Harlan B. Griswold III's Blog

In the last two years, agents have told their buyers “short sales are to be avoided like the plague”. Some of the reasons included:

• The servicing agents were overwhelmed; it took weeks or months for a response.
• The lender was not realistic about values, asking for more than it was worth.
• Second leinholders refused to cooperate.
• Agent commissions were reduced, often at the last minute.

While some of these issues have improved, lenders still are illogical in their response to a short sale offer. One recent short sale of ours failed because the lender could not believe that home values had declined so much, and they would only be getting about 30% of the loan balance in net proceeds. Upon forclosing the home, they listed it $20 grand less than the offer they declined. Banks also reject offers when the homeowner has too much income, or if the buyer is related to the seller. This is very frustrating to all parties involved and everyone is thinking “I wish there was something I could do to even the playing field . . . “ The good news is that there IS something you can do to dramatically change everything about the deal. Use a hired gun, an attorney.

• Consider the use of an experienced attorney who specializes in this type of transaction.
• If you have an attorney you would like to recommend or have had a bad experience we would like to hear about it.

Some of the advantages for short sale transactions are:

• Legal protection to all parties of the transaction. (Seller, buyer and agents)
• Mitigated credit report damage (derogs)
• Accelerated timeline – see Short Sale Acceleration Program on website
• Less work for agents, more assurance of getting full commission
• Most of the fee is paid by the leinholder.
• Your attorney defines the terms, not the bank.

At this time, short sales (using an attorney) seems to be a very attractive option for both sellers and buyers of real estate. Listing agents can offer this option to the (underwater) homeowner, giving them more peace of mind at a very trying time. Homebuyers can write offers on these homes, and feel that the chances for success are good. As long as REO listings continue to get 20+ offers on them, Short Sales will remain an excellent alternative.