SHORT SALES: Who benefits?

Published On: September 12, 2011

If you are in a bind, you need to sell your home BUT it is worth less than you?  You call your lender, after numerous departments, you finally get through to the Short Sale department.  This is what you find out:

1.  You must qualify for the short sale.

2.  You have to have no way to make up the difference for the deficiency.

3.  You have to provide all kinds of personal documentation to prove you cannot: to keep the house, or pay for the deficiency.

4.  The short sale department will not approve the short sale until you get a contract.

5.  It takes 3-8 months for them to "approve" the short sale.

You put the house on the market, you find out that the buyers are slim to none because most buyers do not want to wait 3-8 months to find out whether they are going to get the house.

I closed on a short sale.  It took 3 months to even find out if we had it.  They back did their form of appraisal after the seller had agreed on a price, then just before closing renegotiated the price.

Short Sales are really FIP's (foreclosures in progress).  Most buyers avoid them like the plaque, if you wait until they go into foreclosure they are easier to deal with. 

At the end of the day, you credit is shot, you may find yourself unable to buy another house for 4 years or so, and the lender MAY be able to come after the deficiency at a later date. 

It is very important to consult an attorney, bankruptcy or some other legal action may be to your advantage.