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If I am the owner it would be my responsibility to list my home for a price I could sell it for. What does the bank have to do with that responsibility. This sounds a little to Liberal or Social for my liking.

So what you are saying is there are Realtors who list property for a price that might be acceptable or might be bait?

How does this relate to being liberal or social for ones liking?

It seems the system is slowing shifting responsibility from the owner who created the transaction over to the bank as the responsible party who in turn will be shifting responsibility to a government bail out.

I know the path is not that clear, but I see and hear a lot of grown ups looking to shift responsibility.

In a short sale, the seller is getting nothing. He's selling for less than he owes the bank. There's no profit in it for him whatsoever. The reason sellers try for short sales versus letting the property fall into foreclosure is to try to salvage their credit. On average, short sales reduced credit scores by about 100 points, foreclosures by about 200. That was before most lenders required you to be delinquent before even discussing the possibility of a short sale with you.

And Shelly, funny how Ms. Corcoran advised the buyer to wait for the foreclosure. A week or two ago, she advised an upside down seller on The Today Show to pursue a short sale with his lender. The woman is a complete flake. How she garnered the "expert" moniker is beyond me.

I am thinking seriously about becoming a beach property owner again (I sold my condo in late 2004). My agent has advised me against short sales, saying they are a waste of time.
This thread seems to support his premise. Why would I wait 6 or 7 months to find out if my offer has been accepted when there appears to be an abundance of reasonably priced non short sale properties on the market? Especially if in the case of short sales "low ball offers are a waste of time".
It seems to me you could find a much better deal from someone who needs to sell and bought before all the craziness.

mikeyboy

I am thinking seriously about becoming a beach property owner again (I sold my condo in late 2004). My agent has advised me against short sales, saying they are a waste of time.
This thread seems to support his premise. Why would I wait 6 or 7 months to find out if my offer has been accepted when there appears to be an abundance of reasonably priced non short sale properties on the market? Especially if in the case of short sales "low ball offers are a waste of time".
It seems to me you could find a much better deal from someone who needs to sell and bought before all the craziness.

mikeyboy

It's not that clear cut. Some short sales are easy. I have done a few with Regions that were great and wrapped up in 30 days. It depends on the bank and where the short sale stands. I also advise once under contract getting with a closing attorney that handles them from the start to the finish. In my short sale package I actually have forms that she signs that allow her to now begin to work directly with the sellers bank. We then go get another contract. Short sales can be a waste of time but you can tell right away when you talk with the listing agent. First questions, how long has this been listed as a short sale? Where is the bank on this one and has a BPO been ordered? Does the seller have all the proper Docs filed? How late is the note? What is the original mortgage and is their a second (this helps for low ball offers)? Have you ever done a short sale? If not, are you willing to let me turn this package over to a title company that has?

In a short sale, the seller is getting nothing. He's selling for less than he owes the bank. There's no profit in it for him whatsoever. The reason sellers try for short sales versus letting the property fall into foreclosure is to try to salvage their credit. On average, short sales reduced credit scores by about 100 points, foreclosures by about 200. That was before most lenders required you to be delinquent before even discussing the possibility of a short sale with you.

And Shelly, funny how Ms. Corcoran advised the buyer to wait for the foreclosure. A week or two ago, she advised an upside down seller on The Today Show to pursue a short sale with his lender. The woman is a complete flake. How she garnered the "expert" moniker is beyond me.

I just don't remember ever seeing this provision in my loan doc's at closing. I'm from the party of personal responsibility.

So is it o.k. for me to pummel the other party in a business transaction like a gorilla just because I can, it's legal and it is beneficial to me?

I thought it a tad odd too--but in your comment above you still note that the seller "might" not accept an offer (Babs didn't give examples--*will you?). If there is even a chance that the owner would have reason to reject any offer, then they are an obstacle a buyer can just as well do without.

(*I'm guessing one reason might be a "perceived" super low ball bid that the owner fears will halt the progress of unloading the property as the offer makes its way through the system.)

BINGO. By MLS rules, if the seller accepts the offer, it becomes a contract. If a listing is under contract, it must be moved into pending, and is no longer showing in the MLS as active, nor on any real estate websites. A seller has to consider that when the offer is so low that the lender wouldn't likely approve it anyway, though the lender may take two months to even respond, if they respond at all.

I will note that according to the short-sale addendum to the contract, it provides that a seller can continue to market the property once under contract, unless both seller and buyer agree otherwise in writing. However, according to the MLS rules, they cannot keep it listed as "active," in the MLS.

It seems the system is slowing shifting responsibility from the owner who created the transaction over to the bank as the responsible party who in turn will be shifting responsibility to a government bail out.

I know the path is not that clear, but I see and hear a lot of grown ups looking to shift responsibility.

The path is very clear to me, but it is the lenders who are pushing that, not the sellers.

I just don't remember ever seeing this provision in my loan doc's at closing. I'm from the party of personal responsibility.

So is it o.k. for me to pummel the other party in a business transaction like a gorilla just because I can, it's legal and it is beneficial to me?

You'll have to help me understand you here. Who's pummelling anyone? In most cases, the buyer just wants the property sold, but if it's being sold at a loss to the lender, then the buyer has no say in the sale amount. Most, if not all, of these properties are ultimately going to foreclosure anyway. There may be a handful of sellers with lots of cash who just don't want to make payments anymore, but I believe they are a small minority. Not many sellers who can afford to keep making payments are going to allow their credit to be destroyed in a cavalier fashion. I believe most short sales are a last ditch effort on the seller's behalf to avoid foreclosure.

You'll have to help me understand you here. Who's pummelling anyone? In most cases, the buyer just wants the property sold, but if it's being sold at a loss to the lender, then the buyer has no say in the sale amount. Most, if not all, of these properties are ultimately going to foreclosure anyway. There may be a handful of sellers with lots of cash who just don't want to make payments anymore, but I believe they are a small minority. Not many sellers who can afford to keep making payments are going to allow their credit to be destroyed in a cavalier fashion. I believe most short sales are a last ditch effort on the seller's behalf to avoid foreclosure.

I know what you are trying to say, but to lessen confusion for others who are learning about short-sales, I'd like to correct the bold text above. I think you meant to say the "seller" has no say, but the truth is that the seller does in fact have a say, because they are the owner, not the lender. ( Also, it will be the seller who may be paying taxes on the amount of debt forgiven.) Of course the buyer has ultimate say, because without a buyer, there would be no market.

I know what you are trying to say, but to lessen confusion for others who are learning about short-sales, I'd like to correct the bold text above. I think you meant to say the "seller" has no say, but the truth is that the seller does in fact have a say, because they are the owner, not the lender. ( Also, it will be the seller who may be paying taxes on the amount of debt forgiven.) Of course the buyer has ultimate say, because without a buyer, there would be no market.

Your correction is correct. Thanks, SJ.

You'll have to help me understand you here. Who's pummelling anyone? In most cases, the buyer just wants the property sold, but if it's being sold at a loss to the lender, then the buyer has no say in the sale amount. Most, if not all, of these properties are ultimately going to foreclosure anyway. There may be a handful of sellers with lots of cash who just don't want to make payments anymore, but I believe they are a small minority. Not many sellers who can afford to keep making payments are going to allow their credit to be destroyed in a cavalier fashion. I believe most short sales are a last ditch effort on the seller's behalf to avoid foreclosure.

So it is your belief that the majority of the 500% increase in Walton County Lis Pendens is due to people who have lost their ability to pay their mortgage? I thought until now that the majority of the stopped payments were due to people letting the property go instead of depleting all of their savings.

I don't know the real answer. I do know that unemployment has not gone up by the same percentage. I also know for sure that there are people trying to move property as short sale who do have funds to keep current.

AAbsolute, it is up to the lenders to determine whether or not someone has enough assets to allow a short sale. A person cannot just say they want to have a short sale because they are upside-down.

AAbsolute, it is up to the lenders to determine whether or not someone has enough assets to allow a short sale. A person cannot just say they want to have a short sale because they are upside-down.

I'm betting that a lot of these folks once had enough assets, but those short-selling in the more "upscale" locales shouldn't have invested in the first place or had their income tied to the RE boom in some way, shape or form--am I right?

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AAbsolute, it is up to the lenders to determine whether or not someone has enough assets to allow a short sale. A person cannot just say they want to have a short sale because they are upside-down.

Is that some of the reason why it is taking 7 months to get a short sale to close?

Is it legal to list a property as a short sale just because the seller is upside down?

Is that some of the reason why it is taking 7 months to get a short sale to close?

Is it legal to list a property as a short sale just because the seller is upside down?

There are many reasons why it may take up to 7 months to get a short sale to close, some of which are not known to the general public, and those not in the lending business. I will note that as Bobby J said, not all take up to 7 months. Some lenders have been quick to make things happen.

I'm not a lawyer. If you have any question whether or not it is legal, contact an attorney.

To comply with the MLS rules, a Realtor cannot list a property as a short sale without it officially being a short sale. There is an addendum to the listing agreement for short sales.

It was obvious for a while, that many agents listing properties, were uneducated regarding short-sales, foreclosures, and REOs. Not too weird, because it was new to us all. However, there are some of us who have chose to talk to attorneys, title companies, etc, and attend classes educating us to the ins and outs of these types of transactions. (I'm not talking about the classes on how to get rich by listing short-sales. That is a class which I never had interest in attending.) For a while, many people were using the term, "short-sale" strictly as a marketing tool. The MLS quickly came up with definitions and rules regarding these new types of sales, and that tightened up things quite a bit. I think Bobby J gives some good recommendations on questions to ask your Realtor before giving them your short-sale business.

There are many reasons why it may take up to 7 months to get a short sale to close, some of which are not known to the general public, and those not in the lending business. I will note that as Bobby J said, not all take up to 7 months. Some lenders have been quick to make things happen.

I'm not a lawyer. If you have any question whether or not it is legal, contact an attorney.

To comply with the MLS rules, a Realtor cannot list a property as a short sale without it officially being a short sale. There is an addendum to the listing agreement for short sales.

It was obvious for a while, that many agents listing properties, were uneducated regarding short-sales, foreclosures, and REOs. Not too weird, because it was new to us all. However, there are some of us who have chose to talk to attorneys, title companies, etc, and attend classes educating us to the ins and outs of these types of transactions. (I'm not talking about the classes on how to get rich by listing short-sales. That is a class which I never had interest in attending.) For a while, many people were using the term, "short-sale" strictly as a marketing tool. The MLS quickly came up with definitions and rules regarding these new types of sales, and that tightened up things quite a bit. I think Bobby J gives some good recommendations on questions to ask your Realtor before giving them your short-sale business.

Good stuff SJ! Surely not a quick way to get rich is it? Quick way to lose all your hair!

And a good realtor can even save the time of calling a listing short sales agent by simply researching the mortgage(s) on the short sale property. By finding out who the lender(s) are and how much of a difference in the market value to what is owed can determine quickly whether it is worth pursuing.

I used to believe that it was up to the realtors to move the short sales off the market. Now I am changing my tune because it takes alot more than a realtor taking a very attractively priced property and getting it under a contingent contract- that part is easy. Contingent upon the lender granting the short sale and closing is the hard part.

I've been on the frustrating side of a handful of deals now where you just cannot get lenders to do anything. Even after ordering a BPO. Getting an acceptance or a counter is worse than tooth extraction without novacaine.

The loss mitigation departments in some banks are so slammed and understaffed that it is totally absurd. Not to mention certain recent takeovers where noone seems to want to take any responsibility for making decisions on the property.

Now I preach, "repeat after me- I will not be tempted by ridiculously low priced short sales. I will wait for the foreclosure and close quickly on the REO."

And it is not just the banks queering these deals. It is the sellers too. I had one listing where they did not tell me they had not made a payment all year and were suddenly slapped with a Lis Pendens. The sheriff called me to tell me he was serving it. When I questioned the seller it was, "oh, we knew we were going to have to tell you sooner of later, I think now we are going to try a short sale."

Needless to say, it is now one of those properties with the dying lawn, the science project pool and a cancer to the rest of the neighborhood.

And a good realtor can even save the time of calling a listing short sales agent by simply researching the mortgage(s) on the short sale property. By finding out who the lender(s) are and how much of a difference in the market value to what is owed can determine quickly whether it is worth pursuing.

I used to believe that it was up to the realtors to move the short sales off the market. Now I am changing my tune because it takes alot more than a realtor taking a very attractively priced property and getting it under a contingent contract- that part is easy. Contingent upon the lender granting the short sale and closing is the hard part.

I've been on the frustrating side of a handful of deals now where you just cannot get lenders to do anything. Even after ordering a BPO. Getting an acceptance or a counter is worse than tooth extraction without novacaine.

The loss mitigation departments in some banks are so slammed and understaffed that it is totally absurd. Not to mention certain recent takeovers where noone seems to want to take any responsibility for making decisions on the property.

Now I preach, "repeat after me- I will not be tempted by ridiculously low priced short sales. I will wait for the foreclosure and close quickly on the REO."

And it is not just the banks queering these deals. It is the sellers too. I had one listing where they did not tell me they had not made a payment all year and were suddenly slapped with a Lis Pendens. The sheriff called me to tell me he was serving it. When I questioned the seller it was, "oh, we knew we were going to have to tell you sooner of later, I think now we are going to try a short sale."

Needless to say, it is now one of those properties with the dying lawn, the science project pool and a cancer to the rest of the neighborhood.

I wonder if the lenders may be a little nervous about actually completing the sales for fear of getting the short sale ball really rolling. If I wind up owing $100k more than I could sell for I will be very tempted to stop making payments too, especially if they make a short sale an easier-than-it-is -now option

In summation

In summation what I am understanding is that if I see a property listed as "Short Sale" that the property is a qualified short sale. What makes it a qualified short sale is not a seller who is upside down, but a seller who has not made their payments for a period of time where their lender has put the property into dafault status and the loss mitigation dept. understands that the property is truly pre-foreclosure and the seller does not have assets to bring it current.

Does that sound about correct?

In summation what I am understanding is that if I see a property listed as "Short Sale" that the property is a qualified short sale. What makes it a qualified short sale is not a seller who is upside down, but a seller who has not made their payments for a period of time where their lender has put the property into dafault status and the loss mitigation dept. understands that the property is truly pre-foreclosure and the seller does not have assets to bring it current.

Does that sound about correct?

Deliberately obtuse?

I agree, the best quailty properties that sell are out there. They are realistically priced without worry of a bank's decisons.

Deliberately obtuse?

I'm really trying to understand this term short sale without spin. I don't mean to be obtuse. It is my business to develop housing and we compete with properties termed short sale every day. I'm really believing that many of these short sale listings are actually just marketing ploys. Realtors I trust and people who seem knowledgeable on Sowal both say that a short sale is a property that meets certain criteria.

I can't imagine how some locals have 5 or more properties for sale listed as short sale and they are still active in new business. I know people who have more cash and net worth than I who have property listed as short sale. I know another who is trying to buy his own property with a front man as a short sale from his lender.

In summation what I am understanding is that if I see a property listed as "Short Sale" that the property is a qualified short sale. What makes it a qualified short sale is not a seller who is upside down, but a seller who has not made their payments for a period of time where their lender has put the property into dafault status and the loss mitigation dept. understands that the property is truly pre-foreclosure and the seller does not have assets to bring it current.

Does that sound about correct?

When you see a listed short sale all you need to know is that any offers will be contingent upon the seller's lender(s) granting the short sale. For it to be granted the seller will have to provide letters of hardship and insolvency as well as financial statements to their lender. Then the bank will weigh the benefits of granting the short sale and taking a loss on the owed mortgage or proceeding with foreclosure with a county courthouse auction sale possible or relisting the property as bank owned with a broker, or REO.

Usually "qualified short sale" is really not anything but pure ambiguity. If a deal was near completion and the bank actually committed to a sales price but the buyer still walked then I could see it being "qualified" if another buyer could step right in. But I've been involved in similar offers and the bank started all over again from the beginning making it anything but "qualified" so I'm not sure there is such an animal.

Moral- don't get your hopes up on a short sale.

Thanks Joe Mammy.