'Karen Bloggin on the Walls!

Let me repeat as this drives me batty, nutty crazy when I get the infamous call...is this home approved for short sale? That is a general question that I run frankly scared from when I am told that a home is already short sale approved. Assuming that the seller submitted a hardship package is no indication by any means we are on the way to an ok to a short sale? So not so fast. Oftentimes a banks' loss mitigation or short sale department may indicate that they  need a purchase agreement submitted in order to give a verdict after meeting with the infamous committee who has to decide what to do with your short sale offer.  At this time (better late than later) will you be requested to send a hardship package. In other words don't call us, we'll call up after the review and upon that time shall it be determined if your hardship meets their criteria.

 You must be qualified for a short sale and reasons  that you find yourself unfortunately in do not meet hardship for a majority of banks.  Say, because your home is upside down, and the across th street a few homes are selling for $100,000 less than your purchase price three years ago or you need more space for your 3rd child, in laws etc. and homes in your area are vacant and pose a safety issue,,well unfortunately are not a hardship qualifying factor.  Question is how solvent are you, which will be investigated to determine this?  But walking away folks,,,,that is NOT a good option by no means, especially if you think down the road, just when you're sipping that tall glass of lemonade without a care in the world, you get that certified letter in the mail indicating that you have an unforgiven foreclosure debt that you thought was behind you.   Not worth it! Between Loan Mods, rentals, short sales, deed in lieu.. really give it thought, talk to an attorney, or a learned professional.  And I happen to not be one that believes that you don't have to file bankruptcy against a home when it can be sold with the bank's ok because it can still be sold?

However, stating a home is approved short sale sounds easy and breezy. Why it seems simple enough and it appeases the buyer and perhaps the agent ...but not me! I have learned that red tape and missing docs and the folks behind those desks have more than my deal on their table, may take awhile. HAFA is proving to shore things up and preapprove sellers for short sale.  We all need to push this forward to prevent so many foreclosure and REO listings which has a more detrimental effect in the value of your home.

Again all Banks do not handle short sales the same way.  Some will not even consider a short sale unless you basically wreck your credit by being the infamous 2-3 months late on payments...what brainiacs think that by not paying them for a few months to be considered for a short sale..now that was a bright idea, I still  don't get the logic. If I know I have $600.00 left to my name and my note is $300 hypothetically speaking and I know I can eek out two payments to give to the bank to not ruin my credit OR behind door number two pay a Medical bill to keep up my insurance and worry about the consequences later, because I have a better shot at a short sale, by missing the payments, how is that reasonable? Well, guess what doors some cash strapped homeowners are deciding on. Some people actually have a moral compass and don't want to ruin their credit, and at all costs skimp on everything when they see trouble coming and they want to avoid it head on by calling their lender and explaining their plight and you know what? You would think that is feasible and the correct way to handle your future.

But in most cases, what clients hear instead is the canned in response that,,,you are not behind in your payments Mr or Mrs or Ms homeowner (which translates) you are SOL and until you are behind,,,call us back and we will determine if you are eligible for a hardship at that time. Brilliant eh?  Most ridiculous crap I have ever heard of. And after this we can consider  a loan mod or a short sale now that you just ruined the very credit that helped you qualify for a loan you can't kind of afford any longer because your income changed, laid off or for whatever reason, taxes etc. you are basically screwed,  sorry but that is how I feel for the people because I hear the sad stories and it angers me.

What not to do?

First mistakenly think you can call up a Realtor and say you want to  sell your home on a short sale, just because you think everyone is doing so.  Every institution has different criteria such as hardship packages.  Some may say "my you're on time each month,, can't help you!, or bring us an Purchase agreement and we will let you know. (at that time is when you supply the short sale package which could be possibly denied, negotiated as your bank will have a BPO performed which is subjective on how great that BPO provider is which is actually supposed to by Michigan Law performed by a bonafide broker,,,which most are not!  (sorry my fellow realtors for citing the Michigan licensing law to perform BPOS (broker price opinion, but it is true, unless they change it to APO just how it is). Another thing to consider please,,, the worst thing said to Buyers is..it's a short sale they'll take anything...SO far from the truth. NOT TRUE, if a bank thinks your offer is no benefit to them even though the contract is between you and the seller (very important to repeat, it's between Buyer and Seller) the bank and the seller has the final say.  The Seller in turn negotiates the terms of perhaps a repayment in some cases or discharge etc.  The Buyer's offer can be countered by the Seller and in turn by the Bank and keep in mind if the Seller is not content with your lowball offer as it may cost them money they don't have to settle, so don't be surprised. The plus side you can get a really great home as opposed to what's out there. I cannot believe how many times I have rattled an agent by saying by Seller won't accept that price just because they aren't getting anything.  Maybe it's because the bank has already told them under a certain price they have to bring X amount of dollars either to a JR lein holder or perhaps installment payments they still can't afford or want to pay to take that low offer you think will be wonderful as they will take anything of course!

However banks will request one or more BPO's to determine price. Appraisers are pretty much almost phased out in this arena perhaps they cost more so why not eliminate their professional opinion....perhaps cost too effective. Yet some corrupt ones get us in this trouble in the first place over inflating prices? Well , how it goes.  Also some banks may approve a short sale and the buyer/s walk after months of a slow process (you would think the banks may need to hire up the kazooty at this point to expedite the need for homes to NOT go to foreclosure status or to a sheriff sale while waiting and save money and perhaps a buyer but ,,,yawn) the reality is the buyer may walk away. Sure you can get a new buyer but some banks some actually  need to start the process all over again.

In no way am I saying a short sale is not worth it.  Pack a lunch and be ready for a short or long fishing trip, depending on what's biting.  A good home is worth the wait.  The banks are catching on,,,keep screaming to your state reps.  I am telling you HAFA must be sped up and SOON!  Pre-approvals for short sales should be done before a home hits the market ...not afterwards!!   So when I hear if a home is short sale approved already,,,that's a loaded question. A short sale is approved if price and terms are acceptable to the seller, the bank and both combined.  Also, only one offer (contract) is submitted to the bank, not several offers, a short sale IS NOT A FORECLOSURE. A bank accepts a foreclosure multiple bid situation, however a SELLER (the owner) in a short sale signs and commits to ONE OFFER PERIOD!! If there are multiple bids, just like any other sale they have a right to counter if they think it will not satisfy the bank or whatever they may have negotiated prior with their lender. Have that clause written in your contract if your agent or the seller's agent does not understand that, so you won't be placed in a situation whereas another offer that was higher was accepted after the fact because of someone's ignorance on how to proceed on a short sale! It will save you anguish and grief!

Again, If the answer is too easy, ...well to say the least, (well let's put your home on the market for a short sale, or just put in any offer, the seller isn't getting a dime etc.) don't know about you, but to say the least I had better hire a short sale specialist!

Take care, and if you care to comment on your stories of short sale bliss, or horror experiences (I have heard more than I care to) and if you have any questions,,,try me, if I can't I will find out for you!  Don't forget to read my resources page!! Much anticipated TAX TIPS to arm you with!  By the way if a short sale if in your neighborhood, see how it's handled.....that same home if handled improperly will come back to haunt you in a foreclosure listing which will bring down the cost of homes in your area due to someone dropping the ball.  Public knowledge is priceless! And I do plan to share these stories with congress to speed up the short sale process. Wonderful part,,,banks are FINALLY getting it!