The “What”, the “How” and the “Why” of a Short Sale
A short sale simply means that the homeowner will come up short when they sell their home compared to what they owe their lender. The property won’t sell for enough money to pay off the lender in full after all the closing costs are taken into consideration. “Short sale” does not necessarily mean that it will be a short and easy process. There are also tax and legal ramifications of a short sale, so read this post with several grains of salt as you seek proper legal and tax counsel.
There’s a reason my business partner/husband won’t work on our company’s short sale transactions. He HATES unpredictability and irrationality when it comes to a short sale lender’s need to request documents time after time after time, even after we’ve already sent the requested items multiple times. The start of whether or not a short sale will work depends on the true financial hardship of the sellers. We’ve known many folks who were fully employed with plenty of money in the bank who’ve desired and pursued a short sale. However, short sale lenders, for the most part, won’t necessarily automatically grant a short sale to borrowers who aren’t enduring a documented financial hardship.
In our experience, if a homeowner isn’t experiencing what the lender considers a legitimate hardship, the borrowers will have to be willing to ruin their credit by stopping their mortgage payments in order for the lender to pay attention to the fact that they’re no longer getting a dime out of the homeowners. (The analogy I’ll refer to here is the neglected teenager who strives for attention by “acting up”.)
We’ve turned down plenty of short sale listing opportunities in recent years. Why do we NOT take on certain short sale transactions? First of all, we need to feel good about what we’re doing in our lives and in our work. It gives us great pleasure to assist a struggling homeowner if we see there to be a legitimate need. We’ve turned down plenty of short sale transactions over the years because the homeowners simply “didn’t want to keep paying their mortgage” on a house that dipped dramatically in value.
My own home dipped in value dramatically for a period of time, and I could have pursued a short sale, no doubt. However, I made a commitment when I secured the loan and was too proud to stop making payments or even pay later. Pride comes before a fall, it has been said. Now, the home has increased in value again almost to what is was when purchased 10 years ago, and I’m glad we hung in there.
The Bottom Line
Short sale lenders look at their bottom line and weigh the benefits of granting a short sale vs. foreclosing on a home. The best of the best short sale lender we’ve worked with are the smaller, community banks/lenders. Fremont Bank and Bank of the West have been among the best and most responsive, in our opinion. Well, in my opinion. Greg won’t touch short sales…
During the rainy weather is the best time to just stay home and take care of the house. This is what I did over the last several days. The cleaning and de-cluttering resulted in a box for the Salvation Army of kitchen wares and clothes, a full trash bin, a full recycling bin in addition to a half-full green bin full of dying orchid plants with leaves and roots and soggy bark that I know I’ll never be able to revive. The focus on all three levels of our home was on the “Wealth & Prosperity” (W&P) section of the feng shui “ba-gua”, which is what we call the layout shown here. What I did was make room for W&P by getting rid of stuff that serves no purpose in our lives but can be used in someone else’s life. So, in a sense, we “shared the wealth” to make room for more. On the top levelof our house, the W&P section is where our bathroom shower is located. I took the time to deep clean the tile walls and tile ceiling of the shower enclosure and will replace the fading clear shower curtain with a new one soon. Also, I found some areas between the tiles that need to be re-grouted, so I put that on the Wish List for the bathroom, which I know my Caveman will handle.
Intended Result: Re-grout to keep the W&P “in” the home rather than allow it to leak through. The clean/cleared space will allow W&P in!
On the main level, the kitchen is located in the W&P section. What I did there has me floating on air, mentally! I organized the spice rack, cleared out and organized the baking cabinet, recycled yukky plastic bowls, etc. and also went through multiple cabinets in that kitchen and said bye-bye to a bunch of pot and pans we don’t need. I also replaced the “junk food” cabinet with cereal to subconsciously train myself out of wanting the junk and preferring healthy cereals instead. (Gotta try!) Also, I replaced the soap dispenser and put a cover over the resulting hole. The hot water dispenser is leaking, so we’ll work on having that removed or repaired.
Intended Result: Stop the leak from the hot water dispenser, which is indicative of allowing W&P to slip through. The broken soap dispenser was removed to allow space for W&P.
On the bottom level is where what we call the “kids room” is located. This is the room where the bunk bed, chest of drawers and desk that I had since I was a kid is located. It’s also where we store “extra stuff”, like bedding, extra bows and wrapping paper, etc. I took the time to de-clutter this room and donated the wrapping and packaging material, some of which was brand new/never been opened!
Intended Result: Allow more W&P into the home as a result of donating the additional items we don’t use.
We had our home feng shui’d in December of 2010, a few months after we were married. The feng shui consultant said we’d experience a shift immediately. Indeed we did! I look back and laugh about this now, but the hubby and I fought for three full days after the feng shui was completed. Let’s see what happens in these next few days due to the changes in the “wealth” section of our home…