So if Seller has a mortgage of 865,000 on a property worth about that, income to make payments and assets to cover a deficiency, is this a lender approvable short sale in your experience?
Short Sale Pricing Discussion
- Thread starter Smiling JOe
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So if Seller has a mortgage of 865,000 on a property worth about that, income to make payments and assets to cover a deficiency, is this a lender approvable short sale in your experience?
If the property is worth the amount of the payoff, there would be no deficiency, and thus no short sale.
Am I really making it sound that complicated? If there will be a deficiency (when the seller can not pay the difference between the selling price and the amount owed), it will be a short sale, and it would need to be contingent upon the lender approving the sale.
I think listing a short sale is pointless because the buyers are aware that the sellers are desperate and will therefore make a low-ball offer expecting the buyers to take whatever is offered. What the buyers won't acknowledge is that if a short sale is approved, it is likely that the bank will require the sellers to sign a promissory note agreeing to pay back the balance of the deficiency. If the deficiency is a large amount, the seller is looking at bankruptcy down the road. Therefore, the seller still needs to sell for a higher price than the buyer wants, and the buyer can wait until the property goes into foreclosure and get their target price anyway.
My understanding is that deficiency judgments are the exception, rather than the rule. Most short sellers are out of funds, so there's little likelihood that they could pay a judgment anyway, and would likely file for bankruptcy. But I'm not in the short-sale trenches; I just read alot.
I do question buyers' pursuit of short sales, since short sales will ultimately become foreclosures, and the price (at least the way things are now) would most likely be better for the buyer when that happens, especially since foreclosure inventory seems to be mounting at an accelerated pace. SJ, Bobby J, Joe M - your thoughts??
My understanding is that deficiency judgments are the exception, rather than the rule. Most short sellers are out of funds, so there's little likelihood that they could pay a judgment anyway, and would likely file for bankruptcy. But I'm not in the short-sale trenches; I just read alot.
I do question buyers' pursuit of short sales, since short sales will ultimately become foreclosures, and the price (at least the way things are now) would most likely be better for the buyer when that happens, especially since foreclosure inventory seems to be mounting at an accelerated pace. SJ, Bobby J, Joe M - your thoughts??
I know the details of a couple of short sale and they've all had at least a partial deficiency judgement.
I understand. I believe that some Realtors may list something as Short at a low price, with the lender approval caveat, in order to help their property gain attention. If they get attention by offering $100,000 to $200,000 below current payoff and get an offer or two they kinda have fish in a barrel while they wait for the lender's kick out. Now the Buyer has invested good will in the property and is probably not in the fairest negotiating position.
I haven't heard anyone say this is against Realtor Ethics.
Let us face a harsh reality. We, myself included, are reaping what we have sown. The entire real estate industry and consumers alike got drunk on a witch's brew of easy money, corrupt lenders and appraisers, lax regulatory oversight, ratings agencies with conflict of interests, brokers with only commissions in mind, and the bigger fool theory. It was the perfect storm!
It was in fact the Bermuda triangle for ethics and honest dealings. Good people with good intentions entered but soon lost their way. Their moral compass became disoriented and they allowed the intoxication of money to override good judgment.
Ultimately, their money went to money heaven. Millions of people have been hurt, many destroyed. It will take many years to heal but the toothpaste will never be put back in the tube. The lucky people are those that are able to blame others, justly or unjustly, for their misfortune. For it is those that realize their prostitution of their values has self inflicted monetary and self esteem consequences, that will bear the ongoing burden----and rightly so.
It was in fact the Bermuda triangle for ethics and honest dealings. Good people with good intentions entered but soon lost their way. Their moral compass became disoriented and they allowed the intoxication of money to override good judgment.
Ultimately, their money went to money heaven. Millions of people have been hurt, many destroyed. It will take many years to heal but the toothpaste will never be put back in the tube. The lucky people are those that are able to blame others, justly or unjustly, for their misfortune. For it is those that realize their prostitution of their values has self inflicted monetary and self esteem consequences, that will bear the ongoing burden----and rightly so.
...
so, in other words, the baby boomers aren't all going to flood into Florida and buy up all these beach homes and condos??? Bummer.
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