| Regarding Short Sales | ||
Let me begin by saying that I am not an attorney, and none of the agents or employees of The Home Office Realty LLC are attorneys. Furthermore, we strongly recommend that anyone considering selling or buying a "short sale" property seek the advice of an attorney with expertise and experience in these matters. Find an attorney with strong real estate credentials. The following represents our opinion based on our experience as Realtors in Shiawassee County Michigan. Short sales are one of the most talked about and least understood areas of real estate currently in the market. A "short sale" sometimes mistakenly called a "quick sale", is when a lender agrees to accept a payoff of their mortgage in an amount less than is owed by the seller. Example: Seller owes $100,000. Home is now worth $80,000. Bank accepts $70,000 instead of $100,000 so that the seller can sell the house. In this market where so many of us owe more on our homes than we could sell them for, this sounds like a good solution. Frequently this is not the case. Here are some misunderstandings that we've seen regarding short sales. 1. Your credit is protected. In many cases this is not true, Most lenders won't even consider a short sale unless the seller is several months behind in their payments, so the credit is badly damaged already. 2. It's a quick easy process. Nothing could be further from the truth. We've seen some that have gone on for years, and many buyers give up after several months of waiting for bank approval which never comes. 3. The foreclosure process is stopped while a short sale is in the works. It depends on the lender. We have seen folks be foreclosed on who wrongly thought they were protected by having a pending short sale in process. 4. There is no "deficiency judgment". A deficiency judgment is when the lender pursues the money they lost after the sale is completed. If the lender does not give up the right to pursue it, in writing, prior to closing, they can and probably will sue the seller after the closing for the amount the bank lost. We heard just this week where a local bank approved a short sale, then just 3 weeks after it closed sent the seller a collection notice for $37,000. Our company policy is that we do not list short sales unless there is a commitment from the lender for a certain price prior to listing. So we almost never list these because most lenders won't commit to a price prior to receiving an offer. When a buyer views a listing for $100,000 "subject to short sale", it is usually just a price picked out of the air with no idea if it may eventually be accepted by the lender. Invariably it isn't. So back to our first advice, if you are even considering selling or buying in a "short sale" situation, seek the advice of a qualified attorney! |