HOW DOES SHORT SALE WORK?

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Real Estate Agent

 

I went on an expired listing presentation and the seller said he wanted to do a short sale this time.  I have not done a short sale in my 8 years in business as a realtor.  He said a sales agent told him he can get some money even if he sells his home lower than his mortgage.  His mortgage is $340,000 and will list his home for $316,000 which he said is the value of his home per his tax assessment and hope to sell at $289,000.  Getting some money seems doubtful to me and I told him so.  If that is the case, shouldn't everybody jump in the bandwagon?  I promised to call him the next day after I checked it out.   When I called him, he said his brother who is a co-owner of the property listed last night with the other agent.   I need some opinions about how short sale really works and the position of the agent who promised the homeowner that they will get some money just so he can get the listing.  That's unethical in my book.

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Rainmaker
571,818
Bill Gillhespy
16 Sunview Blvd - Fort Myers Beach, FL
Fort Myers Beach Realtor, Fort Myers Beach Agent - Homes & Condos
Rosalinda,  Good morning !  I know the feeling when you are in a position where you are not totally in command of the facts.  Sounds like the seller is being misled to the extent that he will get money back : Change with your cheeseburg ? ".  Oversimplifying here:  A short sale occurs when a lender agrees to take less than the amount owing.  They may ask the seller to repay some or all of the shortfall, require the agents to reduce commissions, require an  " AS IS " condition to the sale,  or other issues.  That said, I don't see a situation where the seller benefits from the sale.  I would tell the seller to get a signed statement from the other listing agent as to how much they will get back and some sellers in the same position who have received cash back !  My bet is that the agent will backtrack big time. 
Feb 01, 2008 02:29 AM #1
Rainmaker
1,527,118
Gary L. Waters Broker Associate, Bucci Realty
Bucci Realty, Inc. - Melbourne, FL
Fifteen Years Experience in Brevard County
Do a search of blogs for short sales. There is a bunch of info on here.
Feb 01, 2008 02:42 AM #2
Rainmaker
330,507
Rosalinda Morgan
Brookville, NY
"The Rose Lady"

Gary,

I checked NAR website and found some info on short sale.  Thanks a bunch.

Rosalinda

Feb 01, 2008 06:48 AM #3
Rainmaker
330,507
Rosalinda Morgan
Brookville, NY
"The Rose Lady"

Dear Bill,

Thanks for the info.  I checked the National Association of Realtors website and found few articles on short sale.  It makes no sense that the seller will get some money out of short sale transaction.  In fact if the bank even agrees to the short sale, there is an issue of forgiveness of debt which is taxable income.  I should really call the seller back and tell him but then I don't want to be accused of interfering since the property is listed already.

Rosalinda 

 

Feb 01, 2008 06:55 AM #4
Anonymous
NICK TORIO
I'VE JUST BEEN CONTACTED BY A CLIENT WHO WANTS A SHORT SALE. IT SEEMS THEY HAVE JUST BEGUN REPAY UNDER A FORBEARENCE AGREEMENT BUT HAVE DECIDED TO GET OUT FROM UNDER ANYWAY.THIS AGREE CALLS FOR TEN MORE PAYMENTS (THE FOREBEARED AMOUNT)SO HOW WILL THIS WORK? DO I LIST AT WHAT THEY OWE ON THE MORTGAGE OR INCLUDE THE  AMOUNT THEY OWE IN FULL.THEY OWE 227,000 ON THE MORTGAGE AND 10 PAYMENTS OF 1907.18. THEY PUT 12,000 DOWN, I TOLD THEM NOT TO EXPECT ANYTHING BACK. HOW DO I MOVE FORWARD?
Apr 30, 2008 06:59 AM #5
Rainmaker
330,507
Rosalinda Morgan
Brookville, NY
"The Rose Lady"
Nick - You can list it at market value which I presume is less than the mortgage by this time.  The bank has to approve the short sale and the seller will definitely not get anything.
Apr 30, 2008 03:55 PM #6
Rainmaker
330,507
Rosalinda Morgan
Brookville, NY
"The Rose Lady"

Sylvia,

Thanks for the post.  We do not have many short sales in our area.  The only one that came my way is the one I have in my post but after I told him he was not getting any cash from the deal, he listed with another broker and never heard from him again.  Perchance something comes up, I'll definitely keep you in mind.

Aug 04, 2008 12:41 PM #7
Rainer
18,714
Susan Estes
Re/Max - Portland, OR

Excellent Question, Rosalinda, Your Post has benefitted me as well.

 

Susan

May 20, 2009 09:19 AM #8
Rainmaker
330,507
Rosalinda Morgan
Brookville, NY
"The Rose Lady"

Susan - More and more short sales are coming up and we as an agent should be more knowledgeable of what to say to the sellers.  I learn new things as I go along.

May 24, 2009 04:14 AM #9
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Rosalinda Morgan

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