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Who Qualifies For A Short Sale

By
Real Estate Agent with Diamond Partners Inc 00244377

Like every agent, I've had my share of clients this year who owe more than what their homes are worth. In these situations, it seems the first assumption by real estate agents is that a short sale might be the answer. But, not everybody qualifies for a short sale. Surprisingly, some people DO have the income and CAN afford to make two house payments. Or, perhaps they don't have an official hardship to qualify for a short sale.

One common example that comes to mind is the seller who moves to another state to take a job with a new company and was not provided a relocation package. Many people have careers goals that they have not wanted to put on hold. Consequently, they end up assuming they can sell their house. What happens when they can't? What happens when they are not even able to break even and have ended up with two housing payments?

Many of my clients are honorable people who won't consider walking away from their financial obligations and letting their home just go to foreclosure. Some people do take pride in their credit scores. One such client has paid out $60,000 in mortgage payments on a vacant home since his property first went on the market. We rented it out for several months to stop the bleeding in hopes that the market would improve, but that resulted in an eviction and more headaches.

So, what's a seller to do when they owe more and don't qualify for a short sale?   

 

  

Posted by

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Carol Culkin - REECENICHOLS REAL ESTATE

Carol Culkin - Licensed Real Estate Salesperson for ReeceNichols Real Estate, is your source for real estate in Overland Park and the bordering cities of Leawood, Olathe, Mission, Miriam, Lenexa and Shawnee, Stillwell and Spring Hill. Carol has been ranked as an award winning agent and offers her clients over 10 years of real estate experience.

PROFESSIONAL AFFILIATIONS, DESIGNATIONS AND COMMUNITY INVOLVEMENT:

Member of National Associations of Realtors®, Member of Kansas Associations of Realtors®, Member of Kansas City Regional Associations of Realtors®, Member of Heartland Multiple Listing Services, Accredited Buyer's Representative (ABR), Seniors Real Estate Specialist (SRES), Red Cross Volunteer - Greater Kansas City Chapter, Supportor of Cross-Lines Community Outreach.

 
 

ReeceNichols Real Estate

8001 College Blvd Suiite 100

Overland Park, KS 66210

Office: (913) 451-4415
Cell: (913) 333-8310
   
 http://www.overlandparkhomelocator.com/  
 

                                 

 

Comments(6)

Gary Woltal
Keller Williams Realty - Flower Mound, TX
Assoc. Broker Realtor SFR Dallas Ft. Worth

Carol, it's a tough spot. Sometimes the answer is to take the loss at the closing table (if they can). People bring money to closing all the time. I think we invented it in Texas where values appreciate so slowly and people like to be out of houses in 18 months.

Nov 20, 2008 02:06 PM
Larry Story ALC
Total Care Realty - Greensboro, NC
Beneath it all is the Land, Covering all of NC

Carol,

I just had to answer another blog from the standpoint that most agents don't even seem to be that well versed on short sales and what happens after the sale.  I don't even think they are warning their sellers that they will receive a 1099 from the bank for the difference in what they owe versus what they get at closing.  It will really mess up your year to get an extra income statement for tens of thousands of dollars that you have to claim as income.

 

Nov 20, 2008 02:11 PM
William J. Archambault, Jr.
The Real Estate Investment Institute - Houston, TX

Carol,

"So, what's a seller to do when they owe more and don't qualify for a short sale? "

I know it's a novel idea, but how about continue making the payments and staying where they are at! Not every one can move just because they want to. Have to, is another subject.

Lenders accect "short sales" when it's best for the lender, not because the home owner wants it. A "short sale" is not (yet) an intitlement.

Many of your clients are indeed honorable people!

Bill

Nov 20, 2008 02:16 PM
Steve Shatsky
Dallas, TX

Hi Carol... There are many options for folks who are "upside down" on the sale of their homes and a short sale is just one of them.  I encounter people all day who contact me about a short sale, but who have large sums of money in liquid assets that they simply do not want to touch, so they think the bank should allow them to sell their home in a short sale to protect their savings or 401K's.  Banks will not approve a Short sale for every borrower. 

When I explain that it simply does not work that way I am amazed how many get angry with me.  Short Sales are not about dodging responsibility for bad investments or life changes that a seller has decided to make... they are about helping people who have been left with no other options.

Nov 20, 2008 02:41 PM
Barbara S. Duncan
RE/MAX Advantage - Searcy, AR
GRI, e-PRO, Executive Broker, Searcy AR

It is sad to be in that type situation.  Corporate buy-outs must be one of the very best fringe job benefits.

Nov 21, 2008 01:29 PM
John Novak
Keller Williams Realty The Marketplace - Las Vegas, NV
Henderson, Las Vegas and Summerlin Real Estate

Job-related relocations can really put some homeowners in a tight situation. Besides looking at the opportunity of a new job and new location, now they have to figure out how to potentially handle two homes in their budget. A good property manager is critical to getting through the next few years until the homeowner is no longer upside down.

Nov 21, 2008 01:39 PM