Selling Poinciana One Property at a Time.: A "short sale" is an option NOT an entitlement!!

A "short sale" is an option NOT an entitlement!!

Call Broker Bryant today!!

"Short sale". The new buzz word. We've all heard it:

  • "I owe more than my house is worth and I WANT to move. I'll just ask the lender for a short sale."
  • "I don't want to live here anymore and I need to do a short sale."
  • "I want to take a new job up North but I just bought my house last year. I need to do a short sale."
  • "I'm tired of making these payments and want something smaller. I need to do a short sale."
  • "I quit making payments because my lender said once I was behind 60 days I could do a short sale."
  • "I NEED.........blah, blah, blah!!!!!"

Folks did you notice all of the "I" in these statements? What is wrong with people today? What happened to personal responsibilty?

As REALTORS® we need to start counseling people properly. The folks in these above scenarios DO NOT qualify for a short sale. They need to honor their obligations. As a group we need to quit saturating the market with "short sales" because folks feel they are entitled to one.

A "short sale" is for folks that are experiencing financial difficulties and who cannot afford to keep their house. It is NOT for someone who just feels like moving.

Now having said that, these folks may very well apply for a short sale and it may be granted BUT it is flat out wrong!!

The real estate market is experiencing enough difficulties without REALTORS® automatically playing the "short sale" card just to get a listing. You need to look these folks in the eye and say "Sorry, I can't help you. Short sales are for folks facing legitimate financial difficulties. NOT for folks that just want to move."

A "short sale" is great option for folks who are in dire straights. It is NOT an entitlement. Use it but don't abuse it.

OK.....that's all I have to say about that. For now. What say you?

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Comment balloon 48 commentsBryant Tutas • January 11 2008 12:45PM

Comments

Reserved Parking For "The Lovely Wife"...TLW...ROAR! 

Blog Boy...

You and I both knew it was just a matter of time before 'short sales' turned into nothing more than an escape clause.

I really do hope other's in our industry will grasp this concept. 

Advising Seller's to abuse short sales is just going to create another uncontrollable monster.

P.S. Yah. I know. I am a bit serious on this issue. Shhh :)

TLW...ROAR!

Posted by "The Lovely Wife" (Broker Bryantnulls Wife) The One And Only TLW. (President-Tutas Towne Realty, Inc.) over 11 years ago
OK BB...feeling a little grumpy today! Which hat are we wearing? Actually as always your right on!
Posted by Danny Smith (DISCOVER TEXAS HOMES) over 11 years ago
Ok, I agree but it seems that over half of the country is in this postion?
Posted by Investment Brokers Realty, Branson & Ozark Property Management (Investment Brokers Realty) over 11 years ago

Short sales are not for those couples who are going through a divorce so they can hurt each other.

I have a case where the husband (a doctor) has defaulted on the house (about $80,000) so he could add to her worries. The 2nd on the house and the defaulted amount will not satisfy any of the lenders so even a short sale is not going to save this couple. Vengeance is a sad resolution.   

Posted by Mana Tulberg, Real Estate Agent - Camarillo CA (805 County Real Estate) over 11 years ago
You hit it right on the nail.  People need to take responsibility for their decisions.
Posted by Brenda & David Wakeman (Russell Realty) over 11 years ago

Good post.  I have a client that mentioned Short Sale to me.  He said his friend suggested it to him.   Problem is , just like you mentioned, he is not having financial problems.  He is having personal problems about wanting to move closer to his job. 

Posted by Joe Pecoraro (REMAX- Big Bear) over 11 years ago

Bryant- We only take short sales on listings that warrant it. Over one third of the houses for sale are in a short sale mode. I think people should take responsibility for their decisions and choices. But if you listen certain politicians they are promising to bail these bad decisions out, blaming everything and blaming the free market and capitalism. 

It goes much deeper than just not wanting to own up to your bills and choices.  

The sense of entitlement is a disease that is spreading in our country and will turn this wonderful free market into a socialist country if we are not careful and we do not accept responsibility! Katerina 

Posted by Katerina Gasset, Get It Done For Me Virtual Services (Get It Done For Me Virtual Services ) over 11 years ago

A big golf clap for BB!!!  There are so many fraudulent short sale transactions going on in the valley.  It isn't hard to spot.  A new one is where the seller is selling to a relative like a SPOUSE or CHILD.  ARE YOU KIDDING MEEEEEEEEEEEEEEEE???????????

Multiple multiple multiple BPOs are being ordered for short sales now.  I just had one tenant ask me why I was the third doing a BPO this week after he told me he was buying the property.  I didn't know he was the nephew until I explained that banks are trying to catch fraud and a good value on the house.  Then he told me he was the nephew.  Do you think this is right or fair?  I don't! 

Banks are getting screwed daily because people get away with it.  The REAL people in dire straights cannot get help because of garbage like that.  I have turned down many short sale listings and just two weeks ago I decided to become a short sale agent because I am sick of the antics currently being pulled with the list agents and fraudulent buyers/sellers.

I think people need to decide if all of this is worth wearing orange jumpsuits and picking up trash on the side of the road.

Posted by Renée Donohue~Home Photography, Western Michigan Real Estate Photographer (Savvy Home Pix) over 11 years ago
Renne, And there you have it!!! Selling to the relative on a short sale. FRAUD FRAUD FRAUD!!! And it is certainly going on. Do a google search for short sale and you will see folks teaching this stuff. There are even companies that will negotiate the short sale then cut a deal where you can still live there. The deal is they will then split 50% of any future equity. Unfortunately we are only seeing the tip of the iceberg for short sale fraud.
Posted by Bryant Tutas, Selling Florida one home at a time (Tutas Towne Realty, Inc and Garden Views Realty, LLC) over 11 years ago
Bryant,  I couldn't agree with you more.  This is a pervasive problem in our society -- people are not held accountable for their actions anymore.  Instead they're held up as victims.
Posted by Michelle Ewing, Riverside, CA (Trademark Realtors) over 11 years ago

Joe, "Problem is , just like you mentioned, he is not having financial problems.  He is having personal problems about wanting to move closer to his job." I hear that every day. As REALTORS(R) we need to be aware of these and not participate. This is the beginning of another crisis if we all don't wise up and do the right thing.

Katerina, I'm just like you, very picky I who I choose to work with. I did a property search today for a potential buyer today and in the price range I searched every property that showed up was a short sale listing!! 128 results with 128 short sales!!!. That's what sparked this post. Then I read a post earlier from a member of AR asking how we handle sellers that want to relocate but owe more than their property is worth. Half the comments at the time were just automatically suggesting a short sale. Why? She never even mentioned anything about a financial hardship, just the fact that they wanted to move.

Posted by Bryant Tutas, Selling Florida one home at a time (Tutas Towne Realty, Inc and Garden Views Realty, LLC) over 11 years ago
Right on target, as usual. I believe we, including the media, are quick to throw out "short sale" like it was some magical solution. And we, as real estate agents, need to be a little more honest with folks.
Posted by Gary L. Waters Broker Associate, Bucci Realty, Fifteen Years Experience in Brevard County (Bucci Realty, Inc.) over 11 years ago

BB,

On target, as usual...I've had this conversation with a gentleman in the last month, and I counselled him that although it's not a good feeling to know that you owe more on your condo than it is worth, you are financially obligated to keep paying the mortgage! Short sales are not an easy out, they are a last resort! He was certainly capable of making the payments. At least he understood and is continuing to pay his mortgage....

I'm not sure people recognize the future credit implications of doing a short sale, either; or do they just not care??!

Cheers,

Heather

Posted by Heather Elias (Century 21 Redwood Realty) over 11 years ago
Bryant - It is wonderful to see that someone has the chutzpah to call a spade a spade. It will be a fine day when we end the abusive relationships we have with all the systems in place to promote our economy.
Posted by John MacArthur, Licensed Maryland/DC Realtor, Metro DC Homes (Century 21 Redwood) over 11 years ago
Just I just say "Amen" and move on. Yes, I did ! 
Posted by Missy Caulk, Savvy Realtor - Ann Arbor Real Estate (Missy Caulk TEAM) over 11 years ago

Oh, I so agree with you!  I remember when I sold my home to put my kids through college my CPA told me that most people would have filed for foreclosure rather than pay off my exceptionally high credit card debt.  But, I felt obligated to pay off all of my debit and sold my home to do so!  My debt, My responsibility!

Posted by Diane Aurit, Lake Norman Real Estate (LKN Realty, LLC) over 11 years ago

I think a lot of agents are going to be spending a lot of "spinning wheels" time pursuing short sale listings.  We're listing one this weekend because the lender advised the owner to do so.  She already has the docs. 

But, real agents don't create short sale situations. 

Geez.  Now we have a new mortgage fraud category, seller short sale fraud. 

What next?

Posted by Lenn Harley, Real Estate Broker - Virginia & Maryland (Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate) over 11 years ago
BB, You are right, but of course you know that.  I receive calls all the time from people who want to know if they can qualify for a short sale just because they don't WANT to pay.
Posted by Dan Forbes over 11 years ago
The entitlement mentality is a real drain on our economy. Just think of all the litigation that arises from the entitlement mentality.
Posted by Sharon Simms, St. Petersburg FL - CRS CIPS CLHMS RSPS (Coastal Properties Group International - Christie's International) over 11 years ago
Excellent commentary.  Just like anything, some people will find a way to abuse the system for personal gain.  I don't think personal responsibility has completely gone out the window; it's just that the minority is being very vocal looking for someone, anyone to give them what amounts to a handout. 
Posted by Jesse & Kathy Clifton, Retired (Jesse Clifton & Associates, REALTORS®) over 11 years ago
BB -it's amazing that people can look at short sale as a "financial strategy" that fits their current situation.  Why people forget that debt has to be repayed, or else this economy will stop functioning in its usual capitalistic ways. That won't help anyone.
Posted by Faina Sechzer, Real Estate Expert - Princeton, Montgomery ,Hopewell, NJ (Henderson-Sotheby's International Realty) over 11 years ago

BB - I am constantly amazed at the real lack of personal accountability.  Entitlement seems to be just what these people think, and not just about the short sale they desire so they can do something else.  What is wrong with people these days? 

Ann

Posted by Ann Cummings, Portsmouth NH Real Estate Preferrable Agent (RE/MAX Shoreline - NH and Maine) over 11 years ago
So true about the clients needing education. Unfortunately, a lot of agents need educations too. And with the banks constantly changing the rules, and each bank having different rules, we need constant re-education.
Posted by Lisa Hill, Daytona Beach Real Estate (Florida Property Experts) over 11 years ago
Everyone's a short sale expert these days
Posted by Jody Deeds, "Helping You Move On With Your Plans" (Key Realty, LTD) over 11 years ago
Yeup!
Posted by William J. Archambault, Jr. (The Real Estate Investment Institute ) over 11 years ago
BB,  My head is spinning - no I'm not Carrie!  We've all seen the plethora of short sale ads and classes as you've suggested.  You're right, too many of these don't fall into the category.  And I've heard as well of the agents going after the short sale listings.  As much as I can say that I've seen it coming, I never really thought about all this supposed short sale fraud that we're going to see.  Oh Yeah!  More crap for the books!
Posted by Marc Grossman, GRI, Greater Orlando Real Estate Broker (Marc It Sold!) over 11 years ago

BB - I've heard a few comments that make my blood boil. Some see it as a way to escape their responsibility or to go do something else, without understanding what it means OR the implications. This needed to be said. Thanks!

Jeff 

Posted by Jeff Dowler, CRS, The Southern California Relocation Dude (Solutions Real Estate ) over 11 years ago
BB - There are some who have no other alternative.  It's called hardship.  A hardship is not an "I want" situation.  It's a matter of need resulting from a catalyst other than personal motivation.  Problem is, there are far too many agents so anxious to take a listing that haven't a clue how the system works.  They're taking short sale listings encouraging these people to jam up a system that is already overwhelmed with legitimate short sales.
Posted by Marlene Bridges, Laguna Homes|Laguna Condos|Laguna Real Estate (Village Real Estate Services, Inc.) over 11 years ago

We do quite a few short sales in our office.  Probably about 40 of them are currently for sale with our office at this very moment.  Only 1/3 or so will actually get approved and result in a sale.  So even if the seller wants one, odds are pretty high that they will not get one granted even if they price the property to sell. 

If the seller lied on their orignal loan application and then tries for a short sale, the lender will refuse the short sale nearly 100% of the time.  The lender finds out they lied when the seller provides their financials with the short sale paperwork.

Posted by Rob Arnold, Metro Orlando Full Service - Investor Friendly & F (Sand Dollar Realty Group, Inc.) over 11 years ago

Actually, many "investors" are opting for the short sale route; which I agree is flat out wrong. Some people got into the market hoping for a huge profit while the market was heading to the sky. Needless to say, many were left holding an empty bag, upside down investment. These "folk" should not be eligible for the short sale! Lenders need to unload non-performing loans- secured by devalued properties. The lenders were responsible for the loans and appraisals that prefaced the loans. I guess the lenders have some reponsibilty here too.

Posted by Mott Marvin Kornicki, Waterway Realtors, Notary Public 786-229-7999 (Waterway Realty, Realtors® • Broker • South East Florida •) over 11 years ago

BB,

To me what you said in your statement tells me these people could probably still make the payments but they just want out of a pressured situation. In my my mind the only reason why someone goes and attempts a short sale is if they truly cannot afford to continue paying and they owe more than they can get on the market and they don't want to sell for less or they have to bring the money to closing because they will be up side down. It is to relieve you of the debt that you cannot afford to pay and to avoid foreclosure. It's sort of the last alternative if it is really true. It's just an excuse to get out of something that maybe they never should have done in the first place...leave the short sale to someone who really needs to do one. The ones who actually live in the home...not the investors who just want out because they are lsing money on an investment...I have purchased many investment properties and unless it was the last resort...I wouldn't do it.

Posted by Neal Bloom, Realtor CRS-Weston FL Real Estate (eXp Realty) over 11 years ago

I had one short sale this year and it was what the people absolutely HAD to do.  We tried to get more for the home for over 6 months.  The house just could not get the type of money they had to get to pay it off.  They could not afford to be there any longer.  When peoples incomes change from disabilities or Job loss, they are put into a situation where they HAVE to sell. 

  Like everything else thoguh,  it seems people are always trying to find a way to exploit the system.

Posted by Dave Jones, Broker/Owner - e-PRO Dave Jones Realty llc Prospec (Dave Jones Realty, llc.) over 11 years ago

Hi guys. Very good comments.

Rob a 30% closing percentage is actually not bad from what I have been hearing. I decided today to start charging an upfront fee at time of listing for all short sale listings. I figure since the closing percentage is so low I need to get paid something upfront for my efforts. It will also help weed out the sellers that don't want to participate. They need to have some skin in the game. 

A "short sale" may very well be a viable solution for folks that truly have a hardship. But if they don't we need to let them go. We need to quit recommending and taking short sale just for the sake of getting a listing. Be picky. Make sure the sellers understand all the ramifications of choosing this route and make sure they are motivated to work with us to get it done.

Posted by Bryant Tutas, Selling Florida one home at a time (Tutas Towne Realty, Inc and Garden Views Realty, LLC) over 11 years ago

I agree completely. I have 2 short sales now, both for legitimate reasons. One was hurt on the job and cannot work (he is facing 100% disability) and the other lost her husband to a car accident and cannot afford the payments on her own.

The problem is that their is no accountability on the sellers part. They don't have to pay taxes on the difference, their credit can be cleaned up easier and they can walk away with no penalty and buy another home in a few months at a reasonable price and lower payments.

Also there are no set guidelines/rules for a short sale. Each lender decides yes or no when asking for one, and there requirements can vary from one end of a football field to the other.

Unfortunately it seems that short sales are running rampant, and the sad thing is, for homeowners who are sticking with it, they are also getting hurt by declining property values.

Posted by Charles Tharp, Inland Empire, Real Estate & Short Sale Specialist (Prudential California Realty) over 11 years ago
BB, the only one I've dealt with is one in which the seller was entirely deserving (and in arrears) of a short sale opportunity, and it was a NIGHTMARE (ending in a foreclosure).  I cannot imagine dinking around with the hysteria, the non-answered phonecalls, and the B.S. for someone that is no way, no how going to get the short sale.  With banks getting more realistic, perhaps someone will enjoy the effort- it is not going to be me.
Posted by Laurie Mindnich over 11 years ago

When someone calls me about a short sale, I make sure that they actually need it! I tell them that if their situation doesn't warrant it then more than likely the bank want allow it. I then give them all the options they have and how they can turn this into a positive for them and the market.

Posted by Respect Realty LLC, Brokers - Oregon / SW Washington Real Estate (Respect Realty LLC) over 11 years ago

Hi folks. I've spending quite a bit of time this week thinking about short slaes and my strategy moving forward since there are many short sales in my area. I'm trying to look at these from all angles so I can develope a plan that will give me the best opportunity to enter this market area without wasting a lot of time any money on deals that won't close.

I plan on writinmg about this topic this week in more detail, so stay tuned. 

Posted by Bryant Tutas, Selling Florida one home at a time (Tutas Towne Realty, Inc and Garden Views Realty, LLC) over 11 years ago

Well, I agree that some of the Owners are idiots for always thinking they can just opt for a "short sale" (which may or may not be the case--they most of the time need an actual hardship) but I am even more ticked at the agents who have never done a short sale (or even a pre-foreclosure) that think that the Owner deserves a short-sale when those Owners are investors (and have multiple properties) or if the agent feels sorry for an Owner just because of whatever.  It's even worse when companies from all over the US want to charge a "referral fee" to local agents to list a "short sale," which, if it even goes through, is going to have the commission probably lessened by the bank anyway. 

Well, I like your idea of charging an up-front fee for short sales.  Excellent idea.  Otherwise, I don't know what to do about short sales.  I have a lot more thinking to do re: whether to continue to list 'em or not.  Good post, as always. 

Posted by Lisa Spalding, REALTOR, CDPE (Casa Latino Four Corners, REALTOR, CDPE) over 11 years ago

BB, I've beaten this horse until it died. Maybe they will listen to you.

And an aside to Renee, "equity stripping" is a felony in almost all jurisdictions.

Bill Roberts

Posted by Bill Roberts, "Baby Boomer" Retirement Planner (Brooks and Dunphy Real Estate) over 11 years ago
I put in my short sale listing agreements that if we don't sell their property, but help them work out a deal with the bank (modification, forebearance, deed-in-lieu, etc.) that we get paid a $1500 fee for our efforts.
Posted by Rob Arnold, Metro Orlando Full Service - Investor Friendly & F (Sand Dollar Realty Group, Inc.) over 11 years ago

We all must be held accountable!! Why have we lost that  and where did we loose that?  Our country was built on accountability...Boston Tea Party .... and yet now we seem to think it doesn't matter.  It does matter!  We are accountable for our debts!

Thanks for the blog and the comments are also an education (d i v o r c e) oh the details can be ugly!

Posted by asdf zcxv, Ann Arbor Area Real Estate (Keller Williams Realty) over 11 years ago
Our country was built on strong values but in todays society our government has created so many escapes for individuals to be rewarded for all the wrong actions. Then these people abuse the system.... there are people who do really need help because something bad has happened beyond their control ...like losing your job and illness.  Then individuals who work hard are picking up the slack for these individuals. Crawling off the soapbox.
Posted by Anonymous over 11 years ago
Our country was built on strong values but in todays society our government has created so many escapes for individuals to be rewarded for all the wrong actions. Then these people abuse the system.... there are people who do really need help because something bad has happened beyond their control ...like losing your job and illness.  Then individuals who work hard are picking up the slack for these individuals. Crawling off the soapbox.
Posted by Anonymous over 11 years ago

BB - What's crazy to me is how the general public and even many real estate agents didn't even know what the heck a short sale was 2 years ago! 

Now people think that they have an extra option out there...  ESPECIALLY SO CALLED INVESTORS!!!  The banks aren't going to roll over and play dead ya know!

 P.S. it's confirmed that Countywide is being bought out by Bank of America.   THIS major change, should tell most there is a lot of stuff shakin these days!

Posted by Katrina Madewell, Tampa FL Homes for sale | Tampa Bay - (813) 777-1196 (Charles Rutenberg Rlty- More than 5,000 agents(813) 777-1196) over 11 years ago

God morning BB..I agree that there are many who are using the short sale as a fix all rememdy...actually most fail, and go to auction...We are working on quite a few, the majority of mine are abandoned homes without tennants......We take them as normal listings, and work them as well as possible....Remember my last posts about all the listings for short sales with bait and switch pricing...I still get mad about all the listings being shown at a price that it cannot sell for without bank approval...and as we have stated, most do not get approved....

Sorry about pushing my old agenda here again, it still drives me nuts

Posted by Mike Norvell Sr, Norvell Consulting Group (Morris Williams Realty) over 11 years ago

BB - great points - I had one recently that the bank agreed to work with and they still want a short sale... it is CRAZY

Posted by Thesa Chambers, Principal Broker - Licensed in Oregon (Fred Real Estate Group) almost 11 years ago

You agents are getting what you deserve for helping to manipulate this market to it's fraudulant peak in 2005-06. 20 years of appreciation in 5 years is fraud!

You knew what the mortgage companies were doing, and did you really believe people could continue to make the payment after the teaser rate was over?

Home  loans were handed out like hot cakes to every idiot on the street!

Armagedden is here!

 

Posted by Scott Alexander over 10 years ago

I love to listen to people step up on the soap box and preach.

"People need to learn responsibility" "Where is the accountability"

Question: Where were all of the "enlightened and moraly irreproachable" agents and brokers a few years ago when normal people were being approved for these insane loan products on these over-inflated properties? I'll tell you where 99% of them were... in their nice cars driving to the next showing or to the next closing. I knew a LOT of them.

Just because you're in the real estate business and educated in the field doesn't mean everyone else has the same knowledge and expertise not to be taken advantage of by shady lending practices. I think everyone will agree that people need to take individual responsibility for making a bad decision, but at the same time, the lenders/agents/brokers who participated and reaped the rewards of executing the transaction for these people need to take some responsibility as well.

 

Posted by Brandon Henderson over 10 years ago

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