I've commented before about short sales on this blog, but not to much extent, and I haven't seen many of the other contributers do it either. I wonder why? Does everyone abhor them? Are they afraid of them?
I have written on my home blog about The Ins & Outs of Arizona Short Sales, and lo and behold, people started coming out of the woodwork. And I don't mean a few. Let us just say it's been a fabulous return on investment. I have agents calling me from around the country asking for short sale help. I have homeowners calling me (from around the country, no less) about the possibility of doing a short sale on their home. I refer them out. (Incidentally, if you are from some other state than AZ, and you are familiar with short sales, send your contact information to me, I may have clients for you.)
I would like to first give a shout out to Real Estate Radio USA . It has been very cool and helpful for me professionally, and is entertaining to boot.
When I say that short sales are not for the faint of heart, I mean that in two distinct ways: for realtors, and for sellers. Realtors are running up against brick walls with "The Gate Keepers." That's what I call the people who protect the actual "loss mitigators" like the Swiss Guard protects the Pope. Loss mitigators are behind bullet-proof glass, tucked away somewhere in a bunker under the Potomac river, without email, which out phone lines, whichout fax machines; they are completely incommunicado. They send messages between the bunker and the outside world by carrier pigeon. The particular brand of pigeon they use is not one of the kind where you separate it from its home turf by a thousand miles, thow it up in the air, where it circles a few times and "goes where it knows." The kind they use soars into the air, flies crazily for a few weeks, and then lazily makes its way to where ever it happens to be open season for pigeons. This is enough to drive any semi-sane realtor into a nut house.
Then there are the sellers. They come in a few varieties. The first is the charming couple who believes that because their home is worth less than they own against it, they are eligible for a short sale.
The second is current on their mortgage, and will use credit cards for as long as necessary to "stay afloat" while they continue to pay their mortgage, while at the same time, pursue a short sale, hoping that the lender will look favorably on their "diligence." This is in fact true, as the lender does indeed look favorably on the payment of mortgages. In fact, the lender's advice to the homeowner at this point is predictable: "Keep it up! You're doing great! Keep sending us your money!"
I think I'll pause here and offer some advice for those unlucky homeowners who happen to read this blog, and fall into category two. Mortgage debt can be forgiven. Credit card debt cannot. Unless you want to go to foreclosure AND declare bankruptcy. If you are truly screwed, and are digging yourself a hole of unsecured debt to continue to pay the mortgage on a house you will ultimately loose, STOP IT! You're throwing your money away. Just come to grips with the fact that you are losing your home. The sooner you face this reality, the better.
The final type is the truly destitute homeowner, who truly CANNOT pay his or her mortgage any more. They have come to face the fact of the loss of their home, and are ready to proceed with their lives. They have a real hardship, they are ready to provide all the documentation needed to demonstrate this, and they are already moved on to a new rental home. This is the golden client. This is where short sales actually work. This is where the realtor has some reward for his or her (copious) labour. Short sales are definitely not for the faint of heart, whether seller or realtor, but they do work. Unfortunatey, in Arizona, that's where the market is.
The Land of The Lost Equity.