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Thread summary:

Short sale market: marketing tool, tax consequences, Mortgage Forgiveness Debt Relief Act

 
Old 12-28-2007, 06:41 AM
 
Location: Palm Coast, Fl
2,249 posts, read 8,476,500 times
Reputation: 1006

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This new "short-sale" market. I'm having a little difficulty getting my mind around it. It is apparently a new marketing tool that other Realtors are using more and more. It can't be that every single person listed as a 'short sale' actually have to do a short sale... it would be impossible. So, agents are taking these courses (most that they pay for), you know those emails you are constantly getting on how to get into the short sale market..and listing every listing as a 'short sale'. Many, if not most, have no idea what they are doing, don't have everything in place, are putting the listings at some price that they can't justify how they came up with it or if the bank would accept or approve it or not. With this new announcement that there won't be tax consequences for short sales to the seller all of a sudden there is a barage of short sales. If the sellers could afford to hold on to the properties when there were tax consequences, then they can do it when there aren't. I'm not sure if this is the new 'marketing ploy' for the Realtors or what the heck is going on, but it's getting out of hand.
Are any of you running in to this? How are you handling it?
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Old 12-28-2007, 08:13 AM
 
Location: Just south of Denver since 1989
11,570 posts, read 31,821,876 times
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Default http://realtytimes.com/rtpages/20071221_washingtonreport.htm

The Senate also finally got around to passing the Mortgage Forgiveness Debt Relief Act that's been sitting on the agenda for months. That's the one that prohibits the IRS from demanding income taxes from financially-stressed borrowers whose lenders forgive a portion of their principal balance as part of a "short sale" or loan modification agreement.
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Old 12-28-2007, 05:41 PM
 
Location: Montana
2,203 posts, read 8,826,013 times
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I'm representing the buyer's side right now in a short sale. And the agent on the listing side is working his tail off to get the lender to agree to this short sale (which isn't all that "short"). You really have to know what you're doing, who to contact, who else to contact, and the final person to contact . . . plus there's MOUNTAINS of paperwork on the sellers side of things. Now this happens to be a cash sale on a higher-end property. I just cannot imagine that these agents listing all these 100% financed low price point properties are going to be working their tails off and doing ALL the PAPERWORK and making ALL the necessary PHONE CALLS needed to get the short sale to happen. And even with ALL THAT EFFORT, there's no guarantee that the lender will agree to the short sale.

Here's some of the (unverified) stats I've been hearing: WAMU is receiving over 8,000 faxes a day pertaining to short sales; fewer than 75% of short sale requests end up being accepted.

Palmcoasting, I'm not sure what the lure is either. The LAST thing I want to do is market to short sale sellers. No thank you. (Of course if it's a matter of trying to help a friend, I'd consider it.) I would love to hear from some agents on the forum that have been the listing agent on some of these and whether or not they feel it's worth it. (Or maybe it's really not as bad on the sellers side as what we've been told )
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Old 12-28-2007, 05:48 PM
 
Location: Plano, TX
41 posts, read 196,109 times
Reputation: 18
The listings are pretty easy to get if they are in this situation. Some of the lenders are backing up and actually taking some responsibility for getting the owners into a bind becasue they let them buy when they should not have done so! They are offering a fixed for up to 5 years rate and then put the late payments on the back of the mortgage so they can start clean again. It is important to learn and know what you are doing, be incredibly persistant, stubborn and dedicated to achieving the goal. I have heard of some that are actually raising their commission rates to cover the extra work and the possiblity that the lender will try to negotiate their commission down at the last moment after all the work is done-how much fun is that?
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Old 12-28-2007, 09:49 PM
 
Location: Las Vegas, NV
403 posts, read 1,120,356 times
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Palm -

I've done shorts very successfully and I think I could teach a class on it at this point.

Here's my course outline:

Lesson #1 is: DO NOT DO SHORT SALES
Lesson #2 is: REFER TO LESSON #1

On a little more serious note, I will do them for pre-existing clients that I really, really, really like a lot (I mean, like, I almost have to be in love with them) OR if the transaction is at least half-million or higher (anything less and the pay is better at Burger King).

Personally, I don't see how paying someone to teach you how to do a type of transaction that will generate $8.00 per hour is worthwhile, but that's your call.

Your broker can tell you who in your office has successfully sold a short listing and they'll probably tell you how he or she does them for free lunch. Also, the title or escrow officer (or escrow attorney, in attorney) you use will definitely be able to provide you with good advice - where you and I work, they're seeing tons of shorts.
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Old 12-29-2007, 05:57 AM
 
Location: Palm Coast, Fl
2,249 posts, read 8,476,500 times
Reputation: 1006
See, now this is the thing... I spoke with the title company yesterday. He said that of the deals he has coming in approx 20% are shorts. Of those approx 65% actually close. Those aren't too good odds. He also said that what he is seeing is that they are discounting at no more than 30% of the original loan. I spoke with my broker. She said she's doing one now, and it's going to go through, although she hasn't gotten the contract back signed, but the property is an absolute mess and the bank is going to pay the usual closing costs and kick in 3%. (here the seller pays the title ins and doc stamps). She said most times they won't pay those closing costs so it ends up not really such a steal. Our office has 5 listings that are shorts which is why I spoke to her to begin with....to find out if these things are actually behind in payments, etc. I asked her...well, how'd these agents price them? She said "you make it up". (nothing about a percentage of the loan). Just comp them out and go with that. Then I figured ok...I'll take the one that a past client is asking me to do. Go to speak with her and although she is waaay behind in her payments, a lis pendens was filed and everything, she told me just yesterday she got a call from Citibank saying no, we don't want to foreclose, we want to work with you, redo your loan and see if we can't help you keep it. I'm thrilled for her.
So, this is the thing. Here are all these "short sales" on the market and trust me, there are plenty, and it just seems to me that while some will go through MANY will not go through and especially at the pricing that is listed on the MLS. Do these agents not understand just how they are effecting the market? That their "made up" pricing is hurting their community? And that's why I'm wondering...is this sort of a new marketing ploy? Have listings that are artificially priced, which brings in phone calls, which enables them to 'help' the buyer find something else while they sit and wait and wait for an answer? There is no way that legitimately there are that many short sales in my area. Ok, things get tight, people don't want to pay up, but that doesn't mean the bank is going to just approve a short sale. It's not like a legit short sale is , well, I can't sell my house for what I paid for it, so the bank should just take the hit and let me go. All of these people could not have had a death, divorced, or had some other tragedy happen.
And if all these are really readjusting mortgages, does it not behoove the banks to start working with all these people to rework the loans and have a larger something over the long run vs taking such a hit in the short term?
From what I understand from my title company there are judgements put on these people for the difference. He said some of them are not collected but yes, judgements are placed for every one that he's seen go through. Do these sellers not understand that?
I'm not looking to do them, I'm trying to understand why it's being pushed so hard on the Realtors and the sellers. And how the heck I continue to explain to the buyers I work with, no, the chances of you actually getting a house that cheaply are pretty slim except if it's listed by one of 4-6 agents in town and what you've been told isn't really true. I know of one agent here working with a slew of attorneys...the attorneys go after the bank for a really really low price and in the mean time they have a buyer in the background paying a higher price..they flip it to the buyer, making a ton of bucks. It's like the mortgage industry crap in reverse. I guess those are the ones making $20-$30K
per short sale that the emails are talking about? And isn't that just a wee bit...dishonest, unethical?
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