Short Sales in Southeastern Massachusetts and Rhode Island

The majority of listing appointments in my area are short sales.  There was a time when I would go on listing appointments and make the sellers smile with pleasure when I told them what their property was worth.  Those days are long gone!  All I do is disappoint most sellers today, I even make some cry.  It is very sad to find out that you can not sell your property for what you paid for it.  This is what many sellers are facing today.  So what can they do?  They can do a short sale.

A short sale simply means that the owner owes more on a property than what it is worth.  The bank calls this "short", like they are "short money".  It doesn't mean that the sale will move quickly.  It is actually quite the opposite.  Short sales can take anywhere from 2 to 6 months, sometimes even up to a year before we have an answer from the bank telling us if they will allow the sale to be short. 

In order to request a short sale from a bank the seller would need to have a "hardship".  This would be the reason why they need to sell or are unable to make the mortgage payments anymore.  It could be a cut in pay, job loss, tenants not paying, an illness, death in the family, a recent divorce or any life situation change that effects their ability to meet the mortgage payments.  The seller needs to write a letter to the bank explaining their hardship and asking for a short sale approval.

Once that is done we do a market analysis to find out what the house would sell for in todays market and we list it at that price. We market and show the house as usual and when we get an offer that is acceptable to the seller then we go to a purchase and sales agreement and submit all paperwork to the bank and wait for an answer.

The buyer may choose to wait to have the home inspection and the bank appraisal until the short sale is approved.  Once they have word then they move forward quickly.  The short sale bank usually only gives the buyer and seller 2 to 3 weeks to close on the house so the buyer usually has everything else ready to go. 

When we show short sales most times they are already vacant.  The sellers move on so that they won't be looking for a place at the last moment.  They take only what they can fit in their new place so often times there is a lot of personal items left behind.  It is not uncommon to find rotting food and debris scattered around the house and yard.  The buyers look at the things left behind trying to piece together who lived here and what happened to them.  Childrens toys left behind that they must have outgrown.  Kitchen appliances that they never really used.  Pictures of things they want to forget. 

We hope that the seller notified the insurance company to let them know that the house is vacant, but we know most times they have not because the insurance will cost much more.  Knowing that if anything happened they won't be covered.  If the house wasn't winterized, and most times they are not because the seller doesn't have the money, pipes and heating system could be ruined if the house remains empty into the cold months.  Some of them already have plumbing and heating damage as well as mold damage from the water on the walls, floors and in the basements.  Once the yards overgrow from lack of care vandals notice them and break in to steal pipes.  It turns into a real nightmare.  And with all of these things happening the price of the property slowly spirals down lower and lower, making the shortage greater and greater. 

If the banks would put all of their staff and energy focused on getting the short sales either approved or denied as quickly as possible it would improve the market greatly.  Not only would it improve the market but it would improve the chances of them getting the most that they can for the property before it deteriorates.  If buyers knew that they would have an answer in a month then we would have so many more buyers willing to look at properties that need a short sale.  Many buyers won't even consider looking at houses that are short sales for fear of wasting months waiting for an answer and after all of that time it could be a "Not Approved". 

I wish I knew how to make it better.  The banks have to figure it out.  When they do the market will change and start heading in the other direction and once again people will enjoy a growth in their investment. Until then we just have to keep moving ahead and doing the best we can to help our buyers and sellers and keep them informed.

And just in case you didn't know, it's a great time to buy!

Karen The Realtor
Karen J. Archambault