THE SPECTACULAR SHORT-SALES? THINK AGAIN!

Published on 07/04/07
By Eric D. Brown, MBA - General Manager / Designated Broker - Coldwell Banker DCP & Associates

THE SPECTACULAR SHORT-SALES? THINK AGAIN!
by Eric D. Brown, MBA

March 27, 2007 - Daly City, Ca. - Spectacular Short-Sales? Think again! As a manager for a large real estate firm I hear the daily buzz about short-sales. Short-sales seem to be the de jour flavor for this year in the real estate industry!

Many home owners that are facing financial distress and the threat of foreclosure are being romanced by those pied-piper agents that are playing the song of the magical short-sale!

Short-sales can be a useful tool and can help a distressed homeowner out of a bad situation, but only if a few conditions are met. First, it is important to remember that the lender will only agree to the short sale if it makes sense for them to do so, and most especially only on their terms!

Next, the lender will only work with you on a short-sale if they feel that you will inevitably end up in foreclosure, a condition that they don't like.

Furthermore don't expect that the short-sale will magically cause your debt to disappear like a bankruptcy would, there can be additional ramifications including the lender trying to get the amount that they discounted back from you through legal measures and liens.

So, what exactly is a short-sale? Concisely a short-sale is when you, the borrower of a home loan, ask the lender to reduce the loan amount so that you can sell your home in this tough, slow real estate market.

More simply it would be like you lending your friend $20. Later, when your friend is supposed to pay you back your friend says that they can only pay you back just $15. Obviously, you are going to take the $15 bucks, but only reluctantly, because that person is your friend. Remember, a lender isn't your friend and they are only going to take a reduced amount if, and only if you can demonstrate that it is the best you can do!

If you want to learn more about short-sales, and if you possibly qualify, I recommend that you seek out and interview several local REALTORSÂ® who specialize in short-sales.

Don't be afraid to ask those REALTORSÂ® tough questions, qualify and interview them! You must find out if they have ever successfully helped other clients with short-sales, ask for references and please remember, you don't have to go with the first REALTORÂ® you interview.

Additionally you should call your lender and talk to them about their policy on short-sales. Find out answers, for example: what is their usual discount offered; what is the most they will discount; will they try to go after the balance later; do they require the property to be listed with a REALTORÂ®; does the property have to be in a ratified contract (a qualified buyer has already made an offer that you are willing to accept). Asking these questions first will save you a lot of time when interviewing an agent to list and sell your home.

The short-sale step-by-step process is basically very simple. First, you are late on your mortgage payment or payments. Next, you try to sell your home before the lender forecloses on it. Your agent finds a pre-qualified, serious buyer for your home. The appraisal says your home is worth less than your total loan amount(s). You and your agent approach the lender and tell them how much the buyer is willing to pay and if they are willing to reduce the loan amount so that you can sell the home.

What happens to you? You will damage your credit rating because of the short-sale and you will not be able to easily get a loan in the near future. You will probably need to put a down a large deposit if you try to buy another house, a problem, because if you had a lot of cash, you would be making your payments and not selling your home as a short-sale. ----

Eric D. Brown, MBA is the General Manager & Designated Broker for Coldwell Banker DCP & Associates in Daly City, CA. He can be reached through his website: www.CondosOrHomes.com or by calling: (650) 444-9067.