We've had a number of people calling us regarding listing their homes as a short sale. They've heard the expression "jingle mail" and assume all they have to do is get the house listed at an artificially low price, call an agent and list it, mail a set of keys to the bank and live in the house till it settles which could be a year from now and somehow move into something affordable. Wrong. I can't just pull a number out of my hat, you have to have missed payments because of a financial or documented medical hardship. Your credit score is lowered to a point where you can't purchase another more affordable home. If you're unable to pay your mortgage now, why would a bank lend you money even for a smaller house with smaller payments? You'll be directed to someone who should be able to lower your payments until your circumstances change. I'm only at the tip of the iceberg.
Here's a blurb from HAMP dated 11/2009:
In Supplemental Directive 09-01, the Treasury Department (Treasury) announced the eligibility, underwriting and servicing requirements for the Home Affordable Modification Program(HAMP). Under HAMP, the servicers apply a uniform loan modification process to provide eligible borrowers with sustainable monthly payments for their first lien mortgage loans. While HAMP program guidelines are intended to reach a broad range of at-risk borrowers, it is expected that servicers will encounter situations where they are unable to approve a HAMP modification request, a HAMP modification is offered and not accepted by the borrower, or the borrower falls out of a HAMP modification. In these instances, the borrower may benefit from an alternative that helps the borrower transition to more affordable housing and avoid the stigma of a foreclosure.
If I pull a price out of my hat to induce multiple contracts to present to the bank, isn't that false advertising? Once you've established in writing with a bank that you'll be going into short sale, the bank is going to send out an appraiser to determine price. If you've borrowed 100% on the loan and the house was purchased at $100,000 but the house is now worth $90,000 and that number has been established via certified appraisal and market analysis, who pays that $10,000 deficit and when? Should you just throw in the towel and file bankruptcy? Consult an attorney, not your REALTOR! I cannot practice law! How much information do I give other agents who have buyers interested in putting in offers? What tax consequences are there? Do you the seller sign the offer before the bank accepts terms? Will a special stipulation in the contract fully protect you? When is the contract binding? Can you get to the closing table and the sale fall through? What happens if the bank wants you to sign a promissory note at closing for any shortfalls? What are the buyers options at closing and the seller won't or can't close? Providing a property is a good value, why wouldn't buyers prefer a full foreclosure so they don't have to wait months for a short sale to be approved?
RE/MAX Paramount Properties 678-595-5283 Direct
Or 888-940-0074 Toll Free Office
Atlanta Real Estate Agents, Alpharetta GA Homes for Sale, Dunwoody GA Homes for Sale, Atlanta Real Estate & Atlanta Homes for Sale 
Gwinnett Homes for Sale
Atlanta Real Estate Blog, Cumming GA Homes 
Jim - Thanks for the info. Homeowners are receiving misleading information on multiple fronts these days and, I agree, maybe an attorney should be their first stop. With the report out this morning that 13%+ of all mortgages are in past due or f/c status their is a long way yet to go on this train ride. ~Doug
Very good Points...unfortuneately many are given misleading or incomplete information!!!
I like to describe short sales as the wild west of real estate.
In reply to your blog post, I have encounterd many short sale clients that have qualified and are far outside of the guidelines that you deem appropriate. It is my experience that the success of failure of a short sale has allot more to do with how the file/case is presented by a professional negotiator than it does with anything else.
There is a big market out there right now for those that know how to navigate it. Unfortuantely Realtor's are operating under as many misperceptions as are the home owners in need of an experienced short sale professional. Until you roll up your sleeves and take off your tie, you'll probably be stuck at square one with your short sale business.
In my opinion, everyone has to many "opinions" about what qualifies as a short sale.
If you'd like you can read more at my Blog >> http://bit.ly/dfufcD
Jim...
It's a strange world out there, but short sales do have a place when it is a win-win for the borrower and the bank. But there needs to be some guidelines in place.
And there is so much diversity in the process form bank to bank, asset manager to asset manager and it just keeps getting more complicated. We went through a version of a lot of this during the S&L Crisis and I am just glad we managed to mostly dodge the bullet this time!
Cari & Doug Anderson (Diversified Mortgage Group) Georgia law is very clear, that unless you are a lawyer, you cannot advise a person in a short sale. There are so many implications, tax, credit, credit scores, etc. The best course of action is to seek legal advice first.
Deborah Byron-Leffler PMN, SFR (Keller Williams Realty West) I totally agree!
Nat Ferguson I do agree. In many states it is first important for licensed real estate practitioners to comply with their individual state laws.
Richard Weisser Coweta Fayette Real Estate I agree, but from what I've observed in the Atlanta market I refer these leads out to other agents. In hind sight it was a great choice. I have not had to wait 7 months for deal s to close, or have them explode at the closing table after waiting over a year. This business decision freed up a lot of mental anguish, and allowed us to concentrate on more profitable areas for our business. For us it was a better choice.
Russell Lewis, Broker,CLHMS,GRI (AvenueOne Properties, Austin Texas Real Estate) You are right Russell. There is no uniformity in the process, and that is a major problem. Each deal is different, and if there is a second and a third mortgage then it really gets interesting. The point is that it is not as simple a process as so many would like to believe. If a seller gets a low offer they what to short sale. however if they have money in the bank, a job and are current on their bill that is not going to happen.
Jim: Short sales have to be the all time nightmare of real estate. Yes, I know they can close, and yes I know if you get with someone that knows how to do them...altho I've yet to figure out WHERE you learn how to do them....Short Sale training course appear to be a dime a dozen these days...how do you really know you are learning WHAT you need to learn?
So far, I've been able to avoid short sale listings for my buyers. They have been Buyer's that want to but, not write contracts and hope.....
Now, the listing side....that is a whole other story, and again, I refer back to my comment above. I had a short sale listing and the lender did nothing but run us around in circles, till it went to foreclosure.
Good Lord, grant us the strenght to make it through this mess....
On the local tv station today, they were letting the public know a mortgage company was encouraging homeowners to hand over keys and walk away from their mortgage.........I called the station and they sent the link from a mortgage company in Arizona. Now how stupid to tell a totally different real estate market to hand over their keys?
The Thom And Ray Team Midtown Atlanta Real Estate Thom, I totally agree with you. It is a total mess. I've taken all the courses there are, and have the designations. I do not want to do them. It is all risk, and I run a business. My business sense says refer them to someone that is willing to work them. I've heard every nightmare scenarios from agents I refer the business to. Again, I know I made the right choice! I do hope this is over shortly.
Kay Van Kampen, CDPE, Broker, Springfield Missouri Real Estate (RE/MAX Solutions) That is totally irresponsible, and they should be brought p on charges if possible. That is not journalism. Journalism is supposed to report the news not make it and then report it.
It seems like it's becoming more common, even in a short sale or foreclosure, for the former owner to be handed a bill at the closing for some portion of the amount still due to the bank. There are good reasons (if not happy) reasons for losing a home. Walking away "just because" is not going to help.
Stanton Homes - Penny Hull New Home Builders - Raleigh NC Area (Stanton Homes - New Homes in Raleigh NC and Surrounding Area) I agree. I have a problem with the "Just because..." walkaways!
Thanks for your insight and wisdom regarding short sales. They are delicate to handle. I'm glad to have an informed real estate attorney at a title company that is great at guiding us through short sales in the Dayton Ohio area. Don Shurts, http://www.MiamiValleyDreamHomes.commrytle
Thanks Don!
Jim I agree with referring them out. Waiting forever and it doesn't go thru? Not for me either.
John Walters (Licensed in Slidell, Louisiana) (Slidell, Pearl River, Lacombe) I know I would lose it! It really was a smart idea!
Jim, Thank you for the post.I will bookmark it and read it and share it with others.
Good info, Jim. As always, we should "do what we know" and certainly avoid practicing law -- good common sense, good client service, and compliant with the NAR COE.
GITA BANTWAL, REALTOR BUCKS COUNTY, PA HOMES (ReMax Centre Realtors) Thanks Gita! I am glad you found it helpful.
Bill Morris Sadly, many in our industry are acting in a capacity that can put their clients, brokers and themselves at risk! E&O does not cover fraudulent acts. Practicing law without a license is not covered!
Great advise Jim. There are too many agents out there taking advantage of homeowners in distress.
Tina Maraj Fullerton Realtor (RE/MAX North Orange County) Tina, I agree with you on that!