Lenders may ask the seller to bring money to the closing as part of the short sale approval.

Several of my agents have encountered situations involving short sale transactions where, as part of the approval process, the lender requires the seller/owner to bring money to the closing. In many cases this condition of approval is acceptable to the seller and they agree to the banks terms enabling the transaction to close.

There are times when the seller/owner of the home being sold simply does not have the financial ability to bring money to closing. A recent example of a home we are selling subject to a short sale; the lender requested the owner to bring several thousand dollars in order to make the deal work. Not having the full amount requested by the bank, the seller might have just let the deal die. In this case the seller countered back the banks request at a reduced amount which the bank accepted.

The lender’s request does not always have to be the final answer. I know of one case where the lender said they would need the seller to sign a note for a substantial amount of money but the seller was unwilling or unable to do so and when the bank was informed of this they agreed to allow the short sale to deal close without the note.

Helping sellers obtain short sale approval from their lender is something we do very well. If you are considering short selling your home I would encourage you to give me a call for a private consultation.

Thousands of homes are being offered for sale at prices less than owed on the home throughout Central Florida

One reason home sales are on the rise throughout Central Florida is because of the number of homes being sold subject to a short sale. A short sale transaction is one in which the home is being offered for sale at a price less than what the owner owes on the home.

In Orange County alone there are over 3,000 homes listed for sale as a short sale. In Orlando, the largest city in Orange County, there are over 2500. Short sale listings are not just on the low end, with the highest priced short sale listed for sale in Orlando priced at over 2 million dollars.

In addition to the homes actively listed for sale in Orange County there are also 4,000 homes under contract or pended as a short sale. The short sale process from offer to lender approval can be quite lengthy which would explain the large number of short sales showing as pending.

Short sales that have closed this year according to MLS stats in Orange County are reported as just under 1,000. As of today, April 3, 980 properties subject to a short sale have closed.

For buyers who have time to wait, making an offer on a short sale may mean they will purchase house they desire at an affordable price. Of course if a buyer is in a hurry then a home subject to a short sale may not be for them. Give me a call to discuss your personal situation and to receive information about short sale homes in your area.


Related Florida real estate blog posts dealing with short sales

Houses subject to short sale may not be for all Florida buyers

Houses being sold as a short sale, or contingent upon the seller's lender agreeing to accept less than owed on the mortgage could result in the buyer buying the home at a great price, but even with the potential savings, trying to buy a short sale may not be for all Florida home buyers.

A buyer will need patience. Short sale listings can take several weeks or months just to receive an answer from the seller's lender. The time it takes for a short sale to receive a response depends in part on the short sale processing skills of the listing agent, the cooperation and situation of the home owner, the number of mortgages on the home, and the lender's short sale negotiator or loss mitigation department. In October the median days to close a short sale transaction in Osceola County equaled 220 1/2 days according to information found in the MLS.

Buyers who have no time to wait and need a house now, may choose to ignore the short sale market in favor of well priced traditional listings or REO property.


Related blog posts on short sales

The tax credit extension adds a closing cushion for buyers who are trying to purchase a home subject to short sale.

The recently signed into law tax credit extension adds a closing cushion that could help buyers who are trying to purchase a home subject to short sale. The extension allows buyers who are under contract to purchase a home by April 30, 2010 to receive the tax credit provided the transaction closes by June 30, 2010.

Short sale transactions can take up to 30-60 days or longer. Before the extension passed, buyers were leery of making an offer on a home listed with a short sale contingency for fear they would miss the November 30th cutoff date. With the new tax credit extension, buyers may not have to avoid making an offer on a short sale, knowing that they now have 60 days in order to close.

Buyers will still want to consider the possibility of the short sale not being approved in time and should consult with their agent, tax advisor and attorney for guidance before making an offer.


Related blog posts on tax credit

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High End Property Deals

I have posted many times about bargain and cheap homes that are available on the market throughout Orlando, Kissimmee and Central Florida. There are other deals to be found right now that include the high end property.

High end property are those houses and condos listed for $1 million or more listed in the Orlando-Kissimmee, Central Florida market.

High end short sales

In the 4 county area, Osceola, Orange, Seminole and West Volusia right now there are nearly 3 dozen homes listed above 1 million that are subject to a short sale. These include homes that are:

• Custom homes
• Homes on ski lakes
• Acre + lots
• In gated communities
• Situated on a golf course fairway

Starting list prices run up to $3.5 million.

High end REO

Our market also includes a handful of REO/bank owned high end property. These homes offer heated square feet ranging from 4000-8000 and have construction dates from 200-2009.

There are deals available in all price ranges. For additional details, give me a call.

Related Florida real estate views:

What will 5 million buy you in the heart of Central Florida?

How long does the short sale process take?

The time it takes to close a short sale transaction is dependent on the parties involved in the transaction. The buyer, the seller and the real estate agent all play an important role in the short sale process. Once the buyer, seller and agents involved have performed their contractual obligations and submitted all of the necessary paperwork to the lender, the lender now has control of the length of time it will take for the seller to receive either an approval or denial. This time required will vary with lenders and each individual transaction.

The Florida Association of REALTORS created a short sale addendum to the purchase and sales contract that a buyer and seller can use to negotiate time limits for acceptance and additional time periods. The addendum allows for the buyer and seller to agree in writing to the length of time the seller’s lender has to approve the purchase price and contract terms. The default time allowed is 45 days from the effective date of the contract.

Of course the time periods agreed upon cannot be guaranteed and are subject to a third party who is not part of the contract and who could simply choose to ignore the contract.

You can avoid unnecessary delays by working with a professional real estate agent who understands the short sale process and knows how to market your home for the best price in the shortest time period. If you need to sale your home and are curious to learn more about the short sale process, contact me today.


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How does buying a short sale impact a home buyer?

The buzz on working with short sales

Does a short sale impact your FICO® credit score the same way a foreclosure does?

How does buying a short sale impact a home buyer?

How does buying a short sale impact a home buyer?

If you are a buyer buying a home that is subject to a short sale contingency, the impact will vary depending on yours and the homes situation. Each case will be different and you should consult with an attorney and use the services of a real estate professional who is skilled in handling short sales.

Positive impact

One of the positive impacts of buying a short sale is that often times the home will be competitively priced. Short sale sellers are not typically pricing their homes unrealistically. When the seller's lender approves the short sale price, the buyers will be satisfied in most cases that they have paid a fair market price for the home.

Negative Impact

One negative impact of buying a short sale is the amount of time it takes to complete the process. With some short sale transactions the process is never completed causing the buyer to lose valuable time. Once again each short sale situation can be different. Lenders may not respond to a seller's request for approval of a contract for several months or could decline approval after months of waiting.

Short sale inventory is going to make up a significant portion of the Central Florida real estate market for some time to come. If you are in the market to purchase a home and want to know how it will impact you specifically, contact me for a professional consultation.


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Effective date of a short sale contract

Long sales

List a home subject to short sale in Poinciana

Subject to short sale

Do you own a home in Poinciana that needs to be sold with a short sale contingency? I can help. My office covers the Poinciana market area and we have listed and sold a number of homes that had to be sold subject to a short sale contingency.

So if you owe more that your Poinciana home is worth and you would like to list the home with a real estate company that knows how to handle short sales, contact me to speak with an agent.


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The effective date of a short sale contract

Does a short sale impact your credit the same way a foreclosure does?

Q: Does a short sale impact your FICO® credit score the same way a foreclosure does?

According to a Credit Q&A from FICO®, short sales, deed in lieu and foreclosures are viewed the same and will have the same impact on your credit score.

Source


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HUD hopes to speed up the short sale process

HUD is committed to streamlining and speeding up the short sale process as part of the Making Home Affordable program. This effort is part of the ongoing goal of reducing or eliminating foreclosure. Details on how this streamlining will happen involves; "....standard process flow, minimum performance timeframes and standard documentation, and it offers financial incentives to servicers and borrowers to pursue these alternatives to foreclosure." (Bolding mine)

In this market real estate agents working short sales often find themselves hurrying up to wait, which results in frustration and stress of the home owner and the real estate agent. Perhaps the financial incentives being offered to the lender will be the push needed to get the lender and the real estate agent working as one unified team. Perhaps it will result in timely returned calls and email responses. Perhaps it will result in status updates. Perhaps it will result in the right hand not only knowing but also understanding what the left hand is doing.

If that happens then the money will be well spent, the borrower will avoid foreclosure and we as real estate agents will have a tremendous amount of frustration and stress lifted off our shoulders.


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Why overpricing your home will not work

Realtors need to be sure the good real estate deals, really are.

Unfortunately it appears homes are being listed in the MLS at prices that may not be what the seller will actually accept.

My guess is the thought process of the listing real estate agent is by listing the home at a price is low enough the home will attract more buyers which increases the chance of receiving offers. Once offers start coming in the seller and agent no doubt are counting on multiple offers to compete against each other thereby raising the price the home sells for.

Recent information received from FAR should give those agents engaging in this type of listing manipulation pause for concern.

The FAR article asks the question:

Q: If a real estate licensee lists a property at a below market price he knows the seller probably won’t accept, is the licensee in violation of Florida real estate license law?

FAR’s General Counsel Randy Schwartz responds, "While a violation of the Florida real estate license law is a matter to be determined by the Florida Real Estate Commission, in my opinion, if a licensee lists a property for a price the licensee and the seller know is not acceptable, a case of misrepresentation and false advertisement can be made under Chapter 475.25(1)(c) Florida Statutes. It would not make any difference if the listing indicated that the selling price was subject to a third party lender or not; it is more a matter of advertising something that is known to not be acceptable."

If you are interested in finding legitimate good real estate deals, contact me or search for homes on this web page.

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Short sale needs bank approval

Search for homes

Buyers and sellers entering into a contract for a home that is subject to a short sale need to be aware that the transaction will require the seller's lender approval. The lender will have the right to approve:

• Purchase price
• Terms of the contract
• HUD statement

In the short sale process the bank or lender must agree to take a payoff from the seller that is less than is owed. This process can take time. Both parties will need to exercise patience and the lender processes the request.

If you are facing a short sale situation it is best to use the services of a full time real estate professional to assist you with the selling of your home. Give me a call at or email me to discuss your specific situation.

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Appraisal problems add to the frustration

Real estate agents would be wise to pick short sales over long sales.

Negotiating a short sale with the lender

- Greg Staker - 407-304-0255

Appraisals + short sales = no sale

On at least 2 different occasion this month a short sale transaction closing has been delayed because of a low appraisal.

You can imagine the frustration of everyone involved. The listing agent and the seller were successful in getting the seller’s lender to accept a reduced payoff of the seller’s mortgage. The buyer and their agent were excited to know that the short sale contingency had been met and the seller would be able to close.

All for naught however as the buyer’s appraisal of the property, required by the buyer’s lender, came in lower than the agreed upon short sale price!

Appraisers no doubt are being very careful as home values are bound to be affected by the numerous foreclosed properties hitting the market.


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- Greg Staker - Watson Realty Corp. - 407-304-0255

Lender says no to deed in lieu

We recently received a call from the lender of one of our short sale listings. The seller had decided to give the home back with a deed in lieu. The lender is not willing to accept the deed in lieu and has asked our agent to list the home at a price where it will sell.

A deed in lieu is a way for sellers to deliver property back to an investor in order to avoid foreclosure. In this case it appears the lender would rather accept a short sale over deed in lieu or foreclosure.

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- Greg Staker, Watson Realty Corp., 407-304-0255

Real estate agents would be wise to pick short sales over long sales.

Long sales would describe homes listed for sale that are priced considerably higher than market conditions would indicate are possible to obtain. Long sales are generally created when a seller makes an error in their opinion of value and finds an agent who is willing to go along with the error. This list contains a few of the errors that help create long sales.

• Sellers wish to test the market
• Sellers need to realize a certain amount of profit
• Seller is in no hurry to sell
• Agent does not know the market
• Agent wants a listing, any listing
• Agent and seller believe that magical thinking will help sell an overpriced home

A home that is on the market as a long sale has less chance of selling than its counterpart, the short sale. Long sales will languish on the market for months where a short sale will be viewed as an opportunity to buy a home at or below market value and attract multiple buyers. Long sales tend to have no real motivating factors except the motivation of price. Short sales will typically have numerous motivating factors including the desire of the homeowner to reduce credit damage and the desire of the lender to reduce financial loss.

When given the choice between listing an unmotivated over priced home or a home with a short sale contingency, agents will find that short sales may be the better choice.

Related Florida real estate views:

Appraisal problems add to the frustration

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I am not going to give my home away!

- Greg Staker - Watson Realty Corp. - 407-304-0255

There comes a point when you have to foreclose.

This Wall Street Journal article discusses the differences between California and Florida's foreclosure market. The article reports that while California sales are increasing in part to the investor purchasing foreclosures, in Florida the same can not be said. Florida seems to be experiencing a backlog.

While the article places some of the blame on Florida foreclosures having to run through our judicial system I think there may be another culprit, the short sale phenomenon.

Lenders, Realtors and home owners are often caught in a 3-6 month dance of trying to get the lender to accept a partial payoff in hopes of avoiding foreclosure. For the traditional home owner this process can have positive effects. A short sale can keep a home owner's credit from being totally trashed which will keep open the possibility of the individuals ability to obtain a new home loan once they have their financial situation in order. While this is going on, lenders are pushing back the foreclosure process.

I believe we need to stop some of this madness. I am all for helping the traditional homeowner who got caught with a high adjustable mortgage or who has seen their financial situation change drastically and are now in need of assistance. But for the rest, let's foreclose.

I am hearing disturbing rumors of some home owners seeking a short sale on their home so they can buy a better home also being offered as a short sale. Is this right? Or how about the individual who cashed out all of their equity to purchase a second home or luxury item and now seek have this debt erased via the short sale route? Should we continue to delay the foreclosure process for an investor who had no business investing in the first place?

In my opinion the answer is no. Lenders need to follow through with their foreclosure proceeding and get these homes back out on the open market for real home buyers and real investors to pick up at a fair price. Doing this will stimulate the real estate market in Central Florida ultimately leading it back to a healthier place.

There comes a time when a foreclosure is needed. Now is that time.

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Appraisal problems add to the frustration

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Real estate agents would be wise to pick short sales over long sales.


- Greg Staker - Watson Realty Corp. - 407-304-0255

Negotiating a short sale with the lender

I have an agent who has been trying to close a short sale transaction for 3 months. The agent has encounter the trials and hurdles that are a part of a short sale transaction. No responses, lost documentation, new people handling the case, delays, delays and a sense of non interest from the lender. To make matters worse, with this short sale there is a first and second mortgage.

So on Monday this agent walks into my office and says, the second mortgage holder is not agreeing to $1000.00. They will not agree for anything less than $3500.00. AND the first mortgage holder says they will not approve the commission as agreed per the listing contract with our seller.

My agent asks, What's my next step?

My answer: Tell them no. No you are not taking less. If they are not interested in allowing this sale to go through and would rather foreclose, then please let you know so you can inform the buyer and seller.

The very next day the first mortgage holder accepted the deal with the commission as per the contract and agreed to the $3500. for the second.

Related Florida real estate views:

Real estate agents would be wise to pick short sales over long sales.

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Is it really short sale business or no business at all?


- Greg Staker - Watson Realty Corp. - 407-304-0255

Short sales may be an option to some homeowners

Will Weaver a speaker/trainer with Floyd Wickman conducted a short sale workshop today for Watson Realty associates and management.

Will allowed me to video a portion of his presentation. This portion centered on short sales being a win-win for sellers. Highlights of this section include:

Smoother transition for the seller than a foreclosure would offer.
Seller brings nothing to closing.
No deficiency judgment.
Avoids a foreclosure on seller credit.
Helps avoid bankruptcy.
Less worry.

Each situation is different. If you are currently facing a stressful situation and are worried about losing your home in foreclosure give us a call and we will arrange to meet with you to discuss the options available to you.

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Floyd Wickman short sale workshop

- Greg Staker Watson Realty Corp. 407-304-0255

Floyd Wickman short sale workshop

This Monday we will be attending a short sale work shop conducted by the a speaker from the Floyd Wickman group.

The training will offer info about:

•The 3 Phases Of a Property In a Foreclosure
•Why Short Sale Versus Foreclosure
•How to Find Prospects For a Short Sale
•The 9 Vital Steps In Working a Short Sale
•The Benefits Of a Short Sale To The Seller
•How to sell a Seller on a Short Sale Versus Foreclosure
•Why it’s a Win, Win, Win for everyone involved
•The Top 10 Short Sale Opportunities
•How to Double Dip your Short Sale Listing •How To List Saleable Listings in today's market

Watson Realty offers ongoing training to all of our agents to assist them with furthering their careers and providing them with the tools to best serve the home buying and selling public.


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- Greg Staker Watson Realty Corp. 407-304-0255

Is it really short sale business or no business at all?

Closing a short sale transaction can be a tough way to earn a commission. Weary eyed and frustrated agents roam the halls after making the umpteenth millionth call to the lender asking if approval has been authorized only to hear no. Buyers are frustrated, sellers are oddly disinterested and co-broking agents are hungry for their split that may never come.

So I say to the agents, why not be more selective and avoid short sale transactions that are obviously going to be tough and most likely never close? You know, the ones where there is a second mortgage or the seller plans to high tail it immediately after signing the listing contract? The most common answer I receive is "they can't be avoided because that is all the business that is available right now".

Oh really?

I decided to ask the top producing agent in the office this year how is it that short sales are not wearing her out. This is the agent who has closed more transaction and has more volume sold than anyone else within the office. Her answer was revealing. Of all the closed transaction this year only one was a short sale. That's it, just one.

Only one deal this year has been a short sale transaction? I asked her how this is possible since so many other agents contend that short sales make up the biggest part of the transaction? Her answer was that this is simply not true. There is other business out there if you know where and how to look for it. She has been able to be selective with listings she will agree to take and can assist buyers with finding comparably priced homes for sale that are not contingent upon a short sale.

I'm hoping that more of our agents find a secondary source of business to offset the time and energy spent working a short sale. I do not wish for them to ignore the short sale business. I have spent considerable time going over the finer points on how to successfully close these types of transaction. Our agents are the best trained, most prepared to handle the issues associated with short sales. I would like to see them be more selective, that's all.

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Positioning ourselves for real estate success in the years ahead


- Greg Staker - Watson Realty Corp. - 407-304-0255