Short Sale Myths in Palm Beach Gardens

by Rodney Forbes on September 27, 2012

West Palm Beach Short Sale RealtorBecause of homeowners wanting to conduct short sale initiatives on their own, they usually come across the top five short sale myths. In result, it has led to prevalent confusion and widespread misconceptions in Palm Beach Gardens Florida, not only on its details, but the process involved as well. The truth is that short sales are one of the longest real estate transactions, which may easily eat up several weeks to several months on average from the time of contract to closing. At heart, the only thing that is short with this process is the price expected in relation to the outstanding debt of the homeowner to the bank. Don’t let the name fool you!

For most short sale sellers and buyers, this information is common knowledge. However, what they are not very reserved about are the details involved from the contract to the closing of the short sale. There are actually various stages involved in the short sale process that may bring about more misconceptions in and confusion if the guidance of a competent short sale agent is missing. Let’s take a look at the top five short sale myths.

MYTH 1: Getting a short sale approval is typical, normal, or standard.

Homeowners think that because of government streamlining, the set of standards grant banks the ability to follow a specific process for short sale initiatives. What is understood by buyers and sellers in this process is that offers are submitted, signed and turned over to the listing agent who manages all documentation to the bank. After a few months, or in rare occasions a few weeks, approval is received.

FACT: There is nothing usual, normal, or standard when it comes to a short sale.

A bank is typically in an authoritative position and may respond to offers of the homeowner in the manner they desire. There is an apparent possibility that they might counter with a higher offer or demand some form of cash payment from sellers. It is possible as well that none of these will happen. An asking price in Palm Beach Gardens FL that is way lower than the standard may be approved unexpectedly or insist an above board pricing. This means that there is no standard with short sale initiatives. This also highlights the need to have the services of short sale specialists.

MYTH 2: Homeowners will profit more by walking away rather than short sell initiatives.

Generally, homeowners receive the advice from inexperienced real estate companies or incompetent real estate companies to simply turn away rather than bearing through the tedious process of a short sale initiative. Apparently, this will provide them more advantages not only financially, but also in terms of credit scores.

FACT: For most homeowners who are facing upside down properties, walking away and allowing foreclosure proceedings is tantamount to an extremely serious decision.

The foundation of the decision can dramatically alter depending on the owner and the state where the home is located. In some states homeowners may be sued by lenders when the mortgage comes into default. State taxes may also be imposed on the debt that has been cancelled because of foreclosure, which could potentially be tens of thousands of dollars.

The key to handling one of the five short sale myths is to have the backing of real estate companies which can help homeowners get in touch with experienced local real estate agents. This will help financially challenged homeowners to be less hindered by short sale initiatives as opposed to foreclosure. This kind of support will also help aggrieved homeowners repair their credit faster including the functionality in Palm Beach Gardens of getting another mortgage in a shorter time. A short sale also costs the seller nearly nothing besides the investment in time and effort, which makes it the wiser decision as opposed to simply just turning away.

MYTH 3: Banks have limitations on what they are capable of doing

The majority of homeowners who are missing the benefits of having short sale specialists believe that banks are restricted by government requirements and regulations in dealing with short sale initiatives. In addition, they feel that the operating standards add to the imposition of the limitations which can be detrimental to their condition.

FACT: As one of the common five short sale myths, it contributes to the negativism and limited options of homeowners. The truth of the matter is that a short sale initiative is slightly a proposal to waive a debt that is legally owed by financially challenged homeowners.

West Palm Beach Short Sale RealtorThis means that since the bank is the legal lender, it has the absolute right on what can be done including outright refusal of the request for debt forgiveness. This also means that if they have the right to refuse, then they also maintain the right to impose whatever conditions they went on the initiative.

Experienced short sale specialists know that it is entirely possible for the bank to demand more money from the seller or even so the buyer. In the same aspect, they can ask real estate agents to lower their commissions and even refuse payments on closing cost. The buyer and the seller in Palm Beach Gardens may also decline or accept any or all of the demands of the bank, but, it is important to remember that the bank has absolute power over the rules of the game.

MYTH 4: The broker and offer of the buyer affects the approval of the short sale.

Homeowners think that since banks and investors are more worried about profits more the anything else, having a buyer with a broker that has a background in short sales and provides a more than adequate pricing offer, the short sale initiative will at once be approved.

FACT: Despite of the truth that banks and investors look at profits, much value is given to writing a clean and well-qualified offer.

This is critical while making sure that the seller and the buyer hang onto the initiative until the contract is signed. It is valuable to note that the offer and the agent of the buyer have very little to do with how the bank will approve the initiative from the bank based on their needs to close the short sale. This is the reason why this is classified as one of the five short sale myths.

Even though there is no denying that the pricing offer has significant weight, it isn’t that important when coming to short sale initiatives where the following factors have substantial bearing:

.Fair market value of the property based on third-party broker’s opinion or automated computer model

.Financial condition of the seller or potential future challenges

Completion of the workout short sale package of the seller along with the constant follow-up is done by the local real estate agent to close the transaction.
MYTH 5: Short Sales are similar to pre-foreclosure

With the varying standards implemented by banks, especially with enforcing time limits for the short sale before initiating a full foreclosure, many homeowners believe that a short sale initiative is similar to going through a pre-foreclosure proceeding.

FACT: Basically, in a short sale, homes are being sold for lesser than their value in order to settle outstanding obligations to their lender.

This is one of the five short sale myths that need further clarification. Pre-foreclosure on the other hand involves homes that are being prepared for foreclosure because of mortgage payment delays. The fact is that some short sale initiatives are pre-foreclosures simply due to homeowners deciding to stop mortgage payments once the property is placed on the market. This typically happens in Palm Beach Gardens because they have the wrong notion that the bank will approve the short sale faster once the loan comes into default. This type of decision making process highlights the need for the service of a short sale specialist who can help homeowners make educated decisions.

West Palm Beach Short Sale RealtorThe five short sale myths constitute the basic foundation of how homeowners react to various short sale conditions as well as why they choose to walk away or foreclosure. By understanding the five short sale myths and getting the services of short sale specialist, homeowners in Palm Beach Gardens will be able to maximize the advantages of their current condition. When coming to your financial future and deciding on someone to assist you in the short sale process, experience is everything. Don’t settle for less.

**Rodney Forbes is a Realtor® and registered broker with Forbes Realty of South Florida, based in West Palm Beach Florida. Rodney and his team work in Palm Beach, Broward, Martin and St. Lucie Counties. As a recognized expert on short sales, Rodney has been featured on radio and national web conferences for agents. Rodney has also authored the book “Should I Short Sale My Home?”

Forbes Realty of South Florida also specializes in REO asset disposition. Rodney works with several banks and asset managers in the Palm Beach County area. Rodney is the main author for the popular real estate blog South Florida Real Estate Report. You can find a wealth of information regarding bank foreclosures, short sales, real estate news and local real estate trends.

For more information, please call Rodney at 561-337-4810 or email Rodney@ForbesRealtyOnline.com

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