Short Sale Myths


Short Sale Myths A short sale can be an excellent solution for homeowners who must sell and owe more on their homes than they are worth. Unfortunately, a number of myths about short sales have developed, and it is important to understand the reality of this process should you find it meets your current needs.

Myth #1 – The Bank Would Rather Foreclose than Bother with a Short Sale

This is one of the most common misconceptions. The reality is that banks do not want to foreclose on your property because the foreclosure process is incredibly costly. Banks, investors, and even the federal government have all publicly stated that if a person is qualified for a short sale, the deal needs to be considered. Overwhelmingly, banks receive more on their investment through a short sale than a foreclosure.

The qualifications for a short sale include:

                1. Financial Hardship – There is a situation causing you to have trouble affording your mortgage.

                2. Monthly Income Shortfall “You have more month than money.” A lender will want to see that you cannot afford, or soon will not be able to afford your mortgage.

                3. Insolvency – The lender will want to see that you do not have significant liquid assets that would allow you to pay down your mortgage.


Myth #2 – You Must Be Behind on Your Mortgage to Negotiate a Short Sale

While this may have previously been the case, today lenders are looking for verifiable hardship, monthly cash flow shortfall, or pending shortfall and insolvency.

If you meet these three requirements and believe that you soon may be unable to afford your mortgage, act immediately. Any delay could limit your options. Do not wait until the countdown clock to foreclosure has started and you have even less time left.

Myth #3 – There is Not Enough Time to Negotiate a Short Sale Before My Foreclosure

This is a myth that probably hurts homeowners the most. Many do not realize that foreclosure is a process, and that there is time to make decisions that may result in better outcomes.

The foreclosing party—in most cases a lender—can stall a foreclosure up to the final day of the process. Today, many lenders will stall a foreclosure with as little as a phone call from you explaining that you are trying to sell, and almost all lenders will stall a foreclosure with a legitimate contract. For real estate professionals who understand foreclosures and short sales, there is time available until the foreclosure process is complete.

Myth #4 – Listing My Home as a Short Sale is an Embarrassment

It is understandable to have reservations about letting the world know that you owe more on your home than it is worth. However, according to recent estimates, one out of five homeowners in the U.S. is in the same situation. You are to be congratulated for admitting you need help, taking action, and finding a professional who can work with you toward a solution.

With recent estimates showing 40-60% of U.S. sales will be short sales or foreclosures, you are not alone.

Continue reading Short Sale Myths

Question; Will the value of houses ever go above where they are now?

The following  is my response to a zip code specific question on Trulia. The zip code 95403 covers a large portion of the north west quadrant of Santa Rosa. I’m posting it here because the basic premise can be transferred to any area of low to mid priced homes in good neighborhoods that exerienced rapid equity growth brought on in part by a slew of well Continue reading Question; Will the value of houses ever go above where they are now?

Santa Rosa Foreclosure snapshot! More coming down the pike!

Check out the properties which are either in default,going to Auction at the Courtsteps OR now Bank Owned or an “REO” (Real Estate Owned) property. Not a pretty picture. Will it get worse? Are we going to experience the next “wave” will it be a Tsuami? Or weakly lap up against the shore of this real estate market? Some have said the Lenders are under the gun to “not” show bad numbers on the books, “keep them in their homes” is the cry from Washington! We’ve gotten four new “assignments” in the past two weeks. Remember, the big month for last year was October! Sales went through the roof. Why? You guessed it–flood of REO’s! 70,000 to 90,000 more this year in California? Time will tell. But if they do come don’t expect prices to be slashed as before. They are getting hip to that plus word is big “class-action” lawsuits accusing the big lenders of increasing the “Debt Relief Liability” of the FORMER HOMEOWNER by dumping the houses cheaply onto the market!! YES–the FORMER homeowner! Interesting.  Can you spell Hutzpah?

9-26-2009 Foreclosreradar

First Time Buyer Tax Credit; Okay…I’m going to keep hammering this one home until the very end. …it’s THAT important!

The $8000.00 First time home buyer tax credit is set to expire on Nov 30th, 2009. This is the date you will need to CLOSE ESCROW if you wish to claim the credit. With escrows taking at least 30 days to close…and often more, you should have an accepted offer in escrow no later than October 30th , 2009…and that’s pushing it. With many escrows taking 45 days to close, the best scenario Continue reading First Time Buyer Tax Credit; Okay…I’m going to keep hammering this one home until the very end. …it’s THAT important!

IRS Publications–Find out before you act! “Moving Expenses”,”Bankruptcy”,”Debt Cancellaion” Here’s a list!

The Internal Revenue Service publishes a number of real estate publications. They are listed by number:
* 521 “Moving Expenses”
* 523 “Selling Your Home”
* 527 “Residential Rental Property”
* 534 “Depreciation”
* 541 “Tax Information on Partnerships”
* 551 “Basis of Assets”
* 555 “Federal Tax Information on Community Property”
* 561 “Determining the Value of Donated Property”
* 590 “Individual Retirement Arrangements”
* 908 “Bankruptcy and Other Debt Cancellation”
* 936 “Home Mortgage Interest Deduction”

These publications are available for free online or by calling (800) TAX-FORM.

Peak Vs. Current Pricing in select Counties in California! Steep Indeed!

This a very interesting slide provided by the California Association of Realtors (CAR) chief Economist, Leslie Appleton-Young. It illustrates the rather steep slide we’ve experienced from the “Peak” pricing days to the current market levels. This is the largest, steepest decline in State History! Here’s to living in interesting times. I’m discussing this slide in more detail, tomorrow, Sunday 27th, on the Real Estate Hour, 9 to 10AM,PST listen in at


Mortgages will STILL be available–The Fed will Continue to Buy! Good News!

September 24, 2009

Market Forecast: From the Editors of “Leeb’s Income Performance Letter”

 The Fed’s Continuing Life Support–Why the Markets Aren’t Impressed 

The Federal Reserve said yesterday that an economic recovery has begun. But actions speak louder than words: The Fed also signaled that it’s still too soon to start withdrawing its stimulus programs, particularly for the housing market.“Economic activity has picked up following its severe downturn,” said the Fed in its most favorable economic outlook since last year’s economic and markets meltdown. While adding that activity in the housing market has increased and consumer spending seems to be stabilizing, the Fed also cautioned that the recovery will be slow, and it plans to keep its benchmark short-term interest rate at virtually zero for “an extended period.” Continue reading Mortgages will STILL be available–The Fed will Continue to Buy! Good News!

Thanks to Eileen Morelli for joining me on the show.

I had a great time hosting the show this morning and couldn’t have asked for a better guest. Eileen ‘s insight into this market from her vantage point as the managing broker at Keller Williams Realty… not to mention her 30+ years  in Sonoma County Real Estate, was a real treat.  Eileen, spoke of  her recent experiences with buyers, sellers and agents and how everyone seems to be a little more up-beat these days.  I’d have to say I’ve noticed that shift as well.  Speaking of “Shift”, Eileen offered a few copies of Gary Keller’s book “Shift” during the show, and had at least 5 or 6 voicemails by the end of the show.  Congratulations to those agents who are ready to change the way they look at this market.  A great KW quote…”It’s not about the Market, It’s about YOU”

“The Millionaire Real Estate Investor”-Here’s the book Allison was giving away this morning!


Allison did a superb job this morning as my host of the radio show and she spoke of being an investor herself and reccomended this book as a “must read” for every real estate investor. One of the reasons we are seeing so many real estate investors into today’s marketplace is they KNOW we have bottomed and when they invest cash into a home in our marketplace their before tax “cash-on-cash” return can be 5-8%!!Consider what the prudent, conservative investor is getting today in treasuries and this is a solid, retirement type investment. Also, at these prices, when appreciation returns they will have an added bonus. And remember, that’s a BEFORE taxes return. Consult your tax adviser,accountant,CPA for more details on how YOUR return will respond to YOUR tax bracket.  You can buy the book at or if you are looking for a hard working Realtor who understands the investor mindset, then GIVE ALLISON NORMAN at call at 707-799-3617  and request a meeting with her to discuss your portfolio and how real estate can aid its growth. At your FIRST meeting she will present you with the book!


“This book is not just a bargain, it’s a steal. It’s filled with practical, workable advice for anyone wanting to build wealth.”—Mike Summey, co-author of the bestselling The Weekend Millionaire’s Secrets to Investing in Real Estate Continue reading “The Millionaire Real Estate Investor”-Here’s the book Allison was giving away this morning!