REALTOR RUMINATIONS

 One sign of the real estate times is that we are seeing more and more homes advertised as “Short Sales”.  A Short Sale occurs when a homeowner owes more on their property than the property is actually worth, and the bank agrees to accept less than what is owed as payment-in-full.  The bank takes this step in certain cases to avoid the very costly and time consuming process of foreclosing on the property.

Generally homeowners “qualify” for a Short Sale when they fall behind on payments, when they have a legitimate hardship (loss of job, huge medical bills, disability), and when they have little or no equity in the home.    The primary benefit to a homeowner who participates in a Short Sale is avoiding the devastating effects that a foreclosure has on their credit.  If their loan is VA guaranteed, the successful completion of the Short Sale protects their VA eligibility for future VA mortgage loans.  

It is very important in the Short Sale process that you identify and use a real estate agent who has experience and training in not only the mechanics of Short Sales but also in dealing with and negotiating with the “right people” in the bank hierarchy (the Lost Mitigation Department vice the Collections Department).   That agent must know what documents each bank requires for their Short Sale package and must know the different processes associated with different types of loans (FHA vs VA vs Conventional).  In addition the agent must be affiliated with a Title Company who has an experienced Short Sale Coordinator to ensure not only a smooth process but that required documents are prepared accurately and in the time frame needed by the bank.    Because of the training requirements, complexities and difficulties associated with this process most real estate agents shy away from short sales completely.  Unfortunately, that reticence can be devastating to a homeowner.  If the right questions are not initially asked then the possibility  of a short sale in not explored.  This usually leads to a foreclosure or an impossibly short window in which to sell a home prior to foreclosure. 

If you or anyone you know may be in a position that a Short Sale is a best worst solution please contact us immediately.  That also applies to those of you who do not live in Colorado.  We can do the bank negotiations and monitor the process regardless of what state the home is to be sold in.  The important thing is to talk before you list so that you understand all of the ramifications and options.