Stressed Out By Short Sales
By Anne L. Weintraub [1], Esquire
Anne Weintraub P.A. [2]
Unless you live under a rock, you or someone you know has been affected by the process known as a short sale. A short sale occurs when the seller will not receive enough funds from closing to pay their mortgages in full and pay all closing costs. The seller’s lender(s) agree to accept less than what the seller owes them so the seller and lender can avoid foreclosure. It looks like this: seller is upside down-their home is worth a lot less than their outstanding mortgage balance-so they list the property for sale. A willing and able buyer makes an offer and the seller accepts. The listing agent lists the property as “pending” in the multiple listing service as required under Mid Florida Regional rules. Then, the seller submits the offer to all of their lenders with an entire package showing their income, monthly expenses and obligations, the listing agreement, contract, written authorization to speak with third parties, i.e. realtors and attorneys, comparable values, verification of the buyer’s financial ability to close, and any other documents the lender requires for review. The lender receives the package, conducts a valuation of the property, appoints a representative to your case and either approves the short sale with conditions, such as repayment of the difference owed between the net proceeds to the lender after the short sale and the loan amount, or the lender lets the seller off the hook. The seller may or may not be able to avoid taxes for the amounts the lender forgives.
It all seems so easy-but is it?
Unfortunately, short sales have become a nightmarish process for the parties involved-the seller, buyer, attorneys, realtors, and short sale negotiation companies. Every lender has its own process on how to deal with short sales and it can take between weeks and months-sometimes up to a year-to complete the process from beginning to end. Most lenders will not disclose how much an offer must be to satisfy their in-house requirements, which leads to a cloak-and-dagger process leaving sellers frustrated and buyers running away from deals.
Before you embark on a short sale, no matter what your role is in the process, it is a good idea to refer the seller to a real estate attorney who can properly advise them about the process and refer them to other professionals who can advise them about tax and other consequences that can occur after a short sale has been accepted. There are also other great resources available, such as Legal Aid of Manasota, an agency who offers free legal assistance to those who cannot afford attorneys. You can reach Legal Aid of Manasota by calling 941-366-0038. Alternatively, for everyone involved, it is a great idea to visit www.scgov.net/homehelp [3] where you will find valuable information on local programs that are available, including a discussion about foreclosure, short sales, and other types of work-out arrangements, plus valuable phone numbers for non-profit agencies willing to help.
If you are the person talking to the lender and sending correspondence to get the short sale approved, you should keep a timeline of who you spoke with at the lender’s office, their full name, the date, and what you discussed. By keeping track of conversations, you will save time when a new lender representative answers your call. It is also a great idea to follow up and make sure the lender has received the correspondence you have sent and is conducting the valuation of the property to bring the short sale to a conclusion.
There is no doubt- short sales are not easy. Until lenders streamline the process and communicate with third parties, we have to do the best we can with the resources we have to accomplish the short sale and close the transaction.
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Anne L. Weintraub [1] is the driving force behind Anne Weintraub, P.A. [2] practicing in Residential Real Estate Closing, Issuance of Title Insurance & Title Services, Refinancing, Contracts & Deeds and Short Sales & Alternatives. Her practice covers Sarasota, Bradenton, Lakewood Ranch, University Parkway, Casey Key, Siesta Key, Bird Key, Longboat Key, Lido Key and Downtown Sarasota.
Anne Weintraub, P.A. is located at 1800 Second Avenue, Suite 882, in Sarasota. You may reach Anne via email at aweintraub@anneweintraub.com [5] or via phone at (941) 685-4300.
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