I read an article just yesteraday that stated the average short sale success rate for most agents across the country is 23%. Stated another way, real estate agents fail to execute the short sale transaction 77% of the time! What’s the typical outcome of a failed short sale? A FORECLOSURE! Yes that’s correct – a foreclosure. That darned F word again. And that’s exactly what you are looking to avoid when you opt to short sell. Conduct a short sale correctly and you will avoid foreclosure. Mess it up, and you are likely to be foreclosed.
Should you need to short sell, it’s imperative you partner with a real estate professional (a.k.a. Realtor, but I’ve never liked that term) with a successful history in the short sale department. The more I work these deals, the more I realize that most of my real estate peers just do not know the “ins and outs” of a short sale transaction (nothing against you my fellow agents, but you’ve got to know your stuff before you venture off into short sale land).
Here are five simple questions (beyond the obvious “how many short sales have you closed?”) you can ask your real estate agent to see how versed they are in these specialized types of transactions:
1) What are the possible deficiency judgements that may result from my short sale?
2) What is the foreclosure process and timeline in Illinois (or whatever state in which you reside)? What are my alternatives to foreclosure?
3) How does a short sale, a foreclosure, or a deed in lieu effect one’s credit?
4) Deed in lieu, what’s that?
5) How do I qualify under the Mortgage Forgiveness Debt Relief Act of 2007?
If your agent cannot confidently answer these questions, then you might want to look elsewhere for short sale guidance. The first questions I ask a prospective short sale client include: “What is your total debt on the property? How many loans do you have? If you have a 2nd, is it a HELOC or a true second? Who are your lenders? How many payments have you missed? What is your intention with this property? Please fax me copies of your latest mortgage statements.” Please, please, please make sure you’re working with someone who knows this niche. Otherwise, the odds are strong that you’re just spinning your wheels. Don’t be on of the 77% of short sales that do not succeed.
Does all of this make sense? Feel free to comment or ask me questions. I’m always happy to share whatever knowledge I can.