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September 7th, 2010 7:04 AM by David W. Welch
I bet most of you did not realize the Rolling Stones were talking about short sales when they penned those words. If you are considering a short sale, your goal is to have the bank approve it and release you from all deficiencies. I am sure that most people are also prepared for the worst case, where the bank just says no and you are faced with a potential foreclosure. In between these two possible ends is a huge squishy area of other outcomes. I have been watching short sales for over a year and a half now in our market, and only 8-10% of the pending contracts close in any given month. Keep in mind that many of these may still require the seller to bring money to closing, sign a note or accept the fact the lender may pursue a deficiency judgment for a portion or all of the shortfall. On the other end of the spectrum there have been thousands of foreclosures sold over the last couple of years. Not all them tried short sales, but let's say half of them attempted short sales then there are about 10% that have not been approved and gone through to foreclosure.
That leaves 80% that are in process and currently there are just over 6,100 pending contracts and another 5,800 active short sales. Ideally, yours will be approved and you will be released from any deficiency. There is a chance it could not be approved too. In between is the very real possibility that your short sale will be approved, but the bank is going to still hold you accountable for some or all of the shortfall. If the property is an investment property or second home, be prepared to walk away with a judgment. If you have a HELOC (home equity line of credit), you should also be prepared for the bank to reserve the right to pursue the deficiency. Keep in mind that if they do hold the deficiency it is tied to nothing which may put you in a better position to negotiate a settlement later. Unfortunately, you can't always get what you want, but sometimes you get what you need.
David Welch Real Estate Optimist, Orlando Real Estate