How to Deal with a "Border-Line" Short Sale! Palm Beach County, FL

Stephen- I'm not a Realtor but I have the name of someone I've met through my affiliation with the Realtors Association of the Palm Beaches who is an attorney.  He's spoken many times to the group about all of these issues. Best of luck. 

just because the seller is not delinquent or may have a little money in the bank does not mean there is no hardship.  price the property fairly, ass in remarks that at "current listing price there is no short sale, but the short pay threshold is very close" if it ends up being short, just deal with it like any other short sale.

www.ssnegotiators.com

I think that every situation is different that the next. My advice is for potential short sellers to get great advice from experienced people whom they can trust. 

How border-line are you talking?  A few thousand at close or are they more under water than not.  I have a seller now who is willing to bring $5,000 to close to avoid a short sale.  As Joseph stated, the homeowner does not have to be late or deficient on the note to qualify for a short sale.  I just closed one like that last week.  I use and Attorney for all my short sales and I suggest the homeowners consult their tax professional also.  I let the Attorney deal with the Bank.  The legality is beyond the scope of my knolwedge.

I recently met with a seller who is faced with a similar dilemma.  This particular seller is not delinquent on his payments and still has a great job.  However, the deficiency amount on his home would far exceed what any reasonable person would consider paying out of pocket at closing.  Unfortunately for him, he will likely have to remain in his home for now. 

That situation is similar to the short sales in the early 1990s when they were borderline because we didn't experience a big decline in prices.  The RTC days.

Advising the client to seek legal counsel is an excellent idea that you may want to have in writing.  I would.    I'm sure you'll start with an official payoff statement to avoid surprises.  Their payment coupon may not show all fees to pay the loan off.  And be conservative with your CMA and estimated seller proceeds worksheet.

Good luck to you and your clients.

I don't understand some of these shirt sale situations. I just sold a home where the seller brought a check for $48.000.00 which came from their savings and if they didn't have the savings they would have taken a small personal loan to satisfy their indebtedness. They then took a rent and will rebuild their savings before they'd even consider ruining their credit rating. What am I missing?

Garry..I think what you are missing is that some of my Short Sale Sellers are hundreds of thousands underwater on their mortgages..and they have lost their jobs, or reduced income..many were retirement, or investment properties..there are so very many different reasons a Seller may have for NOT killing off their retirement just to protect their credit.

The property will only sell for what the market will pay. Work the figures and give your client the variety of scenarios. Your client is the only one who can decide. Definitely recommend that the client see professional guidance for legal and tax implications.

Short sales are a plague upon Realtors but the real victims are the sellers.

Boy, I don't envy you with that conversation. And since each state deficiency laws are different, you were wise to tell them to seek legal help.

My initial reaction is that if there is an ability to pay a shortage you would have to tap those funds.

Good morning Stephen.  Often faced with similar circumstances.  I outline as much as possible but typically refer to an attorney well versed with short sales and the implications of doing this.  From there, it's the clients decision.

Its very difficult not to be in a short sale situation if you bought a home in the last 6-8 years in certain parts of the country even when putting down large down payments because of declining prices. Unfortunately, not everyone can borrow from their 401K, savings or rich Uncle Joe to make up the deficiency. Only the bank can determine if they will allow the short sale and many times they allow them without the "typical" hardships so it does not hurt to try all options. Giving them all possible scenarios and advising to obtain legal and tax advise for possible consequences is all we can do. Good luck!

Unfortanately this situatiomn is not unique to just Florida, it is happening in most areas. I get calls every week where i am meeting with a seller, we discuss what they owe and what the house is worth, the consensus most people looking to sell owe near or more than what their house is worth. When i see a situation that is close, i prepare them for the possibilities rather than wait and shock the seller, depending on their time frame they NEED to move, we can slowly lower the price or aggressively lower the price until it hits the price point where offers start coming in.