Short Sales

The LA Times has advice for underwater homeowners trying to engineer a short sale – How to unload your home through a short sale. Short sales seem more myth than reality, most stories involve their failure. Usually the bank is slow to respond and eventually the buyers walk away from the deal. If you’re a desperate short seller, the unwelcome news is that most end up in foreclosure. This article has a few tips to help you succeed. Here are a few of their main points:

1. Look for an agent with experience in short sales, it’s helpful to find an agent with contacts at the loss mitigation departments of major lenders.
2. Make sure you qualify – you must be behind in your payments and have little to no equity. Generally you must show a form of hardship – job loss, divorce, rising payments etc.
3. Offer the right price – lenders have a bottom line number they’ll accept, it’s pointless to submit offers for less. Generally lenders won’t accept less than 80% - 90% of current market value.

A short sale is preferable to a foreclosure. The damage to your credit is not as severe - the short sale is recorded as settled for less than full amount. In a few years you can own a home again, hence their popularity.

I know there are several houses in my neighborhood currently listed as short sales. Most were purchased around the same time we moved in, so they are similarly underwater. I haven’t noticed any movement on those homes, though a foreclosure was sold recently. If you are trying for a short sale, I wish you luck.