back a few years, when the over-exuberance of the housing boom was being
partially fed by the first ingredients of the sub-prime debacle, it was
difficult to foresee in this present day, we would be ramping ourselves
up to speed on “short-sales.”
As many GreatWest GMAC Real Estate Professionals understand,
“short-sales” can be anything but short in the process of
negotiation with Banks, Mortgage Insurers, Sellers, Buyers, and ALL
entities prevalent and present in a hoped for sale.
“If” a mortgage lender has agreed to allow “short-sale” on a
property, and the home does become available to the market, it CAN BE an
advantage for all. T. Sami Siddiqui, Broker-Owner of Great West GMAC,
states, “Owners usually need to sell quickly, and though there will be
no profit to the Seller, there is hope of salvaging some of their credit
rating from such a transaction.”
The Buyer is hoping to get a steal. The Bank is hoping to avoid being
forced to foreclose, because the foreclosure process can be very
expensive for the bank to endure. Some estimates have put the figure at
approximately $40,000 per foreclosed property. However, the bank must
get fair price.
However, among the entities with interest in the property, from one
perspective or another, it often isn’t as easy to get a short sale
pushed through the lender (and others) as most folks would think – or
To provide an example - A GreatWest GMAC Real Estate
Professional recently spoke with a client, who came from another part of
the state, and had failed in the process of trying to acquire a
“short-sale” property there. The client had became understandably
overwhelmed and frustrated from trying to get his offer accepted to
facilitate the purchase, and had failed in the attempt. The process,
culminating in ultimate failure, had taken 12 weeks.
The Seller was glad to have the Buyer’s offer, because the Seller
needed to move across country - but owed more on the home than it was
now worth. However, the Seller continued to be current on mortgage
(continued on next column) -
The Buyer made a full price offer for the “short-sale”
The Seller immediately signed acceptance of the offer, without
countering. The Seller’s acceptance was subject to Bank approval; and
that is when the clock began ticking for the next 12 weeks, with
numerous roadblocks along the way.
The bank “sat” on the “seller accepted offer” for what seemed to
be an unusually long time before agreeing to the sale itself.
During this time, the property continued to remain on the market, and
other offers did come in. The Buyer, who by now had become emotionally
attached to the house, more than once found himself in re-negotiation
and experiencing increases of price for the property, while a small
bidding war ensued.
Once the Bank accepted, the acceptance was still subject to an
appraisal. The property was appraised $4,000 above the price of the
There can be this little dance that ensues with all the entities
involved in the “short-sale” property.
If the Seller is current on payments, the Bank isn’t too motivated to
act quickly to take a hit on the value of the existing mortgage balance.
This becomes more critical if there is Mortgage Insurance (PMI or MIP),
which insures the Bank against default of the mortgage by the Seller.
However, if the Seller becomes delinquent in payments, the Bank may be
more interested in negotiating actively in the short-sale process,
because they likely hope to dodge the bullet of foreclosure.
However, if there is PMI or MIP on the property, this may lengthen
negotiating the “short-sale” among the interested parties, and the
PMI or MIP Company, will often become a participant in negotiations.
Once ALL parties are engaged in negotiation, each party is hoping to
come to an equitable solution, where they aren’t required to eat more
of the decline in value of the property, than need be, in order to
facilitate a successful transaction on the property.
(continued on next column) -
advantages and distinct pitfalls in negotiating short-sales. GreatWest
GMAC Real Estate Professionals are trained and experienced in this
process. If you have further questions not addressed in this article,
please allow us to assist you with your interest in this topic.
If you are a Homeowner, considering marketing your home through the
“short-sale” process, please contact us. Also there are income tax
consequences with “short sales” and Sellers are encouraged to
consult their accountant about the ramifications of the “short-sale”
you are currently considering selling or marketing a home, please feel
free to call or contact me. I can provide a free, no-obligation
Comparative Market Analysis of your property. . .Or if you are thinking
of buying a home, I would be pleased to be given the opportunity to sit
and explore with you the
opportunities that await homebuyers at the
Service is always
Local Realtor since 1981
Sacramento - El Dorado
- Placer Counties