Short Sales For Desperate Owners

I posted my feelings on short sales back in October and, as expected, was chastised by some realtors that didn't know what they were talking about. (But I guess they need to make a living too.) There is nothing wrong with listing your property for short sale - and, if it works, it will (or may) offer a solution. It's just that it is usually a waste of time and effort.

I usually see the following:

1. Owner has an outstanding loan of, let's say, $400,000 and is listing his property for $200,000. I hear the complaint that he has not had a single offer in over a year.
BUT, that's NOT the problem. If owner did in fact get a full price offer for the $200,000 as listed, would the bank take it? I suspect the answer is NO. Without knowing the answer, why would you even bother?

If your realtor has nothing better to do, sure, it's no problem for you. And a realtor that understands short satles does (or should) know better.

2. If and when you do receive a short sale offer, you have to then submit a package to the loss mitigation department of the bank. This consists of a hardship letter, last two years tax returns, W-2s and a financial statement.

If you are not willing to provide these documents, don't even go through the exercise.
Secondly, if your financials show lots of income or assets (even in retirement accounts) you will absolutely NOT be approved. The bank will take the position that you can pay off the loan.

Again, this does not mean that you should NOT list your property for short sale. It only means that you are deluding yourself if you think that you are actually accomplishing anything by doing so. Other than making you feel good, usually you are not.

Unfortunately, it's back to square one: The only choices are whether to continue to pay or not.
If you do, prepare on doing it for a long time. If not, make sure you protect yourself and know what you are doing.