Short Sales: Often neither “Short” nor Successful “Sales”
July 23, 2010
Trying to sell your home on a “short sale” is all the rage these days. In our day-to-day work helping homeowners, there is nothing else more misunderstood. But they are almost always difficult to pull off and the benefits are often not what you expected.
In a short sale, a house is sold by “shorting”—underpaying—one or more of the lien holders. All over the country homeowners are trying to ram through short sales out of desperation because their homes are not worth the balances owed against them. In this blog we tell you why they often don’t succeed. In the next one we’ll lay out some good alternative solutions.
Short sales remind us of two wise rules of thumb: 1) acting out of desperation usually leads to no good, and 2) if it sounds too good to be true, it probably is.
They usually don’t work because:
Unhelpful and slow mortgage creditors: Your first mortgage holder is usually working through a servicing company that you are forced to work with. They don’t have enough staff, are not organized to process short sales. Often these servicing companies lose money on short sales so, behind the scenes, they can subtly sabotage your efforts.
Any lien holder can kill the deal: Everybody wants their “fair share” of a pie that is too small to make everybody happy. And usually by the time homeowners come to us, it’s not just the 1st & 2nd (and sometimes 3rd) mortgage, there can be ex-spouse trust deeds, judgment liens by creditors, utility and municipal liens, child support liens, and property and income tax liens. All of these players are unhappy with you, and any single one of them can mess up the whole deal.
The middlemen have the most to gain: Realtors, and sometimes attorneys and others in the real estate business, often benefit more from short sales than you do. Desperate realtors have to churn sales to survive. They tend to be biased towards an option that might make some money for them. There are good reasons that unbiased observers—like bankruptcy judges and trustees—take a dim view of short sales, seeing them as mostly a way for the middlemen to make money on your property.
Read more about this in our next blog, particularly about alternatives that often meet your goals better than a short sale.
Portland Bankruptcy Law Group has the experience and knowledge to handle your case. Our bankruptcy attorneys are extremely familiar with and are well versed in all aspects of bankruptcy law. Contact us today!