Wednesday, February 4, 2009

Top Short Sale Fallacies

There are a lot of rumors, supposed strategies and endless classes teaching "short sales". Here are the top five short sale "tactics" worth debunking:

1. You should put a quick closing on your contract to get a faster approval. False. Many short sale lenders have up to 70,000 files they are processing at any one time, and up to 600 files per negotiator. Threatening that a buyer will "walk" or that you will pull a contract because of a contract closing date will generally have no effect on getting the lender to respond more quickly.

2. You should send in multiple offers to the short sale lender. False. Most large lenders only want one signed contract. Reference Countrywide's short sale package stating: "If there is more than one purchase contract, the seller may only submit ONE offer to Countrywide for review."

3. You can demand the lender not issue a 1099-C on the cancelled debt. False. The lender is required by law to report the forgiven debt on a short sale as income. You may not be liable to pay taxes on this debt, however, if you qualify under the IRS insolvency rule or the Mortgage Forgiveness Debt Relief Act.

4. You can negotiate with the lender to not report the short sale as "settled" to the credit bureaus. False. Again, most large lenders have standard approvals and reporting guidelines they will not vary, even if you hire an attorney. With a short sale, however, you might be able to borrow again in two years, versus four to seven years with a foreclosure or deed-in-lieu of foreclosure.

5. If your lender knows you are trying to do a short sale, they will stop the foreclosure process. False. Lenders cannot rely on a successful short sale transaction or even on a property receiving an offer. Stopping their collection and foreclosure efforts would weaken their position and potentially cause further financial loss. You may, however, be able to postpone a foreclosure sale date if you submit a reasonable short sale offer for consideration.

If you steer away from razzle-dazzle and tricky tactics, and rely on common sense, you will find your short sales a success.

It's Wendy!
Wendy Rulnick, Broker, CRP, CRS, GRI, ABR Rulnick Realty, Inc.

Call toll-free 1-877-ITS-WNDY (1-877-487-9639) or local 850-650-7883 ext 204
Email [email protected]

Wendy Rulnick specializes in real estate sales, short sales, traditional sales on Emerald Coast of Florida: Destin Florida real estate, Santa Rosa Beach, Fort Walton Beach, Niceville, Bluewater Bay, Navarre, Seagrove Beach, Watercolor, Sandestin, Seaside, Dune Allen, Blue Mountain Beach, Crestview, Freeport, Rosemary Beach, Mary Esther, Shalimar, Eglin AFB, Hurlburt Field. Wendy Rulnick, Broker and Realtor, has been selling real estate for 20 years. She has won numerous awards, including the coveted ADDY for advertising design. An expert marketer of real estate listings, she negotiates successfully to her clients' advantage. She is supported by a team of top buyer specialists. She lists and sells homes, condos and townhomes in and around Destin Florida. Wendy is in the top ½ percent resale agents on the Emerald Coast, and was featured in Kiplinger Personal Finance Magazine as a short sale specialist.

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