Florida Homes and Condos for Sale

Your neighborhood is losing its owners through short sales and you hear stories of your neighbors that had big mortgages but are selling their homes for ridiculously low amounts (so you think) and apparently not having to pay the bank the “deficiency” of the amount still owed on the mortgage.  Often this scenario has the twist that most of the neighborhood had refinanced during the hey-day of the middle of the first decade of this century (that is like 2005 for those that need straight facts…).

HOW DO I "LOOK" TO THE LENDER?

Now you look at it from your personal perspective – you have a job, the same one for the past 10 years.  Your salary or business income is stable or even better than the previous years.  You too refinanced when the house appraised for so much that you felt wealthy – but now you have a house apparently salable for half the amount of the remaining amount you owe the lender.  You see you can buy a lot more house for the same payment you are making now, which you have no problem affording.

So you go to your friend the real estate agent and put the house up for sale and in a month of showings a buyer makes what your real estate broker says is a great offer.  Of course it is about half of your mortgage and since you can’t pay off the shortage on the mortgage at the closing, you know this is a short sale.  [Hopefully the agent advised the buyer agent to use a short sale addendum to the contract].

DO I HAVE FINANCIAL INDIGESTION?

Your agent or your attorney work to put together your short sale package of financial statements, income proofs and your definition of a hardship (You hate your neighborhood?  You need a larger house for less money? The existing house value and mortgage amount make no economic sense? You want to retire?  The thought of all this gives you “financial indigestion”).  The thought of stopping payments on the mortgage is abhorrent to you so you keep the mortgage current.  See my articles on STOP PAYING YOUR MORTGAGE? – FANNIE MAE SAYS YES!; and I HAVE TO STOP PAYING MY MORTGAGE TO GET THE LENDER TO TALK TO ME?

MY LENDER SAID WHAT?

 A month later (or 3 months later – sometimes the process is like molasses on a cold day) the bank says the approval for the short sale contract is denied.  The seller yells at its broker or attorney (or both) and essentially says that all their neighbors have gotten short sales and they are entitled to get one too – and they are not going to pay the bank a single dime more than the sale of the house!  (That one is a direct quote from a recent meeting in my office.  The seller was a recent widow, has mid six figures in the bank and is not on the first mortgage note, but is on the second mortgage note.  The second lender says no to the short sale without waiver of any deficiency, although it provides options on how that full deficiency can be paid over time.  The widow has not worked in years, but is easily employable to supplement her investment income).  Realization is required that everyone's "veneer" may seem the same, but underneath and behind closed doors, no neighbor is the same as the next - they all have their not so little secrets. (It reminds me of a story of a person that goes to a sage to get advice on how horrible life was for that person and how could a trade with another person occur.  The sage brings all the towns people together and tells each to put their troubles into a sack and deposit it in the town square.  The distressed person opens each sack to see what lesser troubles are available for trade - horrified to find that each sack contains trouble far worse than they already have.)

PREDICTIONS FOR SHORT SALE SUCCESS

Short sale approvals are indeed unpredictable. (see  my 2007 article Some Sellers Think They Are ENTITLED To A SHORT SALE). The results when they are approved by the lender can be from a full forgiveness of the remaining unpaid debt (a deficiency waiver), to a mere deferment of the balance due for payment on a determined (or “to be determined”) schedule.  See my previous articles regarding the vagaries of short sale approval results at TOO MUCH MONEY IN THE BANK TO DO A SHORT SALE? - ECONOMIC LOGIC; and SHORT SALE DEFICIENCY DEMANDS AND DEFENSES - The Interstate Highway Analogy; and QUOTE OF THE DAY - 29 YEAR OLDS DRIVING MASERATIS GET BAILED OUT.

THE TRUTH AND ONLY THE TRUTH

This situation seldom happens in my office because we tell potential clients the real facts – that they don’t appear to be qualified for a short sale – if that is the case.  But in keeping with the truthfulness as stated in the Interstate Highway Analogy article (referenced above), we also tell prospective clients that results from lenders are more often unpredictable than predictable, and we can cite examples of short sale approvals for borrowers with adequate (sometimes wealthy adequate) savings, investments and/or income where deficiencies were capped with generous payment options or even waived altogether!  Often those seemingly “unqualified” short sellers decide to take the chance on a short sale and if they don’t like the result of the bank’s decision, they just stay in the house and keep paying the mortgage.

WORKING FOR FREE?

The real estate broker is the one that must be careful in those situations – no sale means no commission.  Just getting a listing is in a short sale scenario the easy part.  Being sure the odds are with a successful short sale requires proper “vetting” (qualifying) of the potential listing which means a review of the seller’s financial situation BEFORE the listing is accepted by the listing agent.

LOCATION LOCATION LOCATION = EDUCATION EDUCATION EDUCATION

Education of the potential short sale seller is the KEY job of the selling broker and the seller’s attorney (hopefully they have a knowledgeable one).  Disappointment or outrage is usually caused by ignorance of the process or most often unrealistic expectations.  We advise our clients of the worse case scenarios and focus on those.  Better results mean better client satisfaction means more referrals.  A real estate brokerage should be doing the same thing and should see the same result from that business practice.  Short sales take education, experience, planning and time and a competent team working together.

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Copyright 2012 by Richard P. Zaretsky, Esq.

Be sure to contact your own attorney for your state laws, and always consult your own attorney on any legal decision you need to make. This article is for information purposes and is not specific advice to any one reader. Richard Zaretsky, Esq., RICHARD P. ZARETSKY P.A. ATTORNEYS AT LAW, 1655 PALM BEACH LAKES BLVD, SUITE 900, WEST PALM BEACH, FLORIDA 33401, PHONE 561 689 6660 RPZ99@Florida-Counsel.com - FLORIDA BAR BOARD CERTIFIED IN REAL ESTATE LAW - We assist Brokers and Sellers with Short Sales and Modifications and Consult with Brokers and Sellers Nationwide! Shortsales@Florida-Counsel.com New Website www.Florida-Counsel.com

See our easy to find articles at TABLE OF CONTENTS - SHORT SALE AND LOAN MODIFICATION ARTICLES.

 

More and more of my friends and neighbors are walking away from the homes they truly love.  Why?  Because they owe more than their home is worth.  (For Now)

But they are leaving this wonderful home, destroying their credit, and going out to RENT a house, nothing like they dreamed of, and FOR AS MUCH AS OR MORE THAN THEIR MORTGAGE payment was.

Someone PLEASE tell me what I am missing here????

Is it just the principle of the matter?  Oh, don't get me wrong.....I push the principle often on matters I feel are worthy.  I suppose I have been in the business for so long, and seen so many markets, both up and down, and figure that the housing market WILL rise again (won't it?) and their home will once again be on track. 

Now, I realize that some folks have no choice but to walk away, because of lost jobs and such.  But the majority of the folks I am seeing, are financially fit and just make the choice to take the walk. 

Just like the stock market and other investments, there are losses and wins.  I just cannot help but think that in the long run, IN MANY CASES, it would be a wise investment to just try and stay in that home you love, and wait the storm out for a while.