In the Subprime aftermath, we have created a specialized amount of foreclosures.

We have developed unorthodox sales like bank owned, auctions, short sales, and foreclosures. Not normal transactions.

From my experience, many homeowners sway towards bankruptcy or foreclosures because it is easier to just procrastinate and let it go. But there is no need to tragically kill your credit, this harm takes 7 years to regain the 300-350 points you may lose.

I think that these homeowners don’t truly understand the benefits of short sales. The biggest benefit is the ability to relinquish your financial troubles but without destroying your credit, and done right can make the bank stop chasing you for the deficiency of your property. Letting you have a fresh start.

But how many people really know how to do a short sale? Short Sales are 1/3 part having the house sold, 1/3 part releasing you of the deficiency, and 1/3 part having less credit lost. From my experience, the agents with short sale experience does not exceed 15%. Even with short sale experience, they do not truly know how to completely finish a short sale. Only 1% of active agents are able to achieve all parts of a successful short sale. Reason is because there was not a lot of short sale transactions in the past, and agents tend to treat it like a regular sale without any experience. Agents are scared to approach short sales because they have to spend much more time to deal with lenders and to deal with the case itself, and a lot of the times efforts are in vein.

Short sales to homeowners do not show any monetary benefit. The sales price of the home is not enough to pay off even the mortgage. The main goal is just so that the bank will not come chase them for the deficiency, and hoping that the bank will alleviate some of the credit harm.

It seems that banks are losing a lot for forgiving the homeowners in a short sale. In reality, the banks are very willing to do short sales because foreclosed homes cost thousands to regulate and sell. The subprime crisis’s astronomical amounts of foreclosed homes have already severely hurt the bank’s equity, and all they want to do is to regain their foothold. Short sales are the most direct and quickest way to regain back some of their money, so they do not have to deal with everything that comes with bank-owned homes. The amount of money spent on foreclosed homes, after paying the agent, the repairs, the marketing, the closing costs, takes thousands away from the sold home. In the end, bank-owned homes give a smaller return and takes longer to regain that return.

From that angle, an owner in a situation where they can no longer pay off their debt, a bank is very willing to cooperate with the owner to do a short sale.

Before 2008, many banks did not have the human resources and correct processes to do short sales, and many agents did not fully understand how to do short sales, which lead to the increased amounts of foreclosures. But now the banks have learned and there are even specialized short sale departments to handle these cases. With the banks’ increased cooperation and a truly able agent, the success rate of doing a short sale has increased tenfold. For short sale specialist agents, it is much easier to finish a transaction now.

This is just the most basic part of a short sale. In reality, we want the bank to be able to regain back the most of their debt, while allowing the homeowner to lose the least on their credit and integrity as possible. That is our biggest and toughest job. Many homeowners and real estate agents believe short sales are just to finish a transaction. This is an incomplete view on the bigger picture.

Finishing a transaction is just 1/3 of the big picture. From experience, the other 1/3 part is to release you of the deficiency, and 1/3 part is to have less credit lost. We want to use our experience and knowledge to correctly do a short sale and help the homeowner relieve their financial troubles.