What is a Short Sale?

A Short Sale is when the lender of record agrees to discount their payoff to accommodate a sale of a house when:

• The borrower has experienced hardship and is unable to repay the mortgage.
  
  
• The value is proven to be less than the amount needed to pay off all loans, encumbrances and real estate selling costs.
  
  
• The loan is delinquent or in default.

Often a house in which the proceeds of a sale will fall short of what the home owner still owes on the mortgage, lenders will accept the lesser proceeds as a short sale. By doing this the lender forgives the balance of the mortgage and thereby avoids a lengthy and costly foreclosure procedure.

How do Sellers Benefit from a Short Sale?

The seller can avoid having a “foreclosure” on their credit report.  Most lenders tend to report “settled” upon successful closing of a short sale.  Recent reports state that if a borrower misses 2-5 mortgage payments, their credit score will be affected by an estimated 30 to 60 points.  If a borrower suffers foreclosure, it can affect their score 140 to 200 points.

Assuming the seller is already not making mortgage payments, they can continue to live in the property and not make payments during the lengthy short sales

Most sellers feel it is the “right thing to do” when in default.  They tend to feel that walking away from the house is irresponsible and unfair to the lender.  It’s a respectable option.

How Do Lenders Benefit from a Short Sale

• Not having another “bad debt” on the books.  Most investors require their lenders not to exceed 3% of bad debts on the books.
  
  
• Not having to complete the expensive foreclosure process including all of the legal fees and procedural duties.
  
  
• Not having to evict occupants and pay for their cooperation.
  
  
• Not having to rehab the property.  (i.e., Contractor bids, disgruntled borrower vandalizing, etc.)
  
  
• Not having to later sell the property for no more than the proposed short sale would generate, or even less when the market continues to decline.
  
  
• Not having to pay a commission to the R.E.O. broker they choose to market and list the property for them.

Agent Recommendations Regarding Short Sales

• Be open to change and adapting to market conditions and understand short sales.
  
  
• Take a class on foreclosure law, procedure and be a student of statistics.  The numbers don’t lie.  Be ahead of the crowd.  (i.e., Experts were not shocked when the market changed recently.)
  
  
• Become an expert at Short Sales.  Take a short sales class. When the market is good, you’ll do well.  When the market is bad, you’ll do well.

Next Step

You can now become a Certified Short-Sale Professional (CSP) by taking a course created by Jacob Swodeck. He is an active agent currently working on over 250 short sales and has personally negotiated over 500 successful short sales in the Southern California area. During the last twelve years he has also become a public speaker helping agents master this important skill.

Now Swodeck has teamed up with RealtyU who has converted this unique knowledge and important information into an online class, including video, PowerPoint, downloads and much more. This new course has also just been approved to qualify for the Certified Short-Sale Professional (CSP) designation.

And what’s even better, is that you can soon take the Short Sale class in the comfort of your home over a weekend. Just think, next week you could be making money and helping your clients by effectively handling short sales.

Now Available. For more information visit CSP Designation or  RealtyU Online

View a Video Testimonial Here