Expert: liznarr - 11/6/2009

Question
Hi. I am hoping you can help me with some questions. We are currently trying to sell our house and we have to do a short sale because it is appraised at over $50,000 less than what we bought it for.  We would prefer not to even sell our house right now but my husband is in the military and he is due to transfer out next summer.

Anyway our house has been on the market for almost a month now and we have not had even one person come to look. I am thinking the problem is that when people find out it is a short sale, they will not even bother coming to look because they know short sales can take a really long time. So that is one problem we are having... The other is that we dont even know for sure that we will be able to get a short sale approved.. Our bank has just told us that we have to wait until we have a buyer and then submit the paperwork for a short sale.

Also, I am hearing that you are not likely to get a short sale approved if you are not having major financial problems. We are doing ok, my husband is very good with budgeting our money.. Our mortgate payments are on time and we dont have outstanding bills. So we are wondering if we would even qualify for a short sale in the first place.. Unfortunately we cant get any info from the bank about if we would or not, so this is a really frustrating situation.. This is why I am trying to find out what would be the best next step for us. Should we just wait until we get a buyer (if we ever do) and then just hope we get a short sale? Or is there anything else we can do right now to help ensure that a short sale would be approved?

This is a really tough situation and I am not quite sure what to do next.  I would like to rent out our house but my husband doesnt like the idea at all since we would be living out of state and would probably lose a couple of hundred dollars a month, especially since we would need to get a property management company..  

So, if you have any advice for us on the short sale situation, I would really appreciate it. Thanks so much for your time!!

Jennifer

Answer
Hi Jennifer,

Sorry to hear about your dilemma.

As you have pointed out, it seems to be the case in our country now that if you pay your bills on time and are a responsible American, help for this category of people is severely lacking when your mortgage balance exceeds the fair market value of your home.  On the other hand, if you run up huge debt, don’t pay on time, and get into a bad situation, our government wants to help you.  This is not right.

If your bank would not previously even discuss with you whether or not you would actually qualify for a short sale, I would suggest you do some or all of the following:  

1.   Go to sites like the ones below and first educate yourself on short sales.  

http://www.shortsalehelp.com/steps.html

http://www.shortsaleway.com/

http://www.mortgageqna.com/mortgage-payment-problems/does-a-short-sale-affect-yo...

If you don’t see exactly what you are looking for in one of the above sites, go to Google or Yahoo and search, for example, “short sale procedures”

2.   You can also call a Realtor in your area who specializes in short sales.  Check out some of the trade magazines in the racks at restaurants, grocery stores, etc.  Make sure, however, any Realtor you talk to and represents that they specialize in short sales is ACTUALLY experienced in this area, as procedures can be complex – and you need to know exactly what procedures are and whether or not your credit will be affected.

3.   Call your bank back again and ask to speak to a Supervisor in charge of short sales or their loss mitigation department.  

If they try to brush you off, do NOT let them do it.  INSIST on speaking with a supervisor.  If the supervisor will not help you, continue going up the ladder to each supervisor’s superior until you find someone who will talk to you and give you information.  Let them know you plan to call your US Senator and/or Congressman and complain if they do not answer your questions.  This might put some heat underneath their rear end.  You simply HAVE to learn (at least learn enough to get the information you need right now) the art of negotiating with hard-core banks.  It would be interesting to find out if your bank is one that accepted any bailout money from the Federal Government.

4.   Call your Senator or Congressman and ask them for help.  You might also speak with a JAG rep at your husband’s military base.  I would think this is a common problem for military personnel being transferred, and they might have some different answers/suggestions for you.

I don’t have a lot of experience with banks’ procedures on short sales, but the fact that they won’t even discuss this with you is ridiculous.  You have to remember that the squeaky wheel is the one that ALWAYS gets the grease.  Simply accepting a lower-level clerk’s denial to help you obtain information is unacceptable.  You have to be TENACIOUS and don’t stop calling them until you get the information you want.

Good luck to you, and feel free to write again if you have additional questions.  If you get some answers from your bank, I would be interested in hearing an update from you later.

Regards,
Elizabeth