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

Real Estate Agent with Keller Williams Coastal Partners

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

In a recent conversation with a client, it got me thinking on how to deal with a client on a non-Short SaleDay in the Sun for Palm Beach listing and marketing efforts going forward. Yes, I've done all of the usual approaches (Active Rain, Craigslist, etc.) but still the client is faced with a dilema, do they have the funds to cover any variance in payoff or "go short". Some in the industry may even call this some type of "hybrid strategic default". Of course, the obvious questions come up as to drop in commission, but really! I know ever listing has it's own unique circumstances and issues, but this one has tugged on me even harder than others. Struggling middle class, single income with a local law enforcement agency (showing responsibility) never late on their mortgage and refinanced almost two years ago. Now faced with selling property at market value (hopefully). 

Heck, this sounds like everyone I know in South Florida - almost everyone!

With all of the REO/Short Sale activities in the Palm Beach County area, you almost need to be standing "naked" in front of your Open House sign to be noticed by serious (qualified) buyers. OK - maybe that's a stretch!

After careful review of the situation and market conditions, I'm working on getting the listing priced to a break-even point and getting the property sold. In addition, the client has decided they will tap into retirement funds in order to avoid any deficiencies, if necessary, keeping an acceptable credit rating for his employment. Since I lack a law degree, not too sure on deficiency judgments and assets such as retirement accounts in Palm Beach County court and recommended legal counsel.

I know all of us facing these decisions everyday with our clients, dealing honestly and objectively is our credo. Seeing people tap into their retirement account (that sounds familiar) to satisfy a debt, I'm not sure how many people would make that decision in this econmy, regardless of a credit hit. However, working with this client gives me a new sense of hope to many struggling home owners here in the Palm Beach County area.

What would you do or recommend if faced with the same circumstances....send me your thoughts?

For all of your Palm Beach County real estate needs, please call Stephen Panczak, Sr. (561) 254-8098 or visit our website at

A proud member of the Keller Williams Realty - Palm Beaches team!




Comments (16)

Kathy Streib
Room Service Home Staging - Delray Beach, FL
Home Stager - Palm Beach County,FL -561-914-6224

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. 

Sep 13, 2011 06:18 AM
Joseph Alfe
Short Sale Processing Inc. - Chicago, IL

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.

Sep 13, 2011 07:06 AM
Randy Harden MBA
CENTURY 21 Wieder Realty - Pompano Beach, FL

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. 

Sep 13, 2011 08:00 AM
Michael J. Gallo
Florida Luxury Realty - New Port Richey, FL
Florida Luxury Realty - Gulf Home Sales Team

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.

Sep 13, 2011 08:19 AM
Lisa Dunham
Alexandria, VA
Associate Broker, Alexandria Virginia Real Estate

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. 

Sep 13, 2011 08:41 AM
Lloyd Binen
Certified Realty Services - Saratoga, CA
Silicon Valley Realtor since 1976; 408-373-4411

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.

Sep 13, 2011 10:46 AM
Jane & Garry Smith
Coldwell Banker Residential Brokerage - Portland, ME
ABR, GRI, Realtors - Portland, ME - (207) 253-3195
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?
Sep 13, 2011 02:28 PM
Kimberley Kelly, SFR, HAFA, GREEN
HK Lane, Christie's International Affiliate, 760-285-3578 - La Quinta, CA
I do Real Estate like I played polo-to WIN!

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.

Sep 13, 2011 02:41 PM
John Juarez
The Medford Real Estate Team - Fremont, CA

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.

Sep 13, 2011 04:37 PM
Jon Quist
Tucson's BUYERS ONLY Realtor since 1996

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.

Sep 13, 2011 05:11 PM
Cheryl Ritchie
RE/MAX Leading Edge - Huntingtown, MD
Southern Maryland 301-980-7566
My initial reaction is that if there is an ability to pay a shortage you would have to tap those funds.
Sep 14, 2011 01:12 AM
Gabe Sanders
Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

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.

Sep 14, 2011 01:13 AM
Evelyn Santiago, Managing Broker Heart Realty Group, Inc.
Heart Realty Group, Inc.. - Oswego, IL
Passionate About Real Estate & Our Clients!
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!
Sep 14, 2011 01:19 AM
Scott Godzyk
Godzyk Real Estate Services - Manchester, NH
One of the Manchester NH's area Leading Agents

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.

Sep 14, 2011 01:29 AM
Stephen P. Panczak, MBA
Keller Williams Coastal Partners - Palm Beach, FL
Real Estate Agent & Business Coach, (561) 254-8098

Kathy - thank you for the phone call and contact info...see you at a future RAPB meeting.

Joseph - thanks for the advice on listing remarks...good idea!

Randy - every situation is different, this one gave me some "food for thought" and wanted to share.

Mike - at this point, I'm shotting for break-even, though it may be $5K to $10K for a quicker sale. Like you, I always steer them to an attorney for legal consideration.

Lloyd - we think the same. Already have the Nov 1st payoff and worked it down to the penny. Good advise to go conservative.

Garry - that would be the most responsible thing to do...just don't work with many clients with that kind of money at their disposal to bring to closer on the sale of their home. It's won't go short in the outcome. Great point of view on responsibility...thanks for sharing.

Sep 14, 2011 03:26 AM
Stephen P. Panczak, MBA
Keller Williams Coastal Partners - Palm Beach, FL
Real Estate Agent & Business Coach, (561) 254-8098

John - thanks for the good advice, gave the client several options.

John Q - I send them to the attorney early in the process, mostly for confirmation of there decisions.

Cheryl - that's what it will eventually come down too in this case. thanks for your comments.

Sep 14, 2011 11:52 PM