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That’s one of the most common questions I’m asked by our clients.  So, we decided to crunch some numbers and see.

On average, we save people about $125,000 by assisting them with a short sale on their home.

And truthfully, that number is low.

For the thousands of people who simply mail their keys in to the bank and forgo the short sale option, it can cost them tens of thousands of dollars additional or more.

Here in Michigan, there is a 6 month redemption period.  Once the bank forecloses, that’s how long they must wait before they can sell your home.  What happens during that period?  The bank incurs costs they will add to your tab.

They have to maintain the home, pay taxes, association fees, etc.

During that time, the property will likely continue to devalue (especially in the current economic climate).

Then there are the legal fees and various other costs to the bank during the foreclosure process, which they are sure to add to the tab.

When everything is said and done, is it reasonable to think another $25,000, $50,000 or more can be added on?  You bet.

Don’t let that happen without a fight.

A short sale can reduce the damage to your credit and can keep the bank from pursuing you for the full amount owed.

Talk to your bank about your options.  Ask them for a short sale package.

If you don’t know where to start, call us, we do…
 

MSN today reports short sales are becoming very common but they take a long time.

That is our experience as well.

In the MSN article on short sales, they report

“Our numbers suggest that 20 percent of completed home sales nationwide are short sales,” said Guy Cecala, publisher of Inside Mortgage Finance. “The number would be larger if it weren’t for the fact that one-third of all attempted short sale deals don’t go through.”

…

In a typical home transaction the seller gets final say on which buyer gets the home, but in a short sale the lender weighs in on that decision, since it’s the lender who won’t recoup 100 percent of the seller’s mortgage balance as in a “normal” home transaction.

Many buyers who consider putting a bid in on a short sale abandon the deal mid-way through because it takes so long for a lender — unlike a regular individual home seller — to respond to it.

“If you put in an offer on a short sale, you’ll have to wait on a response for anywhere from four to six weeks,” Popik says. “Our study indicates the average wait is 4.5 weeks.”

This is very true. It can be weeks and weeks to hear anything. And unless you nag the lender and work them every day, nothing happens. Mortgage lenders are buried in too much work and they have a staff that is short of people. They cannot respond in loss mitigation soon enough to all the mortgage short sales that are being submitted to them.

The article continues with this:

Buying a short sale: Time-consuming process
Knowing that the typical short sale is time-consuming for this very reason, Kurtyan said that he and the developer he represents began petitioning the lender for price drops before marketing the homes at their current prices, rather than marketing reduced prices and crossing their fingers that the lender would approve them — a common tactic among short sellers. The process started in December, he says, but it took until March for the new prices to get approved due to the lenders involved.

Our firm is working on numerous short sales. We have the staff to work with the lenders and put on a lot of pressure. Just getting their attention is sometimes a notable accomplishment. We work with a large title company and we get all your ducks in a row — so that you can focus on what is important to you, like selling real estate or arranging loans or going about your day to day business.

Many real estate agents come to us and ask my firm to handle their short sale negotiations. They prefer to focus on selling their client’s property and they realize that negotiating a short sale takes many hours and specialized expertise.

I do suggest that you consider using someone like my firm, Short Sale Legal Services, if you are in the real estate business. You and my firm will be paid largely from the settlement costs at closing.  We do require a retainer up front, but the rest is paid contingent on our success. If we succeed, the buyer’s funds pay the real estate commission, customary closing costs and our fees. The bulk of the money, of course, goes to the first mortgage holder and the second mortgage holder if there is one.

I can’t tell you how many hours we spend on each transaction. If I had to do what you do, sell a house, and do this, I think I’d have to choose a different career, perhaps asylum inmate

The fact is that we specialize and I think, so should you.

Much of our work involves working with people like you, real estate agents, when your clients have two mortgages.

Two mortgages present special problems and challenges. 

Much of the time, the second mortgage holder is completely under water. They have zero equity. Even the first mortgage will not get back full payment.

Yet, the second mortgage controls the deal because unless they release their lien, the short sale cannot go through.

And even when both mortgages are serviced by the same company, the notes may be held by different noteholders. So the servicers must get permission to do the short sale from each noteholder. It is hard to get everyone’s attention, let alone get their permission too.

For that reason, when we negotiate a short sale with two mortgage companies, we always work to get the second mortgage to agree to a short sale and then work on the first. The second will release the lien and we also work to get both mortgages to release your client, the borrower, from future liability. That is not assured but I do my best.

We are often approached by borrowers who want to do a short sale and who have several lenders. Sometimes several properties that must be sold using a mortgage short sale.

One thing we always make sure of is that people understand that we can’t do magic. They may be legally liable for any deficiency.  We do our best to make sure that the lender releases them from liability but that is not a sure thing. On the other hand, people are often better off doing a short sale because they are helping the lender solve a problem. A foreclosure is usually worse for the lender and often for the borrower.