Short Sale Series-Part Six

Part 6-Red Flags

We have gone through the process of what constitues a short sale, what you need to put together for the mortgage company, and how to choose a Realtor and finding the right buyer and buyer's realtor. Now let's go into a few Red Flags to watch our for.

Red Flag #1. Lack of transparency. More lenders are calling for an arms length relationship. BA/Countrywide is especially firm on this. if i want to buy the short sale and leave the owner in as a renter, they will probably kick it back, as they have in relatives buying the house. yes, I can buy a short sale for myself, but I need to put it on the open market for rent. This is becoming more an accepted practice with lenders for accepetance of a contract.

Red Flag #2. True hardship. Let's say for arguments sake you made a bad buy and you want out. Don't lie about it and create a false hardship, and don't go out and buy another home that's cheaper, quit making the payments, and expect the mortgage company to go okay, we will do the short sale. Just stop making payments is not a harship, and if a realtor tells you to stop, file a complaint with the state real estate commission or local board.

Red Flad #3. Don't assign a contract. This is for Realtors. I have been approached by "investors" who want to do an assignable contract for the short sale, then they said that they would hire me as a Realtor to sell it while they do the neogtiation with the lender. After I sold it for more money I would get a full commission. First, i have a signed contractcwith the homeowner, not this scammer. When this all blows up, the homeowner suffers the most. FYI, I have been propostitioned numerous times to do this. As Tony Soprano said, "fuggeddaboudit". I don't look good in orange anyway.

Red Flag #4. The Realtor who says don't worry. Please worry, becasue a 15% national success rate should cause you to worry. We have a 95% success rate but that means no all sales work. This is the same Realtor who does not not get financial info up front, and would more than likely send the offers to the lender without your signature. yesterday we sent in one of our smaller short sale file to the lender with one signed offer and 70 pages of documentation.

The last entry in this series tomorrow will deal with the benefits for all those concerned and a summary of what these 6 blog posts means to the markets we serve.