There are a lot of rumors, supposed strategies and endless classes teaching "short sales". Here are the top five short sale "tactics" worth debunking:
1. You should put a quick closing on your contract to get a faster approval. False. Many short sale lenders have up to 70,000 files they are processing at any one time, and up to 600 files per negotiator. Threatening that a buyer will "walk" or that you will pull a contract because of a contract closing date will generally have no effect on getting the lender to respond more quickly.
2. You should send in multiple offers to the short sale lender. False. Most large lenders only want one signed contract. Reference Countrywide's short sale package stating: "If there is more than one purchase contract, the seller may only submit ONE offer to Countrywide for review."
3. You can demand the lender not issue a 1099-C on the cancelled debt. False. The lender is required by law to report the forgiven debt on a short sale as income. You may not be liable to pay taxes on this debt, however, if you qualify under the IRS insolvency rule or the Mortgage Forgiveness Debt Relief Act.
4. You can negotiate with the lender to not report the short sale as "settled" to the credit bureaus. False. Again, most large lenders have standard approvals and reporting guidelines they will not vary, even if you hire an attorney. With a short sale, however, you might be able to borrow again in two years, versus four to seven years with a foreclosure or deed-in-lieu of foreclosure.
5. If your lender knows you are trying to do a short sale, they will stop the foreclosure process. False. Lenders cannot rely on a successful short sale transaction or even on a property receiving an offer. Stopping their collection and foreclosure efforts would weaken their position and potentially cause further financial loss. You may, however, be able to postpone a foreclosure sale date if you submit a reasonable short sale offer for consideration.
If you steer away from razzle-dazzle and tricky tactics, and rely on common sense, you will find your short sales a success.
It's Wendy!
Wendy Rulnick, Broker, CRP, CRS, GRI, ABR Rulnick Realty, Inc.
Search Destin Florida real estate
Destin Short Sale Pre Foreclosure Help.
Call toll-free 1-877-ITS-WNDY (1-877-487-9639) or local 850-650-7883 ext 204
Email itswendy@rulnickrealty.com
Wendy Rulnick specializes in real estate sales, short sales, traditional sales on Emerald Coast of Florida: Destin Florida real estate, Santa Rosa Beach, Fort Walton Beach, Niceville, Bluewater Bay, Navarre, Seagrove Beach, Watercolor, Sandestin, Seaside, Dune Allen, Blue Mountain Beach, Crestview, Freeport, Rosemary Beach, Mary Esther, Shalimar, Eglin AFB, Hurlburt Field. Wendy Rulnick, Broker and Realtor, has been selling real estate for 20 years. She has won numerous awards, including the coveted ADDY for advertising design. An expert marketer of real estate listings, she negotiates successfully to her clients' advantage. She is supported by a team of top buyer specialists. She lists and sells homes, condos and townhomes in and around Destin Florida. Wendy is in the top ½ percent resale agents on the Emerald Coast, and was featured in Kiplinger Personal Finance Magazine as a short sale specialist.
All Rights Reserved. "Top Five Short Sale Myths" Contact Wendy Rulnick regarding Destin Florida real estate and vicinity. Copyright © 2009 by Wendy Rulnick.
This site, Wendy Rulnick or Rulnick Realty, Inc. is not providing legal or tax advice. The information provided is for educational and informational purposes only. It is recommended that sellers considering a short sale should consult an independent legal and tax advisor for more information.
Subscribe to It's Wendy's Blog by Email
Amen.....I am hoping that we will get agents educated and move this process faster.
Karen - Agents and sellers!
The real estate business have become a mess for a long time. Let's hope that all this ends soon and busines can come back to ususl
Gabe
Gabe - I am thinking two more years at least. When it tapers off, the banks will finally have their acts together.
Good post, Thanks for the info Wendy
Thanks for the info Wendy! It seems that more short sales have been getting approved these days. Hopefully the process will be getting easier!
Good advice all. Another I'd add is that the bank is more often than not amibivilant about the offer being all cash. They don't care where the money comes from so long as they get the money.
Marc - You are quite welcome.
Mindy - One could only hope :)
Philip - You are absolutely correct. Bottom line is king- not cash.
Wendy - I can't thank you enough for all the updates and info you supply on short sales and foreclosures. I'm endlessly involved in these things and it is so helpful to have these tidbits of information at my fingertips during negotiations. Short sales are the new reality.
Thanks so much, Kent! Here is another tidbit, when calling Countrywide short sale 1-866-880-1232, Do NOT enter an account number, if you do, you won't go directly to short sale, you'll have to go through two layers! So just let the message keep asking for an account number and finally short sale will come on and help you :)
Wendy, great post. You nailed it on the head on all 5 counts!
Tony - Thank you kindly!
Wendy, The area where I live, the Pacific Northwest, has been insulated from much of the housing crunch. We are now seeing an increasing need for honest agents to assist good people who are having difficulties. The information you shared is helpful to me, in return I hope to be helpful to someone else. Thanks
Dean - Great attitude. Share the knowledge!
There are still so many people that don't understand short sales, and just when you think you're getting the hang of it, the bank changes something. Every one is a learning experience! Thanks for sharing.
Wendy- Great post! Over the past month I was told to do many of the things you discussed in your post. It seems that everyone has their own method and experience in dealing with the short sale process. I appreciate your post and hopefully a better "system" will be created that will be more effective and efficient in dealing with short sale properties!
-matt
Good Info! I wish all real estate agents would read your post.
Jose Lopez
I specialize in Sarasota Florida Foreclosures and Venice Florida Foreclosures
Wendy,
Nice to see that someone else gets it. Many people are teaching strategies that are just not correct and you just pointed out the main ones. Anyone who is smart will not even think about promising or mentioning the possibilities of these to a seller, can you say lawsuit!
Laura - Thank you!
Matt - It's really a free-for-all out there.
Jose - I appreciate that, thank you.
Kylie - I am sure there might be an exception here or there, but I wouldn't go there!
Hi Wendy good post....goog luck with Countrywide they are the worst one we have dealt with on short sales.
WENDY,
Great post, as always! At least we can help our little corner of the world. You should go get your CDPE designation. That will make you perfect.
Sidney - Thank you so much! But I thought I was already perfect :) !!
Wendy, Countrywide is so inconsistent. They told us to send in another offer after they told us to only send in one offer as per their package.
Frank & Sharon - I think it boils down to the quality of the negotiator- but the system itself is broken. I just had a similar nightmare with Chase. They declined a primary offer, asked for the back-up, but then sent in the primary for approval. I have agents screaming at me. What a mess.
Frank & Sharon - I think it boils down to the quality of the negotiator- but the system itself is broken. I just had a similar nightmare with Chase. They declined a primary offer, asked for the back-up, but then sent in the primary for approval. I have agents screaming at me. What a mess.
FRANK, SHARON, WENDY,
We should remember that Countrywide (BofA) probably services more mortgages than any other lender. Their inconsistency is derived from the lack of ownership they have on the vast majority of Short Sales they are processing. The lender will always try to get a better deal and IF they know there is a back-up on the property they will use that as leverage to play one against the other, against you. The lender does not need to know the availability of other back up offers on the table. They are being asked to consider the contract in front of them. It may be a case where they are not happy with the offer but will take it, if it's the one they have to chose.
Become a CDPE Today
Good points, Sidney. They are the servicers, not owners of the loan we are working on with them.
Wendy, where did you find your cute stamp graphic? I am pouring through 'free' sites but it's hard to find one that's really good. Thanks, Sharon
Sidney - I find the major "servicers" want one contract. It is a mess when there is even one "back-up".
Frank and Sharon - You can steal the graphic if you want it! I subscribe to www.iclipart.com It's relatively inexpensive for a year subscription...
Wendy, I think I'm going to subscribe. I think Katerina does also. So you think it has enough pertinent graphics to be useful? :)
Frank & Sharon - Yeah, I think it's only around $29.... Definitely!
WENDY,
When they ask for another, it's probably because they're fishing. They don't like the price but at the same time they are hesitant to let it go, so they ask for more. It also seems to be an indication that the owner of the note is a relatively small investor. Again, everyone needs to keep in mind that the Seller holds more chips than they realize and any information given to the lender could cancel out that advantage. Never disclose more than you have to. Go about your negotiation as if you're talking to the buyer of the property and not the lender.
Become a CDPE Today
Sidney - That's a keen observation and an astute negotiating instinct.
Thank You! I just think everyone should have a different mindset when negotiating these sales. It seems most people don't want to figure out an advantage or at least try to understand the other party. In order to be successful in negotiatoins, I believe you need to know their thought process and needs. Sometimes you can caudle them and sometimes you can hold you ground, but the key is to know when. Ahhhhh.
Become a CDPE Today
Wendy - thanks, more stuff that I have no clue about - you are the best to learn from.
Sidney - Thank you for sharing!
Virginia - Glad to help, anytime.
Wendy- A truly fine post... I hope many more people find this gem.
What a great list - and so true! Our office is doing so many more short sales and REO properties this past year. Most of our sellers (not in any trouble) take their property off the market after competing with distressed properties for a few months. Bad time for the responsible homeowners to sell, but what a great time for first-time home buyers!
Chuck - Thank you!
Sara - Yes, we have many many showings, many buyers calls, but only a small percentage of lookers are buying. Hopefully that will change soon.
SARA,
Use the "time" and "condition" as marketing vehicles for the homes that are bein sold in the traditional sense. Let everyone know that you can do a quick closing, unlike a Short Sale. Let them also know that the home has been well maintained with little or no issue and throw in a Warranty. There is a large segment of buyers that would be willing to pay a little more for those advantages.
Become a CDPE Today
Schedule Your Class
"You can negotiate with the lender to not report the short sale as "settled" to the credit bureaus. False. Again, most large lenders have standard approvals and reporting guidelines they will not vary, even if you hire an attorney."
We have been able to accomplish this, and the attorney was a big part of it. The key is dealing with an attorney who understands RESPA, which is the Achilles heel for many lenders.