Here is a serious Short Sale Question. What do you think??

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Education & Training with Real Estate Expert Witness Support

I have recently taken several short sale listings.  In both cases,  the sellers were up to date on their payments but were pretty much out of cash.  Their houses were seriously upside down and they knew they were going to lose them one way or another.  In both cases, they asked me,  "should I stop making my payments?"  In one case,  their payments were about $5,000 per month and the other was $3500 per month.  Assuming it takes 4-6 months to get the property closed and sold,  that amounts to $30,000, not counting property taxes saved. 

Obviously,  I could not and would not offer advice.  I explained that this was a serious question that they needed to discuss between themselves since it was both a financial and moral question.

What do you tell your clients???

 

 

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Guy Berry

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Comments (6)

Jim Valentine
RE/MAX Realty Affiliates - Gardnerville, NV

Guy, this is a dicey one.  Who are we to tell them not to make their payment?  Who, then, should tell them?  Their lender?  Their lawyer?  Their accountant?  I've heard pro and con.  No certainty here.  Good luck.  They should be able to figure it out - lets see ... a nowhere shot and terrible credit, or save $30,000 and have marginalized credit. 

Jun 12, 2009 01:19 AM
Raymond Stoklosa
Eleven Oaks Realty - Austin, TX
CRS, ABR

Just because you asked, it's my opinion that a Realtor should never advise someone to stop paying their mortgage payment.  The borrower has a legal obligation to pay, and failure to do so has legal consequences.  The borrower should speak with an attorney, not a licensed.  This kind of advise sounds to me like the unlicensed practice of law.

Jun 14, 2009 09:36 AM
Anja Kerstens, 669.270.8034
Compass - Morgan Hill, CA
GRI, NHCB, CDPE, CHS. Silicon Valley Homes

I just posted a blog asking the very same question including the background of why we are where we are.  Even the experts differ in their advice.  Homeowner who are not making their payment live for free for many months and can save up a nice little cash fund.

Jun 15, 2009 12:34 PM
Wayne Johnson
Coldwell Banker D'Ann Harper REALTORS® - San Antonio, TX
San Antonio REALTOR, San Antonio Homes For Sale

I don't give a definitive answer on something like this. I prefer to offer a couple of things for them to consider, on both sides of the issue. I think, as earlier responses have indicated, this is not just a real estate question. There are financial, tax, legal, as well as ethical considerations. So what did you decide to do?

Ellen Weintraub wrote a nice post on this subject.

Jun 16, 2009 02:29 PM
Mary Pope-Handy
Sereno Group Real Estate - Los Gatos, CA
CRS, CIPS, ABR, SRES, Silicon Valley

I tell them to try alternatives first, such as a loan modification or renting a room or two out to scrounge up extra cash, and if those don't work, then talk to a cpa and/or tax attorney before taking this course of action. They need to research it for themselves because there is serious "collateral damage" done if they quit making payments.

Jun 27, 2009 01:18 PM
Kathleen Daniels, Probate & Trust Specialist
KD Realty - 408.972.1822 - San Jose, CA
Probate Real Estate

I tell them they need to seek tax/CPA and/or legal advice. At the end of the day then need to get all the information necessary in order to make informed and intelligent decisions. A loan modification is a natural alternative. I have encountered many homeowners who simply want out.

Jun 28, 2009 01:12 PM

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