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Replies (29)
- Michael Emery, "MikeEmery"
- Contributions:7298
Short sales are always a great idea....for the agent.
What proof do you have that a foreclosure will mar your record for ten years versus two years for a short sale?
Most of the money that people make is in a recession
Once again, do you have proof to back up this statement, or is this mere puffery?
As for the statement that values will start to rise, that is most likely true. What is also true is the value of a home may only rise due to inflation and not due to any extraneous appreciation.
What proof do you have that a foreclosure will mar your record for ten years versus two years for a short sale?
Most of the money that people make is in a recession
Once again, do you have proof to back up this statement, or is this mere puffery?
As for the statement that values will start to rise, that is most likely true. What is also true is the value of a home may only rise due to inflation and not due to any extraneous appreciation.
- shasta_steve
- Contributions:448
And who said ethics in real estate is dead? Guys like that sure don't make your job any easier do they Mike? But he is a Premier Agent.
- Tiffany Bond, "TiffanyBond"
- Contributions:3010
Puffery is one of my favorite terms. I always visualize a lawyer dressed up like a puffin selling a juicer in an infomercial with the ghost of Jack Lalanne or the shamwow guy who OD'd.
- wetdawgs
- Contributions:26841
Welcome to Zillow Brady:
It is clear you wish to succeed. The environment in Zillow advice is quite different than some other real estate websites. One of the things I noticed is that those who succeed tend to be more thoughtful and helpful and rely less on self promotion. (Those who self promote tend to be received in an unfriendly manner.) Do you have a moment to read a thoughtful post in Advice on how to succeed as a professional and build your reputation on Advice? Here's a link. While you are at it, here's the Good Neighbor Policy.
Welcome aboard.
It is clear you wish to succeed. The environment in Zillow advice is quite different than some other real estate websites. One of the things I noticed is that those who succeed tend to be more thoughtful and helpful and rely less on self promotion. (Those who self promote tend to be received in an unfriendly manner.) Do you have a moment to read a thoughtful post in Advice on how to succeed as a professional and build your reputation on Advice? Here's a link. While you are at it, here's the Good Neighbor Policy.
Welcome aboard.
- Kate Novotny, "Kate Novotny"
- Contributions:4
It is interesting the different answers you will get when you ask this question, and it seems to be the number one question on everyone's mind. The correct answer would be different for each individual situation so:
1. Talk to your accountant about your particular situation.
2. Know your tax ramifications in your particular state, they differ!
3. Look at your life goals and how this might effect your ability to purchase in the future. Perhaps renting your property and holding on it it would be a better choice.
4. Know that most banks will want to see your entire financial picture, be prepared to show bank accounts, tax returns and provide endless documents more than once.
5. Find a Real Estate Agent who has successfully done short sales. Most agents like to reduce the price, tag it as a short sale and them muddle through it. That rarely works.
6. Finally know that every bank handles them differently, processing agents within the same bank will handle it differently and banks change the way they process them from month to month. So there is no firm answer. You have to be prepared for a long haul and it won't be easy.
1. Talk to your accountant about your particular situation.
2. Know your tax ramifications in your particular state, they differ!
3. Look at your life goals and how this might effect your ability to purchase in the future. Perhaps renting your property and holding on it it would be a better choice.
4. Know that most banks will want to see your entire financial picture, be prepared to show bank accounts, tax returns and provide endless documents more than once.
5. Find a Real Estate Agent who has successfully done short sales. Most agents like to reduce the price, tag it as a short sale and them muddle through it. That rarely works.
6. Finally know that every bank handles them differently, processing agents within the same bank will handle it differently and banks change the way they process them from month to month. So there is no firm answer. You have to be prepared for a long haul and it won't be easy.
- Brady Howard, "Brady Howard"
- Contributions:28
Thanks for all your input, Mike and Steve, I''m not an attorney or a CPA, I only pass on what I get from them. Short sales are the most painful real estate transaction ever. I do them because I truly believe that I help people. The most satisfying part is getting a letter from the bank stating they will not come after the homeowner for a deficiency.
I never negotiate the sale, I use attorneys for that. Sorry if it came off as "puffery" just starting a discussion.
I never negotiate the sale, I use attorneys for that. Sorry if it came off as "puffery" just starting a discussion.
- Michael Emery, "MikeEmery"
- Contributions:7298
The most satisfying part is getting a letter from the bank stating they will not come after the homeowner for a deficiency.
While I'm not familiar with the laws in your state, in Minnesota the foreclosure action bars the lender from collecting on a deficiency. So whether the homeowner seeks a short sale or foreclosure is irrelevant.
I'm still curious about attribution for the 10 years of a foreclosure on your record or a 2 year blip before you can buy another house statement. From my understanding a short sale is only marginally better at allowing you to purchase down the road. And any homeowner who has had a short sale or foreclosure will probably not be buying for some time.
While I'm not familiar with the laws in your state, in Minnesota the foreclosure action bars the lender from collecting on a deficiency. So whether the homeowner seeks a short sale or foreclosure is irrelevant.
I'm still curious about attribution for the 10 years of a foreclosure on your record or a 2 year blip before you can buy another house statement. From my understanding a short sale is only marginally better at allowing you to purchase down the road. And any homeowner who has had a short sale or foreclosure will probably not be buying for some time.
- ConnieK_Oklahoma
- Contributions:2899
I am not in favor of short sales at all. Not afraid to do them, don't like doing them. If there was a way to organize the collective of people buying and selling and have a boycott of all short sales I'd be for it. Short sales don't "save" the seller's credit and financial standing the way that they are promised to do by many (not implying that you do this.). Lenders can go after the "seller" for the balance and often do (at least this is clear at contract time if they will do this or not). Problems arise in short sales like repairs are needed for the buyer's loan to approve, seller has no money to do it, seller's lender won't do it or do allowance....it gets messy and painful for everyone. sometimes they go without a hitch. I have other issues with short sales in general that makes me want to refuse to do them, because I feel it's a root culture problem. I haven't gone so far as to say use someone else, but I don't do anything to encourage or seek them out. I'm not expecting to convince you and I deleted my blog about this but I'd encourage you to consider that the culture of being OK with short sales is not necessarily good.
not asking you to agree...just consider a broader look.
- Matt Hackett, "matthackett"
- Contributions:3
I have seen some questions in regards to the timeline of negative impact of a Short Sale vs. Foreclosure and hopefully I can shed some light on the subject. Please keep in mind, policies with lenders and credit reporting agencies change with time, and posts in forums like this online do not.
At the time I writing this, Fannie Mae (the largest conventional mortgage buyer in the U.S) has become more lenient with their guidelines when lending to previously foreclosed homeowners. If the borrower has experienced extenuating circumstances such as death in the family, job transfer, or serious illness they may forgive the foreclosure and lend again within 3-7 years. If you do not have an extenuating circumstance, than you will see a 7-10 year period in which you can not borrow money. (from Fannie Mae)
Bank guidelines, although mechanical in nature, are often decided upon by human beings. It is common sense for the underwriter to approve a mortgage to a previously foreclosed borrower if she lost a husband in war, or become seriously ill. However they will not be quick to lend to those who abuse the system and refuse to pay their mortgage for months, trash the house and refuse to leave when properly and legally evicted.
The short answer (pun intended) to how long one can buy a home with conventional financing after a short sale is, 2 years. It is very simple and clear cut with underwriting guidelines. If you want to borrow FHA, it will be 3 years.
Lastly, I want to point out the importance of selling short rather than foreclosing. Your credit score WILL drop significantly more and stay lower longer if you choose to have multiple late payments on your mortgage and foreclose. With that said, you can expect to see a rise with your credit card, auto loans and any other financing APR's.
Short Sales can be an excellent way to avoid complete financial catastrophe. Thank you for the opportunity to post and I appreciate any feedback or questions.
At the time I writing this, Fannie Mae (the largest conventional mortgage buyer in the U.S) has become more lenient with their guidelines when lending to previously foreclosed homeowners. If the borrower has experienced extenuating circumstances such as death in the family, job transfer, or serious illness they may forgive the foreclosure and lend again within 3-7 years. If you do not have an extenuating circumstance, than you will see a 7-10 year period in which you can not borrow money. (from Fannie Mae)
Bank guidelines, although mechanical in nature, are often decided upon by human beings. It is common sense for the underwriter to approve a mortgage to a previously foreclosed borrower if she lost a husband in war, or become seriously ill. However they will not be quick to lend to those who abuse the system and refuse to pay their mortgage for months, trash the house and refuse to leave when properly and legally evicted.
The short answer (pun intended) to how long one can buy a home with conventional financing after a short sale is, 2 years. It is very simple and clear cut with underwriting guidelines. If you want to borrow FHA, it will be 3 years.
Lastly, I want to point out the importance of selling short rather than foreclosing. Your credit score WILL drop significantly more and stay lower longer if you choose to have multiple late payments on your mortgage and foreclose. With that said, you can expect to see a rise with your credit card, auto loans and any other financing APR's.
Short Sales can be an excellent way to avoid complete financial catastrophe. Thank you for the opportunity to post and I appreciate any feedback or questions.
- Brady Howard, "Brady Howard"
- Contributions:28
Thanks Matt, That is a much more concise answer
I truly believe in Short sales especially if you get a letter from the bank foregoing a deficiency. I have seen many people sell short and buy again within a couple years without the need for bankruptcy or foreclosure.
I truly believe in Short sales especially if you get a letter from the bank foregoing a deficiency. I have seen many people sell short and buy again within a couple years without the need for bankruptcy or foreclosure.
- shasta_steve
- Contributions:448
Yes thanks Matt. You pretty much show the whole short sale scam, that realtors are pushing, is just a great way for you to make some money being less than honest.
There is not nearly enough space to correct every misleading statement you made but here are a couple of examples. You say you have to wait 7-10 years after a foreclosure but it is only 7 as per Fannie. You say you have to wait 2 years after a short sale but you "forget" to mention you would have to have 20% down, it is 5 if you don't. You say that you have to wait 3 years after a short sale to buy FHA but you "forget" to mention that the rules are the same for short sale and foreclosure. Same with VA. In the interest of full disclosure it "may" be possible to get a FHA loan right away after a short sale if you did not go late.
You mention that your credit wll drop much more with a foreclosure than a short sale but that is simply not the case, it you went late on your short sale. If there is no deficency, as is the case of most forecloures in Calfornia, they are almost the same. My FICO score, one year out of foreclosure, was 747. It also states the same of MyFico website but I am sure you would rather get your information from "industry" sources. I won't even get into how you do not understand how banks decide to give loans.
One last thing. Can someone please explain to me how agents, who are barred from giving legal or financial advice, are still able to do it on an open forum. Expecially when it is wrong or misleading.
There is not nearly enough space to correct every misleading statement you made but here are a couple of examples. You say you have to wait 7-10 years after a foreclosure but it is only 7 as per Fannie. You say you have to wait 2 years after a short sale but you "forget" to mention you would have to have 20% down, it is 5 if you don't. You say that you have to wait 3 years after a short sale to buy FHA but you "forget" to mention that the rules are the same for short sale and foreclosure. Same with VA. In the interest of full disclosure it "may" be possible to get a FHA loan right away after a short sale if you did not go late.
You mention that your credit wll drop much more with a foreclosure than a short sale but that is simply not the case, it you went late on your short sale. If there is no deficency, as is the case of most forecloures in Calfornia, they are almost the same. My FICO score, one year out of foreclosure, was 747. It also states the same of MyFico website but I am sure you would rather get your information from "industry" sources. I won't even get into how you do not understand how banks decide to give loans.
One last thing. Can someone please explain to me how agents, who are barred from giving legal or financial advice, are still able to do it on an open forum. Expecially when it is wrong or misleading.
- sunnyview
- Contributions:25139
"Can someone please explain to me how agents, who are barred from giving legal or financial advice, are still able to do it on an open forum. "
Good question. I think the easy answer may be that their local associations support short sale propaganda as a way to line pockets. Ick. Just typing that gives me the creeps. Short sale is not the only option and often not even the best option available depanding on your state law.
I would prefer for people in that situation to read all they can, get information from sources that do not make money from your final decision and make sure to get one legal consultation so that you understand all your options/state laws before you choose the option that is best for you as an owner.
Good question. I think the easy answer may be that their local associations support short sale propaganda as a way to line pockets. Ick. Just typing that gives me the creeps. Short sale is not the only option and often not even the best option available depanding on your state law.
I would prefer for people in that situation to read all they can, get information from sources that do not make money from your final decision and make sure to get one legal consultation so that you understand all your options/state laws before you choose the option that is best for you as an owner.
- Matt Hackett, "matthackett"
- Contributions:3
It is unfortunate to see so much hatred towards the real estate industry in this forum. I appreciate your feedback and encourage open dialog, however many of the facts that I stated above were referenced from Fannie Mae. Perhaps I should have cited the source for you all, but it seems you may still warrant that as "propaganda" The mention of your FICO going to 747 shortly after Foreclosure is a bit unbelievable. I have multiple examples that would prove your experience is either A: Untrue or B: Far from the norm.
At the end of the day, people have free-will to foreclose if they want. I recommend they do not, and that they consult their CPA, Attorney AND REALTOR before doing so..I've assisted homeowners with both their short sale and foreclosure process and in many cases do not make a dime for it. Before bashing into the industry and specifically me "ShastaSteve and SunnyView -23129 posts on zillow forums-" I suggest you keep an open mind to my intention of positively contributing to the forum and the mess in which we have on our hands with the many upside down mortgages.
At the end of the day, people have free-will to foreclose if they want. I recommend they do not, and that they consult their CPA, Attorney AND REALTOR before doing so..I've assisted homeowners with both their short sale and foreclosure process and in many cases do not make a dime for it. Before bashing into the industry and specifically me "ShastaSteve and SunnyView -23129 posts on zillow forums-" I suggest you keep an open mind to my intention of positively contributing to the forum and the mess in which we have on our hands with the many upside down mortgages.
- Tiffany Bond, "TiffanyBond"
- Contributions:3010
Uh, yeah. You should cite sources. This is really a topic for lenders, not agents. Although agents may facilitate short sales, home owners in the unfortunate situation to need such services should also consult with a tax professional, an attorney and, if they want to purchase in the future, a qualified lender to see what the fall out will be - not an agent.
- hpvanc
- Contributions:2579
Gullible sales people pay out good money to find and educate themselves the best talking points to manipulate people into making decisions, so that they can have an income.
A "great" or "consummate" sales or marketing person has no apparent conscience, and can also teach sales and marketing classes to get gullible people to propagate the message they need to steal a living.
The two groups work together very well and will hire lobbyists to prevent meaningful consumer education, disclosure or professional standards, and will use everything in their power to stymie media attention on the scams they are perpetrating. That about sums up my opinion of the shortsale versus foreclosure discussion or the whole real estate sales industry in general.
A "great" or "consummate" sales or marketing person has no apparent conscience, and can also teach sales and marketing classes to get gullible people to propagate the message they need to steal a living.
The two groups work together very well and will hire lobbyists to prevent meaningful consumer education, disclosure or professional standards, and will use everything in their power to stymie media attention on the scams they are perpetrating. That about sums up my opinion of the shortsale versus foreclosure discussion or the whole real estate sales industry in general.
- sunnyview
- Contributions:25139
Matt I did not bash you and I invite you to read my posts if you feel that I am hostile to agents as a whole.
I did state the fact that, unlike you, many agents do NOT refer their clients to CPA's or attorneys before they ask them to sign a short sale contract. That is wrong in my opinion. It may be the best way to get a commission or listing, but it may not be the best way to help the homeowner.
Homeowners need information BEFORE they pursue short sale as the panacea to their underwater ills and it is no secret that the industry itself has not been entirely forthcoming in relating that fact to troubled homeowners.
I did state the fact that, unlike you, many agents do NOT refer their clients to CPA's or attorneys before they ask them to sign a short sale contract. That is wrong in my opinion. It may be the best way to get a commission or listing, but it may not be the best way to help the homeowner.
Homeowners need information BEFORE they pursue short sale as the panacea to their underwater ills and it is no secret that the industry itself has not been entirely forthcoming in relating that fact to troubled homeowners.
- shasta_steve
- Contributions:448
Wow Matt. I guess what you are really saying by "open mind" is don't call me when I am trying to make a buck, even if what I say is not accurate.
Now Matt I am the first to admit my credit score is higher than most would have with a foreclosure. I had a single, non-recourse loan, and a long credit history with another mortgage also. If you have a couple of loans and are having trouble paying your other other bills it will be much worse. But so will it with a short sale if you go late. Most of your credit hit is going 30-60-90 days late and very little is the actual foreclosure.
Also please cite your sources and I am more than willing to debate this with anyone, especially how the process works in California. My problem with your sales pitch is not so much that it is wrong but it is misleading and unless Zillow decides they don't want me posting I am going to keep blasting away at agents who are less than honest on this whole short sale scam they have working.
I do agree that people should do what is in their best interest but when we have agents going door to door to convince people how great short sales are for them, I think that crosses the line, especially when they information they cite is only half true. And when I say door to door I have had three agents knock on my door so far to try and sell me and my neighbors.
- Tiffany Bond, "TiffanyBond"
- Contributions:3010
I think there is a satire waiting to happen in the "door-to-door short sale agent."
- Sheila Mannarelli, "SMannarelli"
- Contributions:82
A short sale is definitely worth the time and effort. Doing a short sale will only affect your credit for two years and there are some lenders who are willing to work with customers who have recently done a short sale on their home to purchase another home. Short sales are done for a multitude of reasons not just because an owner decided not to make payments anymore. Relocation, death of a spouse, downsizing, loss of one job all can contribute to the decision. The bottom line is the seller needs to make the choice.
- Matt Hackett, "matthackett"
- Contributions:3
@Tiffany- fortunately I am also a licensed Mortgage Lender that was until recently managing a firm with 120+ national registered loan agents. I sit on a few boards that currently handle solutions to curb the current mortgage mess in local communities. (probono) I figured citing well known names such as Fannie, that referencing the underwriting code wasn't necessary. I'm curious how you spend your day finding solutions for the matter? With Only 6 years experience and 2900+ blog posts on zillow alone, it is interesting. I agree with you, people need to consult their attorney's, and that does not include their legal assistants or law clerks...
It really was unfortunate to see such hostility unravel with this question/post. I wish you all the best.
It really was unfortunate to see such hostility unravel with this question/post. I wish you all the best.
- Linda Strasberg, "L Strasberg"
- Contributions:2315
When you're in a position to purchase, which makes you feel better as a buyer...knowing you helped someone avoid foreclosure or knowing you put someone out on the street for you to get a deal...or don't you care as long as you get it at 60% off the original purchase price?
- Tiffany Bond, "TiffanyBond"
- Contributions:3010
I can juggle quite a bit Matt and Zillow is a hobby of sorts for me. I'll check in while waiting on hold, sitting in a lobby somewhere, between my grad school courses. I average less than 3 posts per day since I joined - I wouldn't call that intense amounts of energy. Many of us have backgrounds that are more in-depth than our profiles would let on. My profile does not include a lot of relevant details on my past and current endeavors. Are you actually interested in my solutions for world problems or community involvement?
If you are giving advice for something, particularly if someone would need to go to your profile to know you might know what you are talking about, you should cite a source.
If you are giving advice for something, particularly if someone would need to go to your profile to know you might know what you are talking about, you should cite a source.
- Linda Strasberg, "L Strasberg"
- Contributions:2315
I have a cousin who has attended years and years of studies...he was a law professor at Fordham as well as a judges law clerk...some folks love attending classes to avoid working...he's now a stay at home mom... his wife is the bread winner in the family
- Hamp Yonce, "Zilluminati"
- Contributions:3463
Linda Strasberg has Balls of Titanium. I love that Lady!
- Linda Strasberg, "L Strasberg"
- Contributions:2315
Hamp Yonce, "Zilluminati"
since having balls has always been considered to be a plus, I'm glad mine are made of lightweight titanium for added comfort *)
since having balls has always been considered to be a plus, I'm glad mine are made of lightweight titanium for added comfort *)
- ConnieK_Oklahoma
- Contributions:2899
it's unfortunate that the FTC decided to forbear enforcement of MARS rules for REAs. I'd be more supportive of short sales if those rules were enforced. The argument that "some of the required disclosures could confuse consumers or could be inaccurate in this context" simply allows confusion without those disclosures and opens the door for "promoting" short sales which is a far different thing that advertising services to assist people who have that as their only option.
for me...it's the same. I have rather strong opinions on short sales and they are just that...opinions. So I choose not to do them but to refer sellers wishing to short sale to someone else that can serve them better that does not have such opinions.
but the referral would still not be to a person that was "selling" it.
for me...it's the same. I have rather strong opinions on short sales and they are just that...opinions. So I choose not to do them but to refer sellers wishing to short sale to someone else that can serve them better that does not have such opinions.
but the referral would still not be to a person that was "selling" it.
- Quinn Irvine, "quinnirvine"
- Contributions:43
If done properly a short sale is usually the best option. If your loan was purchase money or non cash out refinance then you will qualify for a clean break without owing the bank anything in the future. Make sure you do your research when hiring your agent, it can make all the difference in the world. In my opinion a good short sale agent has 15 or more short sale listings under his/her belt. This will give them the experience needed to do the job correctly.
- Chevon Eaton, "Eatongalveston"
- Contributions:13
People must always remember that these are last options. Right now, many mortgage companies are willing to work with buyers and adjust the rate and terms of your loan. Granted, some paperwork is involved, but I have seen people cut their monthly payments in half. Short sale is the preferred method if you cannot pay. In my experience, trying to sell a foreclosure can sometimes be a nightmare. Short sales are easier and do not impact credit is bad from what I have seen. Also, I have seen the remaining balance after the sale be forgiven by the bank in some cases while others have the remaining still due to borrower. Anyone else experienced this?
- Bryan Genesse, "bryan genesse"
- Contributions:8
Are you Buing or Selling? It's important to know which one you're looking at. Do you need a Security Clearance? Do you own a home that is way underwater--you owe substantially more that it's worth? Are you thinking of buying, and are considering a Short Sale Property---do you have time to wait to move in?
These are just a few of the questions that need answers before knowing which way you might want to go. thanks.
Short Sales, are they worth it?
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- 5.0/5.0
- (4 reviews)
Contributions:28Hell yes!!!! do you want 10 years of a foreclosure on your record or a 2 year blip before you can buy another house.
Skeptics will say "why would you ever want to buy again"
Millionaires will say "oh my god there has never been a better to to buy than now"
Most of the money that people make is in a recession. The time to buy is now so if you even believe in the American dream a little bit. GET IN AND DO IT!!!!!
Short sale and rent for a couple and then buy again because values will start to rise and you don't want to wait for them to be on the upswing. It will be to late.
Cheers, Brady Howard [phone number deleted by Zillow moderator. Please refer to our Good Neighbor Policy]
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