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SHORT SALES... The Good... The Bad... & THE REALLY UGLY... What the devil is a "Short Sale" anyway? Do you really want to get involved in one? A "Short Sale is a situation when a borrower gets behind or is in distress over the mortgage payment and the Lender(s) agree to take less than is owed to expedite a sale and settlement of the real estate. In an "Ideal" situation, a buyer comes in and makes an offer and all parties agree to the sales price... everyone takes their lumps and the subject property finds a new owner who is ready willing and able to pay for the property. Sounds like it should all work out ok... but the devil is in the details and the motivation of each of these parties. Let's look at the parties to a "Short Sale" one at a time... Remember all of these parties have to agree to the terms and conditions and price of the sale of the property. FIRST - There's the CURRENT PROPERTY OWNER who can be motivated by taking less of a hit to their credit score by entering into the short sale. A short sale will ding (damage) the owner's credit but is not as badly as a foreclosure. However, once the short sale is over... this party has to find another place to live and find that place with damaged credit. Oftentimes this party has nowhere else to go and may manipulate the lender to stay in the property by listing it higher than the market or making it impossible to view by potential buyers. Remember, after the former homeowner vacates, that person has to find lodging and pay a monthly rent. Oftentimes bitter home losers stay as long as possible and continue to tell the lender(s) that they are co-operating with the listing agent and any and all parties who want to view the home as a potential purchase. Next there is the PRIMARY LEIN HOLDER (first mortgage position) who is motivated by not having to go through the foreclosure process (which costs at least $50K) and have the asset on their books as a "NON PREFORMING" ASSET. The banks are in the postion of loosing $$$... and they are not happy. All of the "little banker folks" that make the decision of coming to terms on the price of the short sale are really motivated by one thing. KEEPING THEIR JOBS. Motivating these folks to make ANY decision is challenging. Finally there is the SECOND MORTGAGE HOLDER - this party is not motivated at all because they know that they will get $0. or next to $0. This is the party that is most unhappy and oftentimes has nothing to loose by "not signing off" or sabotaging the negotiations. And behind both the primary lein holder and the secondary lein (mortgage) holder are the "little banker folks". These guys are employees of the lenders who are primairly trying to keep their jobs and are trying to "hang on" to them through negotiations that divest their employers of a "non proforming asset" (the home in the middle of the short sale). Keep in mind that every minute the banks keep the homes they are loosing money and if and when they settle on a "short sale" price they will take a loss. In other words they are in a "loose/loose" situation. So is the Short Sale Mostly Good?... Mostly Bad?... or MOSTLY UGLY?... What do you think? At this writing I am waiting to hear back from a Bank (and current property owner)on a Short Sale offer to purchase. This offer to purchase was written about 3 weeks ago. There still is no word from the other side. What's holding up the counter offer or acceptance? I am told that the Bank is worried about the Seller (current property owner) changing her mind on the price. Who knows?... We just know we're waiting... and waiting... and waiting... for any kind of reply. If you want to avoid frustration... AVOID SHORT SALES... Stay well and prosper... m
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