Short Sales Are A Great Tool If You Don’t Listen To Realtors
I hear horror story after horror story from homeowners about real estate agents giving them bad advice on loan modifications and short sales.
The main problem is that real estate agents are generally clueless about the modification and short sale process.
Although, they are usually too arrogant to admit it or ask for help from a specialist.
Real estate agents believe that because they have a buyer who qualifies to purchase the property it’s done deal. This is not true.
Real estate agents don’t understand that lenders handle short sales like modifications. The seller needs to show hardship and/or a good reason to justify the lender taking a hit to their wallet. The seller must also negotiate with the lender. The deal could take anywhere from 30 days to 90 days to complete.
Short Sales Are Not The Yellow Brick Road To Easy Financial Salvation
Dominick Sammarone with Schwarz Foreclosure Defense says homeowners need to remember:
Short sales are not sales for dwarfs. There are no munchkins dancing and singing, “We represent the lollipop, the lollipop bank, the lollipop bank” and then handing you an agreement. Short sales and modifications are not the yellow brick road for financial salvation.
Dominick Sammarone gave a list of the bullshit foreclosure defense experts hear real estate agents tell people on sites like Zillow, Trulia, and their own blogs:
Do a short sale instead of fighting a foreclosure or filing bankruptcy.
This bad advice because a real estate agent isn’t privy to the seller’s other financial data. Real estate agents also don’t know what is lurking in the lender’s file. The lender’s file could contain a treasure chest of illegal activity that could be used to force the lender into accepting a short sale.
Stop making mortgage payments so you can qualify for a short sale.
This is not true and never has been. You still need to prove hardship and justification about why the lender should accept a short payoff.
Don’t hire and pay an attorney to do a short sale.
Real estate agents make this claim all the time. They believe they are F. Lee Bailey or Johnny Cochran because took an 80-hour course to sell real estate. However, they don’t know squat about lending or foreclosure laws. This ignorance could create more problems for the seller later on. Especially, if the deal falls through.5
The Lender has to accept a short sale offer.
A lender does not have to accept a short sale offer, especially in this market with rising values. The lender could pursue you for a deficiency judgment if they decline your offer and pursue foreclosure. Unless you live in a non-recourse state like California.
You will receive CASH at your short sale closing.
You do not get cashback with short sales. Period. The lender will not allow it. If you try to do it under the table with the buyer or any other underhanded ways, the lender will pursue you for fraud!
The lender pays the Real Estate Agent’s sales commission.
I would love to see a real estate agent put this in writing. The lender has to approve the HUD statement. Lenders also approve all the fees being paid as part of the transaction usually 72 hours prior to closing. This includes sales commissions.
Sure, it’s ok to strip the house before you go.
I actually heard a real estate agent tell a seller this. She told the homeowner they could take key things from the house. When I say key things, I’m referring to the light fixtures, the granite countertops in the kitchen, bathroom vanities, and toilets.
Yes, toilets and I’m not talking about the high tech Japanese toilets that massage and warm your ass. I’m talking about a standard low tech American toilet.
Doing something like this is tricky because most people seeking a short sale are in default.
It is perfectly legal as long as it does not affect the value of the property and you are not in default on the loan. You also have to disclose to potential buyers that the items being removed are NOT part of the deal.