Short Sales

By
Real Estate Agent with Property Executives Realty

Who is a canadate to sell their home in a short sale?  Most home owners that are in a financial hardship and behind on payments are prime candidates. 

I will get the bank to take a loss on the property (which they will be happy to do), which allows the homeowner to sell it quickly.

Short sales are a way of life for some Realtors now that the market is down a bit.  There are more and more foreclosures in Western Wisconsin, and across the country, and the banks are dumping them for a quick sale.  Even though these homes can be a good buy, short sales can be even a better buy for a lot of buyers.  Let me tell you why. 

Most banks know that if a home owner is behind, it may take close to a year before they get it back and sell it as a REO (Real Estate Owned Property). 

The two things you need to know are:

 

            1)         The bank doesn't want to own the home, so they would rather take a loss today, than get the property at (Clerk Sale, Sheriff, Auction) and take a bigger loss later.  This can be a great advantage for a potential buyer who wants to get a great deal!  A lot of times the price of a short sale home is far less then what it would be when the bank sells it for as a foreclosed home and in much better condition.

            2)         I do a lot of these sales, and unlike others, I will help the home owners to save their credit, get the bank off their back, and help them to get into a new home with easier payments.  It is very easy to do.  I do most all the work, and the bank pays me, NOT the homeowner!

Typically, a short sale will take 90 - 120 days to close and the home owner will walk away without paying a dime.  Of course a short sale will bruise their credit, but if they're in that predicament already, their credit will be much higher then if they were to foreclose on the home.  Plus there's no worry whether or not the bank will come after the home owner in a civil suit for the difference.  All the terms are negotiated upfront with the lender, once they've received the purchase agreement, and the debt is generally wiped away.  With a foreclosure, all liens are extinguished and the home owner will never know when the attorneys will come knocking on their doors. 

I hope this helps buyers and sellers understand what the benefits of buying/selling a home as a short sale rather then letting the bank take over. 

In 2 years everyone will be asking, "what happened to all the short sales and foreclosed homes?  We should have bought then huh?"

 

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Location:
Wisconsin Saint Croix County Hudson
Tags:
foreclosures
wisconsin
short sales

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Rainer
102,883
Robert Huntsinger
Empire Realty - Upland, CA
Empire Realty Upland, CA - Full Service at a Discount

Even when the home owner is a great candidate for a short sale the bank or it's servicer may not wish to play and let the home roll back.  Been there done that.

Take care!

RJH

Jul 08, 2008 03:34 PM #1
Rainer
45,581
Joe Virnig
RE/MAX Gold Coast REALTORS, Ventura County, California - Ventura, CA
No Ordinary Joe

In my area there a lot of companies charging upfront to take on shortsales, even when the seller is a poor candidate.  In California, at least, it's nearly impossible to charge upfront fees and not break the law.

Jul 08, 2008 04:10 PM #2
Rainer
64,475
Team Cudd - Jeremy & Dana
Property Executives Realty - Hudson, WI

I've heard of Realtors charging upfront fees to do a short sale.  Personally I feel that it's unethical.  There may be times you spend numerous hours doing the paperwork and calling the lender, but that's why Realtors charge a commission, for getting the job done.  Sure there's more paperwork involved with a short sale and numerous calls with long hold times to the lender, but what's the difference between listing a short sale and taking on a typical listing.  Sometimes you have to bite the bullet up front.  It all works out in the end.

Jul 08, 2008 04:20 PM #3
Rainer
64,475
Team Cudd - Jeremy & Dana
Property Executives Realty - Hudson, WI

I've heard of Realtors charging upfront fees to do a short sale.  Personally I feel that it's unethical.  There may be times you spend numerous hours doing the paperwork and calling the lender, but that's why Realtors charge a commission, for getting the job done.  Sure there's more paperwork involved with a short sale and numerous calls with long hold times to the lender, but what's the difference between listing a short sale and taking on a typical listing.  Sometimes you have to bite the bullet up front.  It all works out in the end.

Jul 08, 2008 04:20 PM #4
Rainer
64,475
Team Cudd - Jeremy & Dana
Property Executives Realty - Hudson, WI

If you go through the steps with the lender and provide them:  a hardship letter, financial statement, pay stubs, tax statements, listing agreements, ect they will put it through their internal short sale department.  Usually it will take 2-3 weeks for them to upload the entire short sale package that you've faxed, including everything above.  Once they have everything, they'll basically tell you to get them an offer.  At that time you have the seller sign off on any offer, contingent on lender approval, and let the bank decide what they want to take.  It's not your responsibility to get the best price, nor the sellers, the bank ultimately decides what they want to take as a loss. 

 

If you paint the picture that the seller can no longer continue to make their payments, and are in a hardship, the bank will know it's in their best opinion to sell now with an offer in their hands rather then wait 6 - 12 months to get another one. 

Jul 09, 2008 01:24 AM #5
Rainer
104,456
Ted Mackel
Keller Williams Realty Simi Valley - Simi Valley, CA
Simi Valley Real Estate Agent

Welcome to ActiveRain. Congratulations on your first post. Get around and check out the community, you'll quickly figure out how to supercharge your blogging skills. 

 Read this blog post: http://www.activerain.com/blogsview/535552/Three-Mistakes-Newbies-to

Jul 10, 2008 04:52 PM #6
Anonymous
BK

I am in the process of signing up with a realtor to negotiate a short sale for me in AZ.  They are asking me to pay $1,000 in upfront administrative fees before they begin the process.  Isn't that too much?  I don't know if it is ethical to charge an upfront fee in the first place but assuming that it is, how much is reasonable? 

Jul 25, 2008 06:57 AM #7
Anonymous
Jeremy Cudd

BK - See my previous post above.  My opinion is that if a Realtor wants to earn your business, then they should earn your business, not charge you.  If they do their job correctly, they will get a commission at the end, when your house closes.  So I hope that answers your question.  If every Realtor in your area charged $1k to work a short sale, that's one thing, but I'm guessing that there's someone that won't charge you a penny.  These are the one's you probably want on your side anyway. 

Jul 25, 2008 03:38 PM #8
Anonymous
Anonymous

I disagree with your stand in not charging for an admin fee. Working on shortsales is a tremendous amount of work especially when the first and the second mortgage are with two different banks, and there is no guarantee that it will be approved by the bank. I have worked with banks who flat out will refuse to even consider a short sale and others where after 45 days of working on a file turn it down.  It would be great to just live off of the commission alone if there was a concrete guarantee that the short sale would be approved but chances are that not all will be. Some offices have had to hire extra admin help just to handle these types of sales, Another thing, with short sales the commission is often negoitated by the bank and lowered. Like you said the bank has the last word.

Aug 12, 2008 07:59 AM #9
Anonymous
Jeremy Cudd

If a Realtor wants to charge a fee for the paperwork involved on a short sale and a seller wants to pay it, then to his, his own.  It's your prerogative to charge what you see fit.  Though in Wisconsin the law states that, as a Realtor, must put the best interest of my client first.  So if you feel that by charging them a thousand dollars up-front is in their best interest, then go for it. 

Aug 12, 2008 08:27 AM #10
Rainmaker
102,491
Neal Barnes
Starstate Realty - Killeen, TX
Broker, REALTOR, ABR, CRS, GRI, SRES, SRS.

Hi Jeremy -  Welcome to activerain.  I look forward to networking with you and reading your future post.  Have a nice day!!!

Nov 27, 2008 05:40 PM #11
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Rainer
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Team Cudd - Jeremy & Dana

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