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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?
 

Smiling JOe

SoWal Expert
Nov 18, 2004
31,648
1,773
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.
 

Bobby J

Beach Fanatic
Apr 18, 2005
4,043
600
Blue Mountain beach
www.lifeonshore.com
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? :rotfl:Quick way to lose all your hair!
 

Joe Mammy

Beach Lover
Mar 26, 2007
140
40
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.
 

elgordoboy

Beach Fanatic
Feb 9, 2007
2,513
887
I no longer stay in Dune Allen
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?
 

Marvin

Beach Crab
Apr 10, 2008
3
1
75
Mars, duh!
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? :dunno:
 
Deliberately obtuse? :dunno:

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.
 

Joe Mammy

Beach Lover
Mar 26, 2007
140
40
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.
 
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