Short sale.

andres2bz · Joined: 19 May 2006 Posts: 33 Location: NE

I was reading Sunday paper a small article under Foreclosures…
and it was mentioning the term "short sale" in order for people to get there lenders to settle for less then they owe on there property, and sell off the property and avoid foreclosure on there record...

I never heard of a "short sale" before, does anybody here deal w/ these types of sales? where can i learn or read up on it more?

chow · Posted: Tue Mar 27, 2007 12:08 am Post subject:

Basically the seller is going to have a claim against the mortgage insurance.

They still are viewed as a foreclosure even if it is a deed in lieu of. Try just getting through that black hole and the time it takes to dig yourself out-isn't worth it.

ken(TX) · Joined: 23 Sep 2005 Posts: 184 Location: Dallas, TX

A short-sale is a timing game and relies on multiple parties to the transaction all agreeing to the same circumstances with everyone cutting some commission.

Seller Joe has a home worth $185,000 and he owes $182,000 to his mortgage company. He is 3 months behind and facing probably foreclosure so he hires his Realtor to sell the home. They find a buyer who will buy it but not for more than $175,000.

1) the mortgage company has to believe and agree that losing 7k is less of a loss then if they foreclosed on the home and sold it at auction.

2) the mortgage company most likely will NOT pay 3%/3% for seller and buyer real estate commissions. Expect to get half. If the mortgage company says NO then nobody makes commission.

3) the property owner may still be sued by the mortgage lender for the 7k shortfall which if that happened would be called a deficiency judgement

4) the property seller still had a foreclosure on his credit file impacting his future availability for credit

so you can see why Chow said it's rarely worth the time and I couldn't agree more.

good luck.

chow · Posted: Sun Apr 01, 2007 11:27 am Post subject:

I had a seller walk away from the closing table after I set up a short sale because we pulled title for the buyer and found the up side down situation due to a 125% loan, unpaid taxes *with sale from county coming up due to taxes. His children apperantly didn't understand how bad it was and he was grapping the information anyway.

I call bank, ask them to call him and explain what is going on. The bank never even knew the property was behind in taxes because they didn't have a tax service or escrows set up. They call seller and explain the tax sale process and also explain the foreclosure sale process again. We all go back to the table and buyer let's seller store stuff in garage while he moves out, and she moves in.

The bank ate the 125% loan when they saw the appraisal. I brokered the new loan back to them as a FHA purchase for the buyer. They requested I do that when I called to tell then what the buyer's appraisal came in at, and it was way lower then the payoffs. They paid the Relitter the full commission as they were the buying and selling agent. After all the communication we all did make our full fee's because the bank knew had we not done our jobs well-they would have lost the house completely. This is a big bank with a history of chaos in the mortgage industry. They will work with you, but you have to know what you're doing.

The original appraiser who did a ton of bad appraisals in the area, went to jail eventually. (The bank, my appraiser and I had many a discussion about this appraiser)

The seller will never win. They just walk away with a little more self esteem because the neighbor's just see a sold sign, not a bunch of notices and stickers all over the property.