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Short Sales are becoming more popular as lenders are winding up with more and more inventory that is not moving and costing them money. Every home sitting in inventory is costing them taxes, insurance, yard and home maintenance, security in preventing vandalism, pool maintenance and currently going down in resale almost weekly as more and more homes are dumped on the market.
Every home added additional now makes the market lower which puts more underwater. |
This further saturates the market more, and many considering, decide it no longer makes sense to stay in this and decide to walkaway.
Therefore, lenders are becoming more and more aware, that every home added to their inventory is a bigger problem then the last. Since the short sale is an offer for the lender to get out from under this "problem" home and do so immediately without further expense or considerations, they are becoming more and more aware there is an advantage of settling a short sale.
A short sale makes sense to you only under certain circumstances.
It does almost nothing for you in non deficiency law states that say when you give the home back you are totally off the hook, (such as Az and Ca.). If does make it so a foreclosure is not on your credit record and may cut a year or two of damage off your credit returning to normal. Now you may look for and find a friend etc who might be willing to buy your home for a rock down bottom price and you rent it from them, at slightly more then the new mortgage payment they will have on a much lower principal and often at a much lower interest. When you find such a bona fide buyer that would be qualified, credit wise and down payment, wise to buy it, whether or not you are planning to rent it is nobody's business. You will be having discussions with the lender on how to best handle your home from their interest and if you have a bonafide buyer, tell them what the offer might be, and see if they would be interested in your bringing the buyer in.
If you can do it without a real estate agent will save them thousands, and may make the deal work for everyone.
You may get to stay in your home, for far less cost then now, a friend gets an investment with a tenant they know etc. at a low-low price.
While this is all being negotiated which can take months you of course stay in your home NO payments.
The disadvantage of short sale is that it usually means you will not get to stay in your home free of payments as long as you would if it goes to foreclosure.
Rental investors like myself, not sure if viable option, have not had feedback on any who have done it.
If you could as a rental home owner, continue to rent, (such as I do short term vacation home rentals) where you are often empty more often then not and often just a few days when booked, you could likely work out with an agent to follow your on line rental calendar and just show it days vacant. There seems to be no restrictions on you offering the home on a short sale, (take this up with local real estate people). Only the sale and price must be approved by lender basis. You can get and make offers from outside buyers with out agreement of the lender, but remember there better be no visual relationship between you and the buyer.
If it looks slightly like you are appearing like coming out well on this, nothing is going to be approved.
You only have to have the lender approve the price and sale when you offer one, and they are not under the slightest obligation to be even interested.
Some government programs are offering financial assistance to do short sales so look into this with the HUD counselors etc.
In a nutshell, the lender saves all the legal costs and delays of foreclosure, longer holding time on the property footing all the costs, and this getting into this property dropping value every time another home is added to the surplus inventory. It very well may to their advantage to take far less for a bonafide offer you bring in right now. (your real estate agent likely dug up) but they have their own reasons and are often merely acting for agents of people even overseas who may actually be the ones who own your mortgage. (Many big banks are just the "servicing agent" but wont tell you that unless you file papers or make a formal request as to who is the actual mortgage owner. One told me they have five days to supply you with that answer. Keep in mind you want to deal Only with the loan mitigation authority. Not department not agency, person assigned to your loan number. Find out who that is and deal with only them until it is settled.
They will not have final say but are the one that recommends to the decision makers what should best be done with your mortgage.
The first offer loan mitigation people make likely will not be their best offer, that is what I am hearing. On investor owners, I have not heard of even anyone yet who has had an offer.
As in my case the word you keep getting, is "you are an investor and you are not qualified for any of our loan mitigation programs."
None have been willing to say so far that this is a final decision. (as of March 20, 2010)
(We quit making all payments Jan. 1. on six of our seven under water homes)
One loan firm had responded in Dec. they would try and work with us, so we have kept up payments on that one, as we proceed but quit all others Jan. 1.
All the others would not even talk to us as long as we were not delinquent, but did get interested when we quit paying.
We will keep you posted on the short sale situation as far a our homes are concerned. One home I paid 235k for 3 bedroom has more square foot home on short sale across the street that supposedly sold for 125k was put back on the market recently apparently buyer not accepted etc. These can go on and on and get almost no offers even though ridiculously low. If you do finally get one does not mean lender will accept it. This is a tough double edged sword, you dealing with both sides that can kill it.
Even if it sells you likely are not a real "winner" in any way.
You are dealing as we have illustrated with a many headed dragon. Nothing is fully predictable by even the so called experts, so do not think you can "buy" certain results.
Remember, never complete a short sale without the lender specifically giving you in writing "full settlement of all money due".
Also remember the other option. Giving them the keys if they give you a full settlement statement. (let them sell it) See our other articles and options. Advantages and disadvantages.
