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Those Pesky Short Sales

By Jim Shaw

Real Estate Agent with Premiere Plus Realty Co.

September 17, 2008 06:09 AM

Got a client that is underwater on his condo.

I have been running as fast as I can away from short sales.

But in this case I can run but there is no where to hide.

I'm looking for some advice from all ActiveRain experienced Short Sales Realtors!

Have any of your client's been issued IRS Form 1099 for the shortfall?

How bad does a short sale trash a client's credit score?

I want to test my understanding here; the lenders cannot go after the seller's primary residence, IRA's, 401K's, Annuities, Cash Value Life Insurance Policies, etc.???

What has been your experience as to how long the process takes to get a lender to approve a short sale?

I am thanking you in advance for your experience and advice.

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Mott Marvin Kornicki

Waterway Realtors® • Notary Public & Apostille - Sunny Isles, FL

Miami Notary & Apostille 786-229-7999

The entire short-sale process is for the most part a hassle, time consuming and aggravating- from MY perspective. I believe that until year end, lenders will not be issuing 1099's in for the deficit.

Most lenders have access to the defaulting borrowers assets, income and holdings; it is required when submitting the application to provide a thorough statement as to assets, income, etc.

Many agents and brokerages make a fine living- by handling forecloseres and short-sales! It can and is being done.

I waited 5 months and got a denial on a very good offer!

Sep 17, 2008 06:21 AM

Angela Lawrence

Noble Merit, REALTORS® - Winston-Salem, NC

Broker/Owner

We had a home under contract for 6 months trying to get a pay off for a short sale, it was an absolute nightmare, we had talk to at least 10 different people in loss mitigation dept, they kept saying 30-45 more days everytime, of course the buyers finally gave up. Another short sale situation, it took 3 months, it finally happened, it was not a fun adventure either. We pretty much have decided no more short sales, too much time involved and commission is usually not the greatest on these. I have heard the sellers credit score his hurt some, but not as bad as a foreclosure.

Sep 17, 2008 06:32 AM

Don Fabrizio-Garcia

Fab Real Estate - Danbury, CT

Owner/Broker/Trainer - Fab Real Estate

Hi Jim - If you're not fluent on short sales, then don't go this one alone - team up with someone who has successfully ahndled short sales. There is too much that can go wrong, and you don't want to be responsible for screwing up your seller's sale. Make sure youhave the complete short sale package prepared and ready to go at the time of taking the listing - that way you only need to update any dated information once you have an offer your seller will accept, so you can forward the complete package, with the offer, to the lender.

Currently, in most situations, a 1099 will not be issued for the shortfall, if it is the seller's primary residence. It sounds as though this is an investment property, so most likely there will be a 1099 involved. Your seller needs to speak with an attorney for more information. Same as for in regard to their other assets - they need legal advice.

A short sale will affect the seller's credit, though not as much as a foreclosure would.

Sep 17, 2008 06:40 AM

Mike Davis

Keller Williams Realty, Augusta Partners - Evans, GA

Realtor, Selling Buying Homes Fort Gordon, Hephzibah, Augusta, Evans

thanks for the information, especially about the 1099, I never knew that this would adversely affect the seller's credit

Mike

Sep 18, 2008 09:24 AM

Those Pesky Short Sales

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