What is a "short sell" in the Southern Utah or St. George Real Estate Market?

In simple terms and circumstances, a short sell is a scenario when a banking institution or lien holder accepts less than what is owed on a property, and releases the lien to clear title to a new buyer. They may or may not release the seller from a future obligation to them for the amount of the mortgage not covered by the sell. This is an issue of solvency, or in other words, the seller's ABILITY to pay. Short sells are a loss-mitigation tactic that is used in lieu of foreclosure at the banks or lien holder's option, and is usually done when the lien holder feels it is a better option than foreclosure.

What is the process? (When a listing agent is involved)

When I list "short sells" I meet with a seller about their current situation. If there has been a "Hardship" such as a loss of employment, sickness, death, law suit or sincere bad luck, they may be a good candidate for a short sell. In addition to normal listing paperwork for their house we collect information such as the following:

Authorization to release information
Last two months pay stubs
Last two months bank statements
Last two years taxes
Financial worksheet
Hardship letter
Accompanying documentation
Other institutional and supporting documentation.

Before I get an offer, I send the "Authorization to release information" to the lending institution. This enables them to speak to you when you do get an offer. At that point, it is really good idea to ask them if they have a specific package, because, though my generic one covers nearly every situation, sometimes they want it on "their form".

Once we get an offer, I get a pro-forma settlement statement from the Title Company indicating what the net proceeds would be to the lien holder. Armed with that information, I then create a cover letter showing the lien holder how much money they would receive as a percentage of what they are owed, and all of the reasons and circumstances as to why this poor person is in this situation, and with the current market status how they would be absolute fools not to accept this instead of foreclosing. I attach the Real Estate Purchase contract and the documentation listed above and I sent it the loss mitigation department of whoever is the lending institution.

How long does it take?

Most banks/lien holders that accept short sells are very busy, and it could easily take about two to four weeks to get assigned to someone, and possibly another four to eight to be analyzed or processed. Sometimes they just get ignored or buried under hundreds of others, and despite our best efforts, there is nothing we can do.

Some of the tricks my office manager and I have used to get them looked at a little bit quicker are the following:

1. Call as much as possible. Plan on being “on hold” for at least a half of an hour and probably more than an hour.
2. Ask to speak to the supervisor.
3. Flatter them and be very kind. Give them the speech about Eagles and chickens and they sound like an eagle.
4. Ask for email address. They usually won't give you one, but if you say they wanted you to send something via email, they just may.
5. Get the loss mitigators personal fax, and fax them a message.

How often do short sells work?

It really depends on the circumstances and how many notes are involved and who the banks are. I have been able to with a lot of help from my good assistant, the client’s attorney and an iron gut from both seller and buyer; pull a house out of a bankruptcy to get one to work. I have also had a great offer on one, they denied based on a less informed appraiser only to see them sell it for $20k less after they painted it and foreclosed it.

Unfortunately the national average is about 35% of the time. My percentage is a little closer to 50%, and we really feel like we have a handle on things. We know however, we have a lot to learn, and could be better. We get “ah-ha's”every time. Though we are not looking to do these are our primary real estate source, we know how to do them and are happy when the real NEED is there.

If you know of anyone who may need this service, let me know by email. We would be happy to consider each case on a one by one basis.

Once again, if you want to search the multiple listing service for you St. George area home, or to get your own Southern Utah home assessed for FREE, just go to http://www.joelangston.com/