Short Sales

[ScottsdaleHomes]

Is anybody out ther having any luck with short sales on either the buy or sell side? These days I'm avoiding them like the plague. Every contract we write just sits around on a desk somewhere and nothing ever gets done. Eventually the home goes to foreclosure where my client picks it up after it has been relisted with another agent.

It would be great to get a discussion going on the subject.

[Karen]

I had a listing that turned into a short sale to get it sold. And I did get it sold and it was very gratifying as well as time consuming. My insights:

Seller's Side:
If you even think it's possible that your listing will become a short sale, have the seller contact the lender immediately and ask for the short sale application. Help them fill it out and mail/fax it back asap. That gets the process started. Also, get a letter from your seller giving you permission to talk to the lender directly. Then become the squeaky wheel.

If your seller has an underlying FHA loan, HUD is willing to pay your seller for their cooperation in the sale. I was able to ask for $1000. for my seller and after she paid some closing costs that HUD decided it wouldn't pay, she ended up with a check for about $600. There is a time frame that the house must close within, however. I think it was about 90 days from the short sale approval.

Buyer's Side:
From my experience, if the property has a first and second (or HELOC) and they are different lenders, move on to a different home. The seconds are refusing to take a discount to get the deal done and the firsts don't want to give them anythng anyway (it reduces what they get).

If your buyer needs closing costs assistance and the underlying loan is an FHA loan, move on. HUD will not pay any closing costs. No Ameridream programs either. (as a side note, when HUD gets the foreclosed property back and puts it up for sale, they'll pay up to 5% of buyer closing costs to complete the transaction - go figure!)

All in all, the lenders have been bombarded with pre-foreclosures and they're still trying to figure out what to do with them. But if your client can be patient and flexible, it's a way to get instant equity.