WHAT IS A SHORT SALE ( ...and Where Do I Begin? )

...First, we want you to realize that a Short Sale can be done with or without a Realtor. We like doing Short Sales both ways.

Briefly, a “short sale” is simply a negotiating process with the mortgage holder (bank) to accept less money, than what you owe on your loan, as payment in full.

A short sale is an agreement with the bank when there is a distressed homeowner who usually owes the bank more money than what the property is worth.

Here is how it looks: The homeowners owe $200,000 to their first mortgage holder and monthly payments are in arrears. Their property is only worth $180,000 in retail condition. With the proper negotiating strategies, we get the bank to accept $130,000 to 160,000 as payment in full. Purchasing the property at a discount allows us to fix up the property if needed, and then resell it for a profit.

With proper negotiations, we take deals that most buyers would pass on and turn them into profitable deals. Most of our happiest homeowners have come from deals that had no equity.

There is much controversy surrounding short sales. The key to a successful short sale is to build a great case for the bank, which helps them, and also by taking the time to build great relationships within the banking industry. Building these relationships really helps insure our success helping distressed homeowners. This happens because the banks we work with know we care about helping them get your short sale approved.

Do not let anyone discourage you from working with us and trying this process. Work with us and we will provide the solution for your situation. Ultimately, that is what you want, isn’t it?

YOU MIGHT ASK…WHY DOES THE BANK ACCEPT A SHORT SALE?

There are many reasons why banks accept short sales. The main reason is because the payments are late and you, the homeowners, can prove that you can no longer afford the property.

The property does not have to be in foreclosure for the bank to accept a short sale. Some banks require the foreclosure notice to be served, while others will accept a short sale when just a few payments are late.

There is no specific number of payments that must be delinquent. Sometimes one payment is enough to get it done. Often homeowners will call us when they are not yet in default, but cannot make any more payments. In this case, we contact the bank, let them know that the homeowners will not be making any more payments, and open negotiations for a short sale before the payments are even late.

Let us look at a few more reason why banks short sale:

• The mortgage is in arrears or foreclosure.
• The property might be in poor condition.
• The homeowners have serious hardships and cannot make the payments anymore.
• New homes in the area are being chosen over existing homes.
• The housing area or neighborhood has depreciated.
• The bank’s shareholders are concerned when there are too many defaulted loans on the books. Banks have reports due at the end of each quarter. (They are more inclined to accept short sales at the end of a quarter to “clean up their books.” The absolute best time to get short sales accepted quickly is the last quarter of the year. We have called banks on December 10th and been told the short sale would be accepted if we would close by the end of the month! Banks short sale all year, they just short sale faster in the last quarter.)
• Some banks are required to prove a loss each month… let us help them out.
• Some banks are required to keep a cash reserve of up to six times the retail value for each REO.  REO means real estate owned. Once a property is taken by the Bank at the foreclosure sale it is considered an REO. Any REO is a liability for the Bank, not an asset. Too many liabilities will cause any business to go under if not dealt with quickly. It breaks down like this: The bank has a $200,000 property and is required to keep six times that amount as a cash reserve. This means the bank is sitting on $1,200,000 in non lendable money. Imagine if the bank has 2,000 foreclosures across the nation! The homeowners could drag the foreclosure on for two years utilizing the bankruptcy system. Would it be better for the bank to sit on $1,200,000 for two years or accept a short sale today? The answer is obvious. The short sale is a relief.

More reasons:

• The area is riddled with foreclosures proving a decline in the area.
• Many homeowners do not realize that banks wholesale money. Banks borrow money from larger banks and lend it to you. These banks must show reports in order to borrow this money. (Think of it like a credit report: Every defaulted loan is like a black mark on the credit report. The more foreclosures a bank is carrying, the riskier it appears. If you were a larger bank lending to a smaller bank, would you lend your money to the bank with more or less defaulted loans? Exactly … less! The bank needs to borrow this money as inexpensively as possible so that it can make money lending it to you.)

As you can see, a short sale is often a welcome answer to a big problem. If the bank takes the short sale it can write the loss off and clean up the books before any reports are due.

AS A HOMEOWNER, WHERE DO YOU BEGIN A SHORT SALE?

It is important to realize that when submitting a short sale package, we are building a thorough and understandable case - the better the case, the deeper our discount, which really helps you. Think of it as an attorney preparing for a court hearing. If the attorney shows up unprepared, the case will be lost.

As an example, do you remember the OJ Simpson trial? Did you think he was guilty? If you think he is guilty, why do you think he walked away without going to jail? Simple: his attorney presented a better case than the prosecution. Short sales are the same concept, the better we build your case, the faster the bank can accept your short sale.

Having done many short sales, we know exactly what the banks are looking for.

Before we submit your short sale package, let us look at an overview of what we are about to do for you:

We are going to submit a total of three offers. Each offer will have a different focus and will be higher than the previous. This is because the Loss Mitigator for the bank desperately needs to accept our offer, but also tries to get the best price that he/she can for the bank. This is our proven method:

• The first offer will focus on your distress, the distress of the property, and the overall hardship of the situation. This will be our initial offer and our lowest.
• The second offer will focus on the distress of the neighborhood, other houses for sale, job losses, natural disasters, or whatever is happening in the area. In this offer, we will raise our initial offer to get closer to the number the bank countered at.
• The third offer is our highest and final offer. In this offer we will focus on the financial loss to the bank by denying our short sale. We will break down, step-by-step, how much the bank will actually lose, how long this will take, and we will send a copy to the loss mitigation supervisor. (We are very successful using these three steps.)

Realize the Short Sale process is a very complex. You cannot short sale your own home. If you could everyone would. With this process, you need expert help and that is why we are here. If you choose this option, call me ASAP so we could get you on the road to financial recovery. Let us show you how we can short sale your mortgage, negotiate with the bank, sell and/or buy your home quickly - It’s a perfect solution…everyone wins!

More Questions? We offer FREE advice - call us at (801) 592-9940.