Pinetop White Mountain Blog

Good Morning Everyone,

My topic today is Short Sales and why they are so difficult and more often fail than succeed. 

Let's start by defining what a Short Sale is.  A Short Sale is an attempt by a Property Owner/Borrower to sell a property for less than the existing loan balance.  Right up front the Property Owner is asking the Bank to take a loss on the loan.  The Bank does not want to take a loss so the inevitable first reaction from that Bank is going to be a resounding NO!  After all, the Bank made that loan in Good Faith with every intention of being repaid for the Loan.  If the loan isn't repaid they will simply take the property instead.  The Bank does not care about the Borrower or the Borrower's circumstances, they just want their money!

Can you see where I am going with this?  The reality is that the Bank wants to be repaid for that loan.  It is entirely possible that it may not be in that Bank's best interest to allow the Short Sale on the property.  They may be able to make more money on the property by taking it back through foreclosure and reselling it to another owner.  Therefore the Bank is not going to make the process easy!   Does that mean the Short Sale idea won't work, no it doesn't, but it does mean that the Property Owner needs to find out whether the "Short Sale" idea is even feasible for them. 

So what is that Owner to do?  First they need to consult with Professional Advisors.  They need to consult with an Attorney, a Tax Professional, & a REALTOR®, to find out what the legal and financial ramifications might be if the Short Sale is successful.  In many cases, the unique circumstances for that Owner are such that the chances of a Short Sale being successful are pretty slim.  It is not just the fact that the Owner is asking a Bank(s) to take a loss, there may be other reasons why that attempt may not work.  A lot depends on the true circumstances of that Property Owner and what kind of loan or loans are against the property.

Short Sales can be a good option for some property owners.  Other's however have little chance of success because of the individual circumstances of the Property Owner.  It would be impossible in a venue such as a blog to define all the good and bad aspects of a Short Sale.  The main point of this post is to give you a bit of guidance on where to start if you find yourself in a bad place and you need to get out from under your mortgage.  Short Sales can work but they are not always the best option for a borrower.  They are time consuming, frustrating, and difficult to make work for the simple reason that the Bank or Banks don't want them to work.  They want their money or the property, it is as simple as that. 

If you need some guidance on where to begin if you are thinking about this as an option, give me a call.  I will be happy to assist you in finding the people you need to talk to in order to determine if a Short Sale is a good option for you.  If we find that it is, I will be happy to help you with the marketing and guide you through the process. 

I hope this has given you a little food for thought if nothing else. Have a wonderful weekend.

SANDRA PAULOW, ASSOCIATE BROKER, GRI, SFR  (928) 242-0300

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