Home > Blogs > Bryant Tutas > Broker Bryant's Real Estate Ramblings

A "short sale" is an option NOT an entitlement!!

By Bryant Tutas

Real Estate Broker/Owner with Tutas Towne Realty, Inc and Garden Views Realty, LLC BK607690

January 11, 2008 04:45 AM

Call Broker Bryant today!!

"Short sale". The new buzz word. We've all heard it:

"I owe more than my house is worth and I WANT to move. I'll just ask the lender for a short sale."

"I don't want to live here anymore and I need to do a short sale."

"I want to take a new job up North but I just bought my house last year. I need to do a short sale."

"I'm tired of making these payments and want something smaller. I need to do a short sale."

"I quit making payments because my lender said once I was behind 60 days I could do a short sale."

"I NEED.........blah, blah, blah!!!!!"

Folks did you notice all of the "I" in these statements? What is wrong with people today? What happened to personal responsibilty?

As REALTORS® we need to start counseling people properly. The folks in these above scenarios DO NOT qualify for a short sale. They need to honor their obligations. As a group we need to quit saturating the market with "short sales" because folks feel they are entitled to one.

A "short sale" is for folks that are experiencing financial difficulties and who cannot afford to keep their house. It is NOT for someone who just feels like moving.

Now having said that, these folks may very well apply for a short sale and it may be granted BUT it is flat out wrong!!

The real estate market is experiencing enough difficulties without REALTORS® automatically playing the "short sale" card just to get a listing. You need to look these folks in the eye and say "Sorry, I can't help you. Short sales are for folks facing legitimate financial difficulties. NOT for folks that just want to move."

A "short sale" is great option for folks who are in dire straights. It is NOT an entitlement. Use it but don't abuse it.

OK.....that's all I have to say about that. For now. What say you?

Comments(48)

Comment

Show All Comments

Sort:

Rob Arnold

Sand Dollar Realty Group, Inc. - Altamonte Springs, FL

Metro Orlando Full Service - Investor Friendly & F

We do quite a few short sales in our office. Probably about 40 of them are currently for sale with our office at this very moment. Only 1/3 or so will actually get approved and result in a sale. So even if the seller wants one, odds are pretty high that they will not get one granted even if they price the property to sell.

If the seller lied on their orignal loan application and then tries for a short sale, the lender will refuse the short sale nearly 100% of the time. The lender finds out they lied when the seller provides their financials with the short sale paperwork.

Jan 11, 2008 01:58 PM

Mott Marvin Kornicki

Waterway Realtors® • Notary Public & Apostille - Sunny Isles, FL

Miami Notary & Apostille 786-229-7999

Actually, many "investors" are opting for the short sale route; which I agree is flat out wrong. Some people got into the market hoping for a huge profit while the market was heading to the sky. Needless to say, many were left holding an empty bag, upside down investment. These "folk" should not be eligible for the short sale! Lenders need to unload non-performing loans- secured by devalued properties. The lenders were responsible for the loans and appraisals that prefaced the loans. I guess the lenders have some reponsibilty here too.

Jan 11, 2008 02:41 PM

Neal Bloom

Brokered by eXp Realty LLC - Weston, FL

Realtor CRS-Weston FL Real Estate

BB,

To me what you said in your statement tells me these people could probably still make the payments but they just want out of a pressured situation. In my my mind the only reason why someone goes and attempts a short sale is if they truly cannot afford to continue paying and they owe more than they can get on the market and they don't want to sell for less or they have to bring the money to closing because they will be up side down. It is to relieve you of the debt that you cannot afford to pay and to avoid foreclosure. It's sort of the last alternative if it is really true. It's just an excuse to get out of something that maybe they never should have done in the first place...leave the short sale to someone who really needs to do one. The ones who actually live in the home...not the investors who just want out because they are lsing money on an investment...I have purchased many investment properties and unless it was the last resort...I wouldn't do it.

Jan 11, 2008 11:05 PM

Dave Jones

Dave Jones Realty, llc. - Prospect, CT

Broker/Owner - e-PRO Dave Jones Realty llc Prospec

I had one short sale this year and it was what the people absolutely HAD to do. We tried to get more for the home for over 6 months. The house just could not get the type of money they had to get to pay it off. They could not afford to be there any longer. When peoples incomes change from disabilities or Job loss, they are put into a situation where they HAVE to sell.

Like everything else thoguh, it seems people are always trying to find a way to exploit the system.

Jan 12, 2008 03:09 AM

Bryant Tutas

Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL

Selling Florida one home at a time

Hi guys. Very good comments.

Rob a 30% closing percentage is actually not bad from what I have been hearing. I decided today to start charging an upfront fee at time of listing for all short sale listings. I figure since the closing percentage is so low I need to get paid something upfront for my efforts. It will also help weed out the sellers that don't want to participate. They need to have some skin in the game.

A "short sale" may very well be a viable solution for folks that truly have a hardship. But if they don't we need to let them go. We need to quit recommending and taking short sale just for the sake of getting a listing. Be picky. Make sure the sellers understand all the ramifications of choosing this route and make sure they are motivated to work with us to get it done.

Jan 12, 2008 09:55 AM

Charles Tharp

Prudential California Realty - Fontana, CA

Inland Empire, Real Estate & Short Sale Specialist

I agree completely. I have 2 short sales now, both for legitimate reasons. One was hurt on the job and cannot work (he is facing 100% disability) and the other lost her husband to a car accident and cannot afford the payments on her own.

The problem is that their is no accountability on the sellers part. They don't have to pay taxes on the difference, their credit can be cleaned up easier and they can walk away with no penalty and buy another home in a few months at a reasonable price and lower payments.

Also there are no set guidelines/rules for a short sale. Each lender decides yes or no when asking for one, and there requirements can vary from one end of a football field to the other.

Unfortunately it seems that short sales are running rampant, and the sad thing is, for homeowners who are sticking with it, they are also getting hurt by declining property values.

Jan 12, 2008 10:11 AM

Laurie Mindnich

Centennial, CO

BB, the only one I've dealt with is one in which the seller was entirely deserving (and in arrears) of a short sale opportunity, and it was a NIGHTMARE (ending in a foreclosure). I cannot imagine dinking around with the hysteria, the non-answered phonecalls, and the B.S. for someone that is no way, no how going to get the short sale. With banks getting more realistic, perhaps someone will enjoy the effort- it is not going to be me.

Jan 12, 2008 11:00 AM

Todd Clark - Retired

eXp Realty LLC - Tigard, OR

Principle Broker Oregon

When someone calls me about a short sale, I make sure that they actually need it! I tell them that if their situation doesn't warrant it then more than likely the bank want allow it. I then give them all the options they have and how they can turn this into a positive for them and the market.

Jan 12, 2008 04:30 PM

Bryant Tutas

Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL

Selling Florida one home at a time

Hi folks. I've spending quite a bit of time this week thinking about short slaes and my strategy moving forward since there are many short sales in my area. I'm trying to look at these from all angles so I can develope a plan that will give me the best opportunity to enter this market area without wasting a lot of time any money on deals that won't close.

I plan on writinmg about this topic this week in more detail, so stay tuned.

Jan 12, 2008 11:20 PM

Lisa Spalding

Casa Latino Four Corners, REALTOR, CDPE - Longwood, FL

REALTOR, CDPE

Well, I agree that some of the Owners are idiots for always thinking they can just opt for a "short sale" (which may or may not be the case--they most of the time need an actual hardship) but I am even more ticked at the agents who have never done a short sale (or even a pre-foreclosure) that think that the Owner deserves a short-sale when those Owners are investors (and have multiple properties) or if the agent feels sorry for an Owner just because of whatever. It's even worse when companies from all over the US want to charge a "referral fee" to local agents to list a "short sale," which, if it even goes through, is going to have the commission probably lessened by the bank anyway.

Well, I like your idea of charging an up-front fee for short sales. Excellent idea. Otherwise, I don't know what to do about short sales. I have a lot more thinking to do re: whether to continue to list 'em or not. Good post, as always.

Jan 12, 2008 11:44 PM

Bill Roberts

Brooks and Dunphy Real Estate - Oceanside, CA

"Baby Boomer" Retirement Planner

BB, I've beaten this horse until it died. Maybe they will listen to you.

And an aside to Renee, "equity stripping" is a felony in almost all jurisdictions.

Bill Roberts

Jan 13, 2008 05:07 AM

Rob Arnold

Sand Dollar Realty Group, Inc. - Altamonte Springs, FL

Metro Orlando Full Service - Investor Friendly & F

I put in my short sale listing agreements that if we don't sell their property, but help them work out a deal with the bank (modification, forebearance, deed-in-lieu, etc.) that we get paid a $1500 fee for our efforts.

Jan 13, 2008 09:33 AM

asdf zcxv

Keller Williams Realty - Ann Arbor, MI

Ann Arbor Area Real Estate

We all must be held accountable!! Why have we lost that and where did we loose that? Our country was built on accountability...Boston Tea Party .... and yet now we seem to think it doesn't matter. It does matter! We are accountable for our debts!

Thanks for the blog and the comments are also an education (d i v o r c e) oh the details can be ugly!

Jan 13, 2008 10:48 AM

Anonymous

Our country was built on strong values but in todays society our government has created so many escapes for individuals to be rewarded for all the wrong actions. Then these people abuse the system.... there are people who do really need help because something bad has happened beyond their control ...like losing your job and illness. Then individuals who work hard are picking up the slack for these individuals. Crawling off the soapbox.

Jan 14, 2008 07:01 AM

#42

Anonymous

Jan 14, 2008 07:02 AM

#43

Katrina Madewell

Charles Rutenberg Rlty- More than 5,000 agents(813) 777-1196 - Tampa, FL

Tampa FL Homes for sale | Tampa Bay - (813) 777-1196

BB - What's crazy to me is how the general public and even many real estate agents didn't even know what the heck a short sale was 2 years ago!

Now people think that they have an extra option out there... ESPECIALLY SO CALLED INVESTORS!!! The banks aren't going to roll over and play dead ya know!

P.S. it's confirmed that Countywide is being bought out by Bank of America. THIS major change, should tell most there is a lot of stuff shakin these days!

Jan 14, 2008 03:48 PM

Mike Norvell Sr

Morris Williams Realty - Leesburg, FL

Norvell Consulting Group

God morning BB..I agree that there are many who are using the short sale as a fix all rememdy...actually most fail, and go to auction...We are working on quite a few, the majority of mine are abandoned homes without tennants......We take them as normal listings, and work them as well as possible....Remember my last posts about all the listings for short sales with bait and switch pricing...I still get mad about all the listings being shown at a price that it cannot sell for without bank approval...and as we have stated, most do not get approved....

Sorry about pushing my old agenda here again, it still drives me nuts

Jan 20, 2008 04:08 AM

Thesa Chambers

West + Main - Bend, OR

Principal Broker - Licensed in Oregon

BB - great points - I had one recently that the bank agreed to work with and they still want a short sale... it is CRAZY

Aug 10, 2008 01:28 PM

Anonymous

Scott Alexander

You agents are getting what you deserve for helping to manipulate this market to it's fraudulant peak in 2005-06. 20 years of appreciation in 5 years is fraud!

You knew what the mortgage companies were doing, and did you really believe people could continue to make the payment after the teaser rate was over?

Home loans were handed out like hot cakes to every idiot on the street!

Armagedden is here!

Dec 27, 2008 03:02 PM

#47

Anonymous

Brandon Henderson

I love to listen to people step up on the soap box and preach.

"People need to learn responsibility" "Where is the accountability"

Question: Where were all of the "enlightened and moraly irreproachable" agents and brokers a few years ago when normal people were being approved for these insane loan products on these over-inflated properties? I'll tell you where 99% of them were... in their nice cars driving to the next showing or to the next closing. I knew a LOT of them.

Just because you're in the real estate business and educated in the field doesn't mean everyone else has the same knowledge and expertise not to be taken advantage of by shady lending practices. I think everyone will agree that people need to take individual responsibility for making a bad decision, but at the same time, the lenders/agents/brokers who participated and reaped the rewards of executing the transaction for these people need to take some responsibility as well.

Jan 09, 2009 07:27 PM

#48