unemployment or natural disaster.
I know of no exceptions to the policy of almost every bank and mortgage lender to require proof of financial hardship before allowing a residential short sale, and entirely forgiving the borrowers debt.
They would allow you to sell and pay the difference between the debt and the net in cash at the close of escrow.
If you are not in hardship but don't have cash assets, a bank might allow you to transfer the unpaid portion to a personal loan, or a loan secured by other assets.
An investor or homeowner who made an unlucky investment, can't expect relief from a short sale
The article linked below tells you a little about the patience and risk tolerance required from a buyer and a seller in a short sale situation. My opinion of short sales for buyers? High Risk, Low Reward.
To sum up the article. 1. Buyer waits a long time for the bank to anything. 2. Buyer has to sign banks counteroffer that is full of anti-consumer clauses. 3. Buyer has to pay nearly full market value. (discount, if any is much tinier than you think it will be) 4. Bank can cancel the sale at any time up until close of escrow, with no consequence to the bank and no compensation to the buyer
In my not so humble opinion ( imnsho,) ) The reasons why the failure is above 80% are:
1. Many sellers don't qualify, they think that being upside down and hating it is enough.
You must also be undergoing hardship not of your own making. such as illness, unemployment or natural disaster. Stovall gives a few other reasons.
2. Prospective buyers think that these are bargains, so very few buyers offer close to full market value. The banks will not approve sales at huge discounts, tiny discounts: yes.
3. The wait, 4. the paperwork, the wait 5. the anti-buyer addenda, the long wait 6. the uncertainty of the sale, still waiting 7. the perception, if not a reality, of bad faith dealing by the bank loss mitigation managers.
.I linked below to an article in Broker Agent News by Steve Stovall. He gives a pretty good description of the short sale process, seller, property, paperwork, and buyer requirements
Email me, I have a handy short sale kit, (a pdf) that breaks down what you need to gather, and how to approach the bank etc..
Realtor in Portland, Oregon
My REO manager friend likes to joke about all the â€œfirst timersâ€ who continue to drive up the bid when they donâ€™t hear anything from the bank. Every time I see the â€œhow come I havenâ€™t heard from the bank about accepting my foreclosure bid after 30+ daysâ€ on trulia, I have to let out a chuckle because heâ€™s so right. For those newbies, this is real. They know that when you donâ€™t hear from them that a large percentage of people drop a second or third offer higher than the previous one. **WARNING, YOU ARE BEING TAKEN ADVANTAGE OF HERE**
You want a deal on a property right, everyone wants thatâ€¦. So the moral of this story is:
1. the 60 days you have to wait to hear from a REO, you could have made 2 or 3 better deals with a property that has been on the market for a long period of time. A good realtor will drop an 80% offer on a property and get one accepted.
2. You are attempting to make a deal in a house covered in a cloud of bad energy, donâ€™t be surprised when it rubs off. Personally I stay away from these for this reason entirely.
Please give me a call to have me set up a short sale training course in your area that clearly outlines the "process". It does exist and the process is supported by NAR and the major banks dealing with short sales. There is a designation for short sale specialist coming out and I am an instructor for this course which is currently being approved for CE in most states. E-mail me back at firstname.lastname@example.org and we can set up a course in your area. You will be blown away by the information and it will change your entire outlook on short sales. They are our future for the next few years.
The critical item is to make sure your clientâ€™s "hardship" package from the lender has been scrupulously filled out with ALL of their questions completed. The client should also give you authorization to deal with the lender in their name. They then should submit it to the lender after making copies galore and also have one scanned in to reside on their desktop. You of course need the same copy on YOUR desktop. The lender will most likely loose it, pass it to their "specialist" of the week and/or assign their case to someone brand new who won't have a clue who your client is or what's been done to date! You will repeat many steps over and over. You will be told everything is a go only to have an unsecured promissory note show up with the loan payoff for a percentage of the loan forgiveness which the lender will insist your client sign!! You should have all this going on BEFORE putting the property on the market. You should state this in the MLS when the property hits the market. Donâ€™t get cute with agents and say itâ€™s subject to â€œthird party approvalâ€ or some such other BS statement. Tell them itâ€™s a â€œShort-Saleâ€, subject to lender approval BUT youâ€™ve submitted the package and are weeks into the process. This will give them a higher level of confidence in YOUR ability to get the job done!
Too many times Iâ€™ll call an agent who says, â€œIâ€™m waiting to get an offer before I do all of that stuff!â€ This is an idiot and should be avoided!! The question every Realtor/Licensee should be asking themselves, â€œWhy in the world would I want to take a motivated, qualified Buyer and stick them into a vicious cycle of frustration and little reward?â€ YOU, as a representative of a â€œShort-Saleâ€ client better have an answer to that!
This is not only draining to the client but also to YOU!! If you approach it systematically, and maintain an even strain, you'll be able to close 25% to 75% of your deals. Your only issue is to get the Realtor/Licensee community to work with you on the deal!! It makes for some interesting "agency" bed partners! Here you're trying to get your best deal for the Seller and a buyer wants to get the best deal from the Lender and you both all dealing with the final approval of the deal NOT with the Seller but with the Lender!! Oh,Brave New World!!
I will look for his name. His stuff was very good.
Otherwise jump in and go to work!
Best of luck with this.
Dirk T Knudsen
Re\Max Hall of Fame
#1 Team in Oregon