Short Sale Q&A - Short Sale Primer for beginners

Real Estate Agent with First Coast Sotheby’s International Realty

Jennifer AllanThank you everyone for joining Jennifer Allan’s webcast yesterday which was a primer on working with Short Sales.  If you missed it, you can listen to it here (warning, it is 1:45 hours long, but considering 134 people out of 140 listened to the whole session, I am hoping it provided some useful basic short sale info for fellow Realtors).  Broker Bryant and I had a little fun giving this and we hope you will enjoy it.

Far too many Q&As came out of the webinar to answer during the session so we decided to post a follow up blog here.

Disclaimer 1: The info in the webinar was intended to help you feel that short sales are not so scary or so difficult that you should be afraid of them but not intended to be a full education on the process.  Basically enough to make you realize you CAN do them but not enough that furhter education and knowledge is not needed.  Educate, Educate, Educate.

Disclaimer 2: Find out how your state, board, region, broker and follow agents handle short sales in YOUR Market.  What works or is oK in one market may not be in another.

Disclaimer 3: I am not a Short Sale guru nor am I selling anything.  I am just a working Broker and everything I say is based on my own expereinces so make sure to eProxy-Connection: keep-alive Cache-Control: max-age=0 cate yourself on your state and market and veryfiy everyhing you read, here and elsewhere.

Note: Trasparency to buyers and buyers' agents is KEY, disclose, disclose, disclose!

Final note: I would subscribe to Richard Zaretsky’s blog, he is a real estate attorney in FL and has GREAT and informative posts on short sales and I would join the various short sale groups in AR for further reading and info.

Here we go, BB or anyone else please feel free to chime in where I may be off or you can add detail and clarity

Short Sale Questions

Q. Pam Eilts-Mount Vernon WA
can we get that disclosure???
A. I think I am going to have to do a whole series of posts to cover all of the paperwork that would help a listing agent, please keep an eye out on this blog (maybe subscribe) and I will do that ASAP. UPDATE: I have Started that Short Sale Series Here!

Q. sarah-
I have a divorce situation where the husband doesn't want anything to do with the house and I don't believe I'll get authorization signed by him to deal with the lender. Any suggestions on how to handle this?
A. Likely you will not be authorized and even if you are, if he is needed to sign the purchase agreement and won’t, then you won’t be able to close anyway.  Unfortuantely marriages are just another casulty of this economic recession.  The stress is just too much for couples, we see this ALL of the time. Note: If he doesn't want his credit ruined by a foreclosure, I would hope he would reconsider and be more cooperative.

Q. BIG DAN-St Louis
do you have any good system forms, ie disclosures, examples of hardship letters, checklists, authorization ltrs, etc to use as a starting point that you would be willing to share , share for fee etc. By the way this is GREAT INFORMATION you are sharing, Thank You!!
A. I think I am going to have to do a whole series of posts to cover all of the paperwork that would help a listing agent, please keep an eye out on this blog (maybe subscribe) and I will do that ASAP. UPDATE: I have Started that Short Sale Series Here!

Q. bobby-
bryant-- you mentioned obamas paln to help people in a "short sale" situation.. will this hurt some of our business from an agents perspective????
A. (this is Janie’s answer, I am sure BB will chime in also).  No I don’t think so, first, if the owner’s want to stay in the home they should, 2nd, the sooner the market can stabilize the faster we will be back to a “normal” market and stemming the tide of short sales and foreclosures is the key to it all.

Q. Sharon Filbig-Escondido
Is there any cooperating central clearinghouse for lender-specific information on Active Rain?
A. I am not sure but that would be an excellent idea as I have my “faves” and my “blacklisted” lenders ;-)

Q. Candy Laube-Lincoln City, OR
I have to take off for a listing appointment. Realty Trac was mentioned earlier, I think by Brian; is this system worth the fee?
A. I will let Bryant handle this, (to me Janie, no not really, but that’s just me)

Q. how about a deed in lieu if no short sale happens?
A. I haven’t seen the lenders do this much,  but I would look into it

Q. kim-springfield, Virginia
How do you deal with attempted commission "cramdowns" from the banks?
A. Here we often expect the fee to be reduced to 5% and both listing and buyer’s agents know this going in, and I typicallty don’t fight a 5% commission (I do fight anything less) other listing agents have been successful in fighting this and maintaining whatever was in their listing agreement.  In fact, Fannie Mae has now said that commission can no longer be reduced as part of the negotiations to get to the net they need (but not over 6%).  This is great news in areas that have a high percentage of Fannie Mae loans, one less headache.

Q. Carrie-Crosslake
Would it be positive to ask sellers to sign an authorization to get a copy of thier credit report?
A. Well, it isn’t going to show hidden assets which is the one thing you might want to know about, but other’s may have a differing opinion. (they don’t need good credit to qualify for a short sale ;-)

Q. stacie colclasure-bethalto
Hi Jennifer! This is such great information! The speakers have given so much insight into the short sale process. I've not been able to get this information in my area. All I hear from agents here is "don't do it!" Therefore, there are only a couple agents getting all the short sales. And they make it sound like it's exclusive to them. Baloney!! I am taking notes as fast as I can but I know I'm missing a lot of it. Is there any way we can get an outline or handout?
A. I think I am going to have to do a whole series of posts to cover all of the paperwork that would help a listing agent, please keep an eye out on this blog (maybe subscribe) and I will do that ASAP. UPDATE: I have Started that Short Sale Series Here!

Q. Kathlene-Monroe, Michigan
Do you promote yourself as a short sale specialist and how do you do it?
A. Sometimes, but I really don’t like that term, but if you felt comfortable with it, then I would add it to your profiles and other promotional items.

Q. Sharon Filbig-Escondido
What if they do that thing where they ask for a seller to sign a promissory note just before the sale is scheduled to close?
A. There is always that possibility.  When that happens 1st try and negotiate that out with the lender (this absolutely can be done) or, if the lender won’t budge, the seller is going to have to decide what is more important to him/her; not signing a note or the credit issues they will have if the home forecloses.  This will be a personal decision based on their own circumstances.

Q. Debbie DiFonzo-Lebanon MO
When does this packet then get sent? When you have an offer? Or as soon as it is put together?
A. Many lenders want it sent in with the first offer, but ask them when you first get the listing.  Lenders’ vary, but Don’t wait to get the info from the sellers. It may take awhile for them to pull it all together.

Q. Debbie DiFonzo-Lebanon MO
I have my first short sale listing. I have an authorization to speak to the lender. When do I make that first phone call?
A. as soon as you have the listing!

Q. Patti Wolfe-Spokane
Can Jane provide a list of all these things that would be good to ask the seller for.
A. I think I am going to have to do a whole series of posts to cover all of the paperwork that would help a listing agent, please keep an eye out on this blog (maybe subscribe) and I will do that ASAP. UPDATE: I have Started that Short Sale Series Here!

Q. Chanda-Indianapolis
So the short sale is more or less based on current market value compared to current mortgage amount? Does that mean that even if the Individual is financially able to pay the monthly mortgage payments but not the difference between current market value of 150,000 and mortgage for 300,000 and they just want to sell their house so they can buy one somewhere else, can they still try to attempt a short sale?
A. The price a lender is based on their belief of the current value of the home, not the mortgage price.  If they have the ability to keep paying, they may have a more difficutl time being awarded a short sale.  They will not be able to show a financial hardship.  Short Sales are not “get out of jail free” cards when someone is upside down.  They have to show that they are not able to continue to pay.  However, that being said, I have seen some surprising things approved so I never say never, but it doesn’t fit in the nice short sale hole in the board.  Owners doing just this has contributed to the decrease in home values (although I do understand why an owner might not want to continue paying on an upside down home, it is not why short sales are out there)

Q. Shari Barclay-Delta
Where can we get a list of specifically what is in a "short sale packet" from the Seller ?
A. I think I am going to have to do a whole series of posts to cover all of the paperwork that would help a listing agent, please keep an eye out on this blog (maybe subscribe) and I will do that ASAP. UPDATE: I have Started that Short Sale Series Here!

Q. Bob Lyons, CRS-Owensboro, Ky. 42301
is there a way to find out who the pmi company is IF the lender won't help; give their name.
A. Great question, we had this happen where the seller didn’t even know there was PMI because the lender had gotten it themselves (ie seller not paying for it) and it held up a huge short sale.  It is VERY difficult got get this info and we only succeed b/c of luck and wouldn’t say we could do it again.

Q. Shari Barclay-Delta
Can an investment property qualify for a short sale? (ie Seller has another primary residence)
A. very possibly, we have sold several investment properties, but be aware they might be asked to hold a note for a percentage of the difference AND they have income tax implications that a tyical owner-occupied home owner will not have.

Q. Jesse-Dover
Do Sellers have to be deliquent in their payments in order to get the short sale approved?
A. Normally yes, but we have seen and heard this being waived more and more often

Q. Karen Reid-Sedalia
How does the process work when there is a 1st and 2nd mtg and the sales price will satisfy the 1st but not the 2nd? Do the banks work together on the satisfaction or the seller?
A. At that point, if the net after commissions and other closing costs still cover the first then you only have to negotiate with the 2nd.  (As a note, you as the listing agent will be the go between with the 2 lenders, they do not work together to resolve the amounts each get)

Q. Carrie-MN
I'm a buyer specialist in a second home market, to this point we've had few short sales/forclosures. We're now starting to see significant new listings are there things I can research to identify which of these properties are headed for shortsale/forclosure to identify motivated sellers?
A. Great question: I would check the following resources 1. Public records to see if an default or other notice has been publically recorded 2. Public records to see when the home was purchased or refinanced.  Here in SoFL, 90% of homes purchased after 2005 are upside down 3. Property appraisers, see if they are current on their taxes (big give away) 4. MLS for any signs of distress (motivated, third party approval needed, etc. – our board acutally makes us Mark Y or N to Short Sale)

Q. Linda Schulte-Atlanta
Could you explain a little more about how PMI affects ability to do a short sale?
A. This is insurance insuring the loan in case of defalt by the borrower.  Depending on how the payout is calculated, the PMI might actually net the lender more than a short sale in which case all bets are off for the short sale to be approved.  Always asked the seller up front if there is PMI on the loan (see the mortgage payment book).

Q. Kim-Springfield, Virginia
Advantages - if any - of Bankruptcy vs Short Sale, assuming your client wants to keep their home?
A. I am not really qualified to answer that.  It depends on your state (go VA, I grew up in Fairfax!) and the seller’s personal situation.  Have them seek legal council on that one.

Q. John Castro-Hales Corners (Milwaukee), WI
There are many "short-sale programs" for sale online. Are you aware of any "program" that you would consider really beneficial (for listing agents)?
A. There are tons.  I would find one that really understands your state’s laws.  I have seen some pretty good in person classes, DVDs and more.  I don’t want to recommend any b/c I haven’t taken them, but while researching I think you will start to see the cream of the crop stand out.

Q. Are short sales typically sold for more than a home that's already gone into foreclosure?
A.    In our area absolutely.

Q. Katie Johnson-Salem
I have several been working with several sellers who have jumbo mortgages and they would like to stay in the home. Bank of America has told them there are no modification programs for them. Any suggestions other than a short sale?
A. hmmm, maybe the Obama plan will help them.

Q. robert-chi
so, when there is a short sale there is NO defiency judgement???
A. No, not necessarily.  Only IF the lender acccpets the amount as a Payoff and issues a 1099.  Once the 1099 is issued there can be no defiencincy.  This is part of the negotiation with the approval.  If they do NOT issue a 1099 or will NOT guarantee they won’t seek a deficienly, it doesn’t automatically mean they willl seek one, but they could.  Here in Florida, I believe they have up to 5 years.  The safest thing by far is to 1) have the titel company put PAYOFF next to the amount each lender is getting on the Pre-HUD and 2) negotiate with the lender to put in writing it is a Payoff and that no further action will be taken.

Q. Anja-Gilroy ca
How do you get short sales?Is there any technique to that? I am a new real estate agent. My broker doesn't want to do short sales and let one listing go when it went to a short sale due to falling prices all around the listing property
A. see my blog post on Top 10 ways to list more short sales

Q. John Castro-Hales Corners (Milwaukee), WI
(a)I've read that when listing a short-sale property, you should price it 10% below the lowest priced sold comp. Would you tend to agree with that? (b)Based on your experience, on average, how low under the list-price do lenders tend to accept offer-prices?
A. I would list it at what you value it to be worth right now and then systematically reduce by 2% until you have a buyer.  I would say 10-20% below current value is what we are seeing (it is not list price they go by but current market value)

Q. Jeanne Schwartz-Apple Valley MN
What the probability of a short sale seller being able to qualify for a mortgage on a different home? Can it be timed "right" with an approval ready to go on their next home? I have a prospective with a townhome; they are current on their mortgage, but the value of the townhome has dropped severly; they want to move to a larger home that they could afford, but they don't have the $50,000 to bring to the table to close on their current townhome.
A.  Hmmm they might have difficulty getting a loan for a 2nd home if the first is close by and still shows up as a debt.  You could try, but I can see that getting into some very tricky waters…

Q. Jesse-Dover
I have homes that I have on the market now and with the prices dropping in the New Hamsphire area and with the built in price drops, these homes are subject to now being short sales. Now i am finding the banks not accepting the Purchase and Sales Agreements prices and going above the lists price which of course is above the market value. What are we supposed to do to get these banks to be more realistic.
A. I hope that lenders wise up sooner rather than later.  Do note that 1) lenders often will not accept the first offer, so you may have to wait to see if you get another offer or resubmit the first a little later on and 2) you can request another BPO as that is what the amount they want to take is based upon.  It is sad to say, but messed up BPOs have been our biggest problem.

Q. If a Realtor is facing Foreclosure, would it not be wise to market, sell and negotiate a their own personal short sale?
A. I did, and was glad I did (remember you cannot earn a commission or profit from the sale) but Jennifer pointed out that your E&O may not cover this.  I would ask your broker’s opinion.

Q. susan gough-leonardtown
This sounds very risky and time consuming. Am I wrong?
A. Yes, it can be both but with proper education and preparation you can mitigate both.

Q. Dean Speirs-San Diego, California
Can you give us guidance about how we as realtors can get listings of REOs from the mortgage lenders?
A. No, I don’t do any REO listing work, but there are tons of good services, sites and resources out there who do.

Q. Cindy Jacobs-Zanesville
Can the process of the short sale be sped up if the buyer pays cash?
A. Not by much as it is the analysis of the purchase price and the seller that take the longest time.  But it may help for sure.



Want to read more about Short Sales?  Visit my other posts!

If you need assistance with a possible short sale in the South Florida Area, we are here to help! 786-252-4970 or

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Debra Donahue
RE/Max River's Edge - Seekonk, MA
Debra Donahue Realtor RI & Mass

Hello Janie,

 You have given alot of good information on Short Sales. I have done quite a few myself and closed them sucessfully in RI & Mass.

We do not have an addendum. So I write on the last page of are P&S in Additional Provisions that this contract is subject to short sale bank approval. 2. Home Inspection,appraisal,etc will take place once the bank has approved the sale in writing.Thank you for the blog with helpful information


Mar 08, 2009 01:57 PM #19
jason morris
Long Bay Realty, LLC - Murrells Inlet, SC

great post

we have saw some weird things with Myrtle beach short sales recently

Mar 08, 2009 04:04 PM #21
Emily Lowe
The Lipman Group | Sotheby's International Realty - Nashville, TN
Nashville TN Realtor

There is a lot more to learn about the short sale process and I think I am going to try to find the time to listen to your post!  Thanks!

Mar 08, 2009 04:05 PM #22
Anja Kerstens
Coldwell Banker Residential Brokerage - Morgan Hill, CA
GRI, CDPE, CHS, ASP, Selling Silicon Valley Real

That was a great and educational webinar.  In my stated question it appears that my broker doesn't WANT to do short sales but he just chooses not to do so for other reasons. He is teaching me a lot about the business and is a great mentor however, I want to know more about short sales because that is indeed most of what we see around us.  We have also raised the question Chanda in Indianapolis asked about the homeowners who see an "easy" way out "dumping" their home due to the loss in value.  Thanks for answering that question too.

Mar 08, 2009 04:17 PM #23
Roland Woodworth
eXp Realty - Clarksville, TN
eXp Realty

Janie: Thank You for posting.. I book marked this to come back and review.

Mar 08, 2009 04:43 PM #24
J. Philip Faranda
J. Philip Faranda (J. Philip R.E. LLC) Westchester County NY - Briarcliff Manor, NY

Good information here- thanks. I do alot of short sales here in New York . I appreciate the disclaimer that participating in the webinar does not a true expert make. It is just a start.

Mar 08, 2009 11:34 PM #25
Janie Coffey
First Coast Sotheby’s International Realty - Ponte Vedra, FL
Uniting Extraordinary Homes w/ Extraordinary Lives

Maggie, yes, his blog is the best when it comes to REAL informed legal advice!

Rebecca, I am glad you enjoyed it

Sarah, sorry if we went to fast but good notes should help!

Mar 08, 2009 11:41 PM #26
Janie Coffey
First Coast Sotheby’s International Realty - Ponte Vedra, FL
Uniting Extraordinary Homes w/ Extraordinary Lives

Amber - hope you like it

Debra - hopefully your board will create one soon, to protect everyone!

Jason - I will have to check out your post!

Mar 08, 2009 11:45 PM #27
Janie Coffey
First Coast Sotheby’s International Realty - Ponte Vedra, FL
Uniting Extraordinary Homes w/ Extraordinary Lives

Emily - I hope you enjoy it

Anja - as long as your broker is good with it, you have a great position to become the office short sale expert and get the referrals of all of the other agents who don't want to do them!

Roland - looking forward to it!

J. Phillip - yes, absolutely, there is an enormous amount of education needed, much of which constantly changes....

Mar 08, 2009 11:48 PM #28
Mark Watterson
Salt Lake City, UT
Utah Real Estate

Some very good information.  I going to bookmark for future reference.  Thank you

Mar 09, 2009 12:20 AM #29
real estate real estate
Providence, RI

Jannie, great info. I have educated by attorneys last Sept on this topic. Now I really got time to work with another agent to work on this topic. This long list comes in really really handy. Thanks.

Mar 09, 2009 03:52 AM #30
Janie Coffey
First Coast Sotheby’s International Realty - Ponte Vedra, FL
Uniting Extraordinary Homes w/ Extraordinary Lives

Mark - I hope you enjoy it when you read it!

Hulting - thank you, I am sure working with attorneys and other agents on this topic will really help the learning curve!

Mar 09, 2009 03:59 AM #31
Peter Tamura
Coldwell Banker Select - Tulsa, OK

Hi Janie,

Thanks for sharing this info.

We are just finishing up a short sale where the second is coming back and asking the seller to sign a form tellin him that they are not releasing him from the liability on the second... have you run across this?

Mar 09, 2009 05:05 AM #32
Janie Coffey
First Coast Sotheby’s International Realty - Ponte Vedra, FL
Uniting Extraordinary Homes w/ Extraordinary Lives

Peter yes, we have.  It all depends on both the lender and the seller's situation.  We have seen it when the lender wouldn't budge, when the lender finally reduced and we have seen the seller stick their heels in the ground (at the CLOSING Table where it FIRST came up!) and they ened up removing the condition (a month later, the buyer held on).  You have to see what your seller is willing to do and see how far you can push the lender.  Good Luck!

Mar 09, 2009 05:15 AM #33
John Novak
Keller Williams Realty The Marketplace - Las Vegas, NV
Henderson, Las Vegas and Summerlin Real Estate

Thanks for providing this great resource, Janie! I'm hoping to fit the webcast into my schedule sometime this week.

Mar 09, 2009 05:21 AM #34
Kim Hannemann
Samson Properties - Springfield, VA

Janie, Bryant -

Thanks for answering my questions - well, at least the ones that don't require a law degree!

I am a Fairfax County native - not many of us around. I am working on getting into handling short sales. Tried a few on the buyer side, with no success - the listing agents were clueless. REOs are pretty much the opposite - the bank is in a hurry to get rid of the property.

Kim (middle name  . . . Bryant) Hannemann, Springfield, VA

Mar 09, 2009 08:56 AM #35
Janie Coffey
First Coast Sotheby’s International Realty - Ponte Vedra, FL
Uniting Extraordinary Homes w/ Extraordinary Lives

John, let me know what you think!

Kim, I just sent you an email from one (native) Fairfaxian to another ;-) - I live in Miami now but grew up in Fairfax when Burke was a volunteer firestation and a farm stand ;-)!

Mar 09, 2009 09:45 AM #36
Regina P. Brown
MBA Broker Consultants - Carlsbad, CA
M.B.A., Broker, Instructor

Janie, how wonderful of you to share all this great info!  THANKS, & keep up the good work.

Mar 09, 2009 09:55 AM #37

Hay Janie,


Fairfax was a great place to grow up.  I am in Seattle now but hope to move back sooner than later.  I was the girl from Oakton and Chantilly High. Then went on to GMU.  Hoped to never leave until marrying a ROTC guy who showed me the world.

I Love Florida.


Mar 10, 2009 08:38 AM #38


I had bookmarked this...luckily I is so helpful THX!!!!

Mar 19, 2009 07:20 AM #39
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Uniting Extraordinary Homes w/ Extraordinary Lives
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