Let’s Make It Clear About Short Sales

Although we have covered many short sale myths in the past, the growing need for viable information combined with clear confusion surrounding short sales has made the need for a follow-up more important than ever. Here to help define fact from fiction in relation to short sales are the most common myths and the information you need to know to close the deal:

Myth #1- Delinquent amount determines the short sale.

Fact: While the lender understandably desires to minimize losses on any loan, the fact behind short sales is that the delinquent amount is not the sole – nor even the most important – factor used when determining price. Property condition, comparable sales, cost to hold the property, time on the market, original down payment(s) and even the performance of other properties within the same portfolio all play important roles in the lenders decisions on whether to accept or reject a short sale offer.

Myth #2 – Condominiums can’t close as short sale.

Fact: While condominiums always require specialized knowledge and insight from a reputable agent, it is entirely possible to close a short sale on a condominium; in fact, even if a condo association has taken title of a unit, many investors find it preferable to use a short sale contract when purchasing from the condo association rather than the bank. Often a condo association is able to close in less time and with fewer constraints due to greater flexibility in their own portfolio. On the other hand, expect to encounter or specialized considerations when working with condo associations as well as financing.

Myth #3 – Lender mediated programs are preferable to short sale.

Fact: Mortgage mediations have not lived up to the full potential nor do all homeowners desired to mediate an existing mortgage. Some homes simply cannot be saved and others simply do not want to save their homes. Job transfer, high maintenance costs, multiple homes and change of lifestyle such as retirement are just a few reasons some homeowner prefer to walk away. Still others simply want a fresh financial start after filing bankruptcy or facing shrinking 401k accounts and shrinking retirement savings; there is a new focus on frugal living rather. People would rather live in a more modest home that allows them to retire on time despite major drops in other investments. Short sales fill the gap where mediation programs falter.

Myth #4 – It takes too long to close a short sale deal.

Fact: While it can take months, the national average is 9.5 weeks; while this is up from the 4.5 week average just one year ago, it is certainly far from impossible to close a short sale deal in a decent period of time. Of course, this is just an average and includes the nightmare closures that drag on endlessly with those that close quickly because they have a proven process working on their behalf. Tune in to one our free shortsalesriches.com webinars to learn more about putting your short sale investment on automatic with a proven process designed to maximize profits and minimize workload.
More Short Sale Myths

Although we have covered many short sale myths in the past, the growing need for viable information combined with clear confusion surrounding short sales has made the need for a follow-up more important than ever. Here to help define fact from fiction in relation to short sales are the most common myths and the information you need to know to close the deal:

Myth #1- Delinquent amount determines the short sale.

Fact: While the lender understandably desires to minimize losses on any loan, the fact behind short sales is that the delinquent amount is not the sole – nor even the most important – factor used when determining price. Property condition, comparable sales, cost to hold the property, time on the market, original down payment(s) and even the performance of other properties within the same portfolio all play important roles in the lenders decisions on whether to accept or reject a short sale offer.

Myth #2 – Condominiums can’t close as short sales.

Fact: While condominiums always require specialized knowledge and insight from a reputable agent, it is entirely possible to close a short sale on a condominium; in fact, even if a condo association has taken title of a unit, many investors find it preferable to use a short sale contract when purchasing from the condo association rather than the bank. Often a condo association is able to close in less time and with fewer constraints due to greater flexibility in their own portfolio. On the other hand, expect to encounter or specialized considerations when working with condo associations as well as financing.

Myth #3 – Lender mediated programs are preferable to short sales.

Fact: Mortgage mediations have not lived up to the full potential nor do all homeowners desired to mediate an existing mortgage. Some homes simply cannot be saved and others simply do not want to save their homes. Job transfer, high maintenance costs, multiple homes and change of lifestyle such as retirement are just a few reasons some homeowner prefer to walk away. Still others simply want a fresh financial start after filing bankruptcy or facing shrinking 401k accounts and shrinking retirement savings; there is a new focus on frugal living rather. People would rather live in a more modest home that allows them to retire on time despite major drops in other investments. Short sales fill the gap where mediation programs falter.

Myth #4 – It takes too long to close a short sale deal.

Fact: While it can take months, the national average is 9.5 weeks; while this is up from the 4.5 week average just one year ago, it is certainly far from impossible to close a short sale deal in a decent period of time. Of course, this is just an average and includes the nightmare closures that drag on endlessly with those that close quickly because they have a proven process working on their behalf. Tune in to one our free shortsalesriches.com webinars to learn more about putting your short sale investment on automatic with a proven process designed to maximize profits and minimize workload.