Short Sale Urban Myths – Short Sales with No Late Payments

Reblogger Missy Caulk
Real Estate Broker/Owner with Missy Caulk TEAM

Ann Arbor sellers, do you have to be behind in your payments to do a short sale ?

No not necessarily. 

But, in my experience they take longer as the buyer is still paying and they are not loosing money yet. 

Like Melissa says in her post, it is totally up to the hardship letter and the financial work sheet.  

Original content by Melissa Zavala Cal BRE #01324959

short salesIt happens all the time: I have sellers and agents call me at the office to ask whether a short sale seller (their prospective client) can list in a short sale because the seller has not missed any mortgage payments.

Or, I may get a call from an agent who tells me that the bank told the seller that he or she could only get evaluated for a short sale if mortgage payments have been missed. Apparently, there’s this masked employee who seems to work at all the banks and spread this misinformation like wildfire. (It’s almost like the beginning of one of those urban myths—you know the friend of a friend who brings home a Chihuahua from Mexico but it turns out to be a rat).

Can a borrower participate in a short sale if s/he is still current on his or her mortgage?

Quite simply, the answer is yes. However, there are certain criteria that may impact an agent’s ability to successfully negotiate a short sale for a borrower who is current. So, here’s what you need to consider when taking a short sale listing like this:

Does the borrower have a hardship or a legitimate reason for participating in a short sale? If the seller is simply sick and tired of being upside down on the mortgage, some banks may be a little bit less flexible in their short sale approvals. Banks are looking for solid reasons that sellers need to sell—job loss, divorce, death, illness, etc. 

How many liens exist on the property? Depending upon the number of mortgage loans and also depending upon the state where you live, there are many different programs available for short sale sellers. However, sellers who are current and who have second liens held by collection agents may find it necessary to throw in a little bit of cash in order to make the second lien holder agree to the short sale. (Don’t forget that you need to get the first lien holder’s approval in order to make a cash contribution to the second lien holder and that contribution must appear on the settlement statement.)

Who are the mortgage lenders? With respect to folks who are still current, some mortgage lenders are a little more flexible than others. Many mortgage lenders will check the borrower’s credit and look into all aspects of the sellers’ financials, while others will be a bit more flexible and forthcoming with short sale approval letters.

So, the next time you hear that the bank has told your seller to miss a few payments, you had better double check to make sure that the Chihuahua doesn’t smell like a rat.

Photo: flickr creative commons by crispee


Melissa Zavala 

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Rodney Mason
Guaranteed Rate NMLS# 2611 - Atlanta, GA
VP of Mortgage Lending - AL, FL, GA, SC, & TN

It really all depends on the individual mortgage company as to whether or not a seller must be late in order to be able to do a short sale.

Sep 24, 2011 12:20 PM #1
Marcia Kramarz
Re/Max Executive Realty - Medway, MA

Melissa - thanks for sharing - it's a misconception even realtors have - and the short sale landscape is always changing - thanks for the update -

Sep 24, 2011 01:37 PM #2
Daniel H. Fisher (704) 617-3544 - Charlotte, NC
MCRP - Charlotte Real Estate, NC or SC

Defaulting on a loan should never be done before paying an attorney and CPA to represent you and provide advice about the legal and tax consequences.  Default is not necessary to complete a short sale - and lenders currently have a shorter waiting period after a non-defaulted short sale than one completed under default.

Sep 24, 2011 02:58 PM #3
Melissa Zavala
Broadpoint Properties - Escondido, CA
Broker, Escondido Real Estate, San Diego County

HI there Missy. Thanks for reblogging my post. Happy SUnday to you!

Sep 25, 2011 02:50 AM #4
Katerina Gasset
Get It Done For Me Virtual Services - Wellington, FL
Get It Done For Me Virtual Services

Hi Missy. Short sales are really complicated but with the assistance of experienced Ann Arbor Short Sale Agents like Missy, a seller need not worry as she will be informed with her right options. Excellent reblog missy!

Sep 29, 2011 11:00 PM #5
Bob Hertzog
Summit Home Consultants - Phoenix, AZ
Designated Broker

Thanks for reblogging this Missy. The information you share as well as your experiences as Ann Arbor Short Sale Agents is invaluable to your readers, especially the buyers and sellers. Short sales are never easy but if assisted by an expert like Missy, buyer or seller can be sure she will be informed with all of her options. 

Sep 30, 2011 02:10 AM #6
Charles McDonald
Charlottesville Real Estate Solutions - Charlottesville, VA
REALTOR®, Blogger, Principal Broker®, Owner

Short sales are more complicated than many agents know, not to mention the public

your friend in Charlottesville

Oct 09, 2011 10:36 AM #7
Dom Naidoo
Westside Properties - Venice, CA
Malibu to the Marina Real Estate


Thanks for sharing this post. I did read the original post and agree with many points. Short sales are the growning normal transaction in California which is why I became SFR certifed. It has helped me save a lot of sellers from foreclosure!

Oct 22, 2011 02:49 PM #8
Rachel Massey
Massey & Associates Valuation Services, LLC - Ann Arbor, MI

It seems so counter intuitive to default on your payments in order to be eligible for a short sale. It seems that all this would accomplish is to ruin credit. I certainly hope this is not the way most lenders coach people who are underwater and need to sell.

Jan 30, 2012 03:56 AM #9
Kim & Kristine Halverson
Compass - Santa Monica, CA
Sisters, Realtors

Hi Missy,

I really enjoy reading your blog.It gives us voice to also share what we think.In my opinion I think Short sales is not something easy but with the right assistant of a short sale agent it could be a success in both ends.Great job on this ,stay on top being the best Ann Arbor Short Sale Agent.

Apr 16, 2012 08:44 PM #10
Petra Norris
Lakeland Real Estate Group, Inc. - Lakeland, FL
Realtor, Lakeland FL Homes for Sale

I definitely agree with all theri comments.All everyone need is just the right guidance with the right short sale agent.I can only think one best Ann Arbor Short Sale Agent and that is you Missy.


Apr 26, 2012 04:29 AM #11
Bas Panch
SCV Home Buyer - Valencia, CA

Looking for the best Ann Arbor Short Sale Agent.I can definitely recommend only the best and that will be Missy Caulk. You're blog is always informative and definitely a help to everyone. Best of luck!

Oct 20, 2012 10:26 AM #12
Debbie Harr
Homes that Click Realtors - Columbus, OH
Realtor Homes That Click, Worthington Ohio Homes

Hello Missy,
Thank you for sharing this very informative blog. And this is a big help to everyone. Continue being the best Ann Arbor Short Sale Agent Missy!


Oct 29, 2012 11:01 AM #13
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Savvy Realtor - Ann Arbor Real Estate
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