Short Sales

The carnage in the real estate market echoes that of the Great Depression, when millions of Americans lost their homes to foreclosure. Never before has there been an opportunity of this magnitude to make a great living while serving homeowners in distress—and there are millions of them. Therefore, “pre-foreclosure” strategies such as loan modifications, deeds-in-lieu of foreclosure and short sales have all taken a front seat for today’s real estate professional.

Lenders prefer short sales to foreclosures for two very important reasons.  The first and most obvious is because a foreclosure represents a greater loss to the lender.  Attorney’s fees, trustee fees, holding costs and maintenance outlays continue to add to mount as the lengthy process continues. Second, banks are in the money business and they can’t lend against an REO property because it’s a non-performing asset.

Even though a short sale is more beneficial for all parties involved, a number of issues typically crop up that either delay the closing or prevent it entirely. Some of the more frequent problems are:

Lender
Banks are under staffed and their employees are over worked and under trained to deal with the bombardment of loan modification and short sale files.  To add to this confusion, guidelines are changing daily to cope with local markets fluctuations and government subsidies.

Brokers and Agents
Although a number of real estate agents claim to be “Short Sale Specialists” the statistics tell us that very few have the ability to close a short sale transaction. Only about 12% of short sales are consummated and it’s no wonder.  Most Realtors haven’t been effectively trained to package a file according to lender guidelines, negotiate with the loss mitigation decision makers, or read settlement and deficiency language in the short sale addendum.  Furthermore, buyers and sellers often have unrealistic expectations with respect to the timing and the process of closing a short sale transaction.

3rd Parties to the Transaction
One of the most common misconceptions is that the first mortgage holder is the sole decision maker when it comes to approving a short sale.  In reality, 3rd parties frequent block short sales. Among these objectors are tax lien holders (property, income, estate and/or corporate franchise tax) and mechanic's lien holders. It is also possible for junior lien holders and PMI insurance companies to prevent a short sale. 

The Solution
Short sales are a complex and highly specialized type of real estate transaction that should only be handled by an experienced professional with the proper credentials and resources.  We can show you how to:

To learn more see Attorney Negotiated Short Sales