When an Atlanta home seller doesn't have enough money to cover what is owed on their mortgage for whatever reason, they will attempt to have an Atlanta real estate agent list their home at a steeply discounted price and a short sale is born. There is no equity - period. A property that may be worth $250,000 is listed for $150,000 in an effort to lure buyers to make offers. In Georgia you will see "potential" short sales where the bank's first contact with the seller comes when the listing agent tenders four contracts on a property and no one has cleared anything with the loss mitigation department. In some states, it is my understanding this is illegal. It is an attempt to sell a home for substantially less than is owed on the property, but so far this is not the case in Georgia. No one takes the time and explains to the seller who is responsible for that $100,000 shortfall or the likelihood that the bank will accept a shortfall where there's no evidence of hardship. If the first lender agrees to the short sale, the second mortgage holder may not. What does this mean to the buyer? The bank may send out appraisers and tell all offerors that the list price is now raised to $250,000 or market price. The bank can also decide to foreclose if they feel they can get a higher price in an area with rising prices or low inventory. This is a more common scenario than many agents would like to admit. The Atlanta home is also sold in "as is" condition, no repairs, and you have to pay to have the utilities turned on and for de-winterizing and re-winterizing of the property. With the backlog on law firms closing on foreclosures, the time to close could take several months. I've heard of last minute reprieves where the closing was terminated and this is allowable should the bank so decide. You probably will be responsible for all standard selling costs as well as cost of repairs. Many banks will not take contracts contingent on the sale of your home, even if your home is under contract and closing in two weeks. Now that $250,000 market value is costing $270,000 in hard dollars. So for a first time home buyer, or someone that needs a sure thing, a short sale may be more risky than a bank owned property of REO. There are just t many uncertainties.
Jim, So true. anyone in Real estate right now has to have had a S.S. transcation. My buyer just got moved to first position...but we wait. the world we live in today.
Debbie Aldrich Salt Lake Real Estate Salt Lake County Real Estate (Keller Williams Realty 801-870-0606 ) It is so sad, butwe get calls all day long on prices that do not exist, and on deals that will never close. Some agents are really being very deceptive in their marketing and if you ask me it is predatory. They are preying upon unsuspecting consumers. In Georgia it has been affirmed in the courts..if you are giving advice to a home owner and advising short sales, you better not be practicing law without a license to do so.
Hi Jim...Sounds like a Big Mess, I feel sorry for the Sellers who, because of no fault of their own, they lose their home simply because they cannot make the payments..
Who's at fault, the Banks for Lending or the Seller for being to optimistic and putting everything on the line, and then too high mortgage payments after the rates change.
And of course the Agents that have to try and earn a living...only to see their Sale go up in Smoke. Not a Good time for anyone.
Cheers, here's to better times for everyone in Atlanta soon.
Jim, Your right, I had never known the meaning of endless until my first short sale =(
That's why they call it Tuesday,
Paul
Hi Jim, short sales are never a sure thing and it is key to work with a knowledgeable and skilled short sales person or agent on a deal, but even that there is no guarantee. However this can be a great strategy for helping buyer in distress. I only have done one and I used an experienced partner for one of my investments. It takes time and patience.
Victoria Oak Bay Realtor Fred Carver 250-598-2963 for Victoria Oak Bay Homes (Re/Max Camosun Oak Bay & Surrounding Area Real Estate) I think a lot of the agents that list these homes without aproval from the bank and price these homes at rediculous prices are totally unethical.
Paul Henderson, Realtor ® Lacey & Dupont Washington homes (RE/MAX Professionals & Four Seasons Inc.) Friends of mine that are very expereinced work a few of them, and they never amount to anything. 6-7 months 'under contract', and the banks pulled the deal at the last moment and placed the properties in full foreclosure. The buyers always blame their buyers agent. The truth is that many of these never had any approval to begin with.
Barbara Heil-Sonneck - Home Staging Atlanta (Design2Sell - We Stage Atlanta ) Thank you for your comments. I have helped sellers sell without a short sale and keep their credit in tact. They are already living in their new home a year later. Real estate is not social work. I cannot place all my resources, time and effort on problematic deals. When I do, they consume me mentally, and I neglect other real business. Too many agents in Atlanta with little or no experience do not know what they are doing are screwing up the market with homes advertised as short sales, that are not. They are foreclosures in waiting.
Sellers often do not understand the process of a short sale as well. Indeed they often feel that they are still in control. Which is sort of true.
They do have to agree to the sales price.They do have authorize the listing and the subsequent sale should one happen.
Yet as they see there amount of control dwindle they often will try to draw a line in the sand as to how much control they are willing to lose by trying to dictate the commission amount.
I just generally give them the confused dog look. They will not see any proceeds. They will need a competent and patient individual to help them through this maze. Yet they want to control the fee.
Jim I had a couple here in Portland this weekend from your neck of the woods. Nice couple will be moving here in a month or so. They already have there home on the market in close in Atlanta. I told them if it doesn't work out then they should look you up.
Great for me is that they spent part of their holiday specifficaly looking for the home that I am marketing in close in Portland after seeing it on the Internet.
Gotta luv it!
Sellers often do not understand the process of a short sale as well. Indeed they often feel that they are still in control. Which is sort of true.
They do have to agree to the sales price.They do have authorize the listing and the subsequent sale should one happen.
Yet as they see there amount of control dwindle they often will try to draw a line in the sand as to how much control they are willing to lose by trying to dictate the commission amount.
I just generally give them the confused dog look. They will not see any proceeds. They will need a competent and patient individual to help them through this maze. Yet they want to control the fee.
Jim I had a couple here in Portland this weekend from your neck of the woods. Nice couple will be moving here in a month or so. They already have there home on the market in close in Atlanta. I told them if it doesn't work out then they should look you up.
Great for me is that they spent part of their holiday specifficaly looking for the home that I am marketing in close in Portland after seeing it on the Internet.
Gotta luv it!
Downtown Portland Real Estate Broker~Herb Hamilton (RE/MAX Preferred Inc. Realtors) Thanks for the kind words. The Internet rules.
You are so right, the word that comes to mind is 'powerless!'
Jim-
All too true, we've experienced these problems first hand. What bothers me most is the Realtor advertising a home as a Short Sale and the lender has no knowledge of this.
Jim Wood Nashville Real Estate (Crye-Leike Realtors, Inc.) When it reaches the lenders desk...it is news to them. SURPRISE! It is not fair to all parties involved. The status of the short sale should be on the front side.
Jim,
That's pretty bold, or desperate, to attempt a short sale without clearing it first with the mortgage lender. Probably creates major headaches for the seller.
Esko Kiuru - Las Vegas NV Mortgage Consultant (FHA, VA, Conventional, Refinance, Jumbo) They do it all the time here in Atlanta. There ought to be a law against it.
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