Our team, East Valley Green Homes, has been doing short sales since the beginning and though we discuss all of the options with our clients, encourage them to see an attorney and talk to their accountant there comes a time and a client that falls through the cracks.
The financially responsible seller doesn't get any breaks in this market. This is the seller with a mortgage that is almost paid off because they made sure that for the 10 years they owned the home they always paid more on the principle each month. Now they need to sell. They owe $140,000 on a house they paid $500,000 for but will only get $350,000 if they sell. A loss of $150,000. They don't want to rent the house out, were unsuccessful getting a loan modification (long story but then they all are) so they are taking the loss. My last client who fell into this category found a buyer who made an offer $15,000 over asking because of the solar upgrades to the home only to have the FHA appraisal come in $15,000 under asking (but I digress).
Our next seller is moving out of state and they are eligible for a short sale. They have one loan and owe $300,000 on a house that is only worth $130,000. The bank doesn't agree. The bank wants $200,000. We've asked where they came up with that number and have escalated it all the way to the bank president. They want $200,000 even though they were told the house needs a lot of work. They said they might believe us if we had the home inspected. The buyer who has been waiting for 2 months for a response has decided to walk. This seller is now being forced into a foreclosure by the bank and all of the negative consequences that comes with that. They are angry and feel helpless.
You win some and you lose some one of my colleagues reminded me. We rarely lose one but we also know how hard it can be to win. The banks are supposedly improving the short sale process with more automation and new rules but you're still playing Russion Roulette when it comes to the negotiator assigned to your short sale and the decisions that follow. We've seen short sales that shouldn't have a prayer go through and short sales that should be a no-brainer take over 9 months before bank approval.
Handling short sales has changed how we work with buyers. We avoid them at all costs if we can. When it comes to listings we have become more selective. We used to love the thrill of making the impossible happen and seeing the sigh of relief on our client's faces. We also thought as the years passed that the banks would get their act together.
We've been between the bank and a hard place for long enough or is it dreaming to think that the world of short sales will have a happy ending.