Pinetop White Mountain Blog

GOOD AFTERNOON EVERYONE!

I am sure there isn't anyone out there reading this today who hasn't heard the term "Short Sale".  But how many of you really know what that means? I know I didn't until I attended a seminar yesterday about "Short Sales". One of the reasons I attended this seminar yesterday was if nothing else to gain some insight into what exactly a Short Sale is and if it is a good answer for homeowners who are in trouble on their mortgage payments. 

The long & short of it is, a short sale may be an alternative for some people, but they are not a one size fits all solution.  They may be a possibility for some people but there are consequences for anyone and you should know what they are before you decide to try and sell your home as a Short Sale. 

According to the Arizona Department of Real Estate a "Short Sale" is defined as follows:

"The term "short sale" is used to describe a sale in a situation where there is more debt owing against a property than the property's value. In a loan default situation, (pre-foreclosure) the creditor(s) may be willing to agree to allow the property to be sold for less that the loan amount and/or accept less than (or "short") the amount owed as payment in full.  The Owner acknowledges that there may be disadvantages to a short  sale. "             (copied from the AZDRE Short Sale Addendum)

Sound great, right? WRONG!!! From what I learned yesterday before a lender will even consider a short sale on a property you as the seller must prove hardship.  I.E. Job Loss, Illness, Death of a Breadwinner, etc.  You cannot go to your lender as tell them that you just can't afford the terms of the loan anymore so you are going to quit paying the payments and you want to sell it for less than is owed.  If isn't going to happen. 

Further, what you don't hear about is that there are some pretty dire consequences to a short sale.  It is highly unlikely that the difference between what you owed against the property and the amount you sell it for is going to be forgiven.  You will still owe that difference in one form or another.  It could be in the form of a payment plan to pay off the amount you owe, it could be in the form of a garnishment, or a judgement, there are just too many options to even list.  There are also time limits on how long the house can be on the market at a short sale and if it doesn't sell in that time you could still face foreclosure on the property.  

Another thing I learned is that you can't just call up your friendly neighborhood REALTOR® (me) and ask them to list your property.  You will need to contact your lender and ask for a Short Sale Package and complete the paperwork and submit it to them before you list the property.  Your lender may have specific companies with whom they are contracted to market the properties.  Companies who may be willing to accept reduced commissions or make other concessions to the lender to work those short sales.  

The point of all this is, there are no easy outs if you are facing back payments, collections calls, and possible foreclosure.  As a homeowner it is your responsibility to investigate possible alternatives for you and you must get that information from your lender.  You should contact an Attorney and your Accountant for advice on the consequences of either a short sale or foreclosure.  As REALTORS® we cannot advise you.  What you do need to do if you are talking to a REALTOR® about listing your property is be honest with them about your circumstances.  Don't think by hiding the facts from them that the truth won't come out.  It will, and when it does you could have placed yourself and your  REALTOR® in a very difficult spot.  Even if you get an offer on the property your lender may not accept the offer.  They may have a specific number in mind for the sale of your property and it may include other costs associated with your loan that you don't know about.  Just paying off the mortgage may not be enough.  

Just be sure if you are facing a difficult situation that you try your best to work things out through your lender.  You may have to keep calling and calling to get to someone who can help you.  Right now all the lenders are buried under piles of files just like yours.  It will take a lot of diligence on your part to get past the first level of paperwork shufflers at the lending institution to get to someone who can really help you. 

I truly hope no one reading this today is in this situation.  But if you are, I wish you tons of luck and hope you can get it resolved to everyone's satisfaction.

SANDRA & BRUCE PAULOW, REALTORS®