Short Sales B
All About
eing prepared and able to act quickly once a potential buyer makes an offer are the key factors in closing a
short sale, according to Jamie Hol- lingsworth, a real estate agent who has as much experience as
By Brian Sherman
anyone in the Charleston area shep- herding these types of transactions through what could be a complicated process. Hollingsworth, who is with
Beachside Real Estate on the Isle of Palms, pointed out that since main- taining the buyer’s interest is critical, his company doesn’t wait until an offer is on the table to gather the information the lending institution will need to determine whether the deal can proceed and how much, if anything, it will cost the seller to get rid of the home. “The biggest problem in short sales
is buyers walking,” Hollingsworth, who completed about a dozen such transactions in 2010, explained. “They’re excited about buying the house, and we tell them it will be 60 to 90 days. Sometimes that excitement goes away in about 40 days. We want to be able to keep giving them infor- mation that will keep them excited about buying the property.” Banks require certain financial information from homeowners who want to sell despite owing more than their home will bring. This includes their tax returns from the past two years, their bank statements from the last two months, their last two pay stubs, and, if they are self-employed, a year-to-date personal financial statement. Hollingsworth compiles this information in advance so it is ready to go to the bank as soon as an
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offer is made. “It might take a real estate agent without experience in short sales two to three weeks to get all this informa- tion together,” Hollingsworth said. “We have all that ready. We might have to get updated pay stubs, but we can do that within 24 hours.” “We understand the communica- tion process with the banks,” he add-
Jamie Hollingsworth
ed. “We make sure the information is turned in and that it is correct. But we don’t want to provide too much information. If they don’t ask for it, we don’t give it to them.” Another important piece of information is a hardship letter from the seller, an attempt to convince the bank that it should accept the proceeds of the sale and not demand additional funds from the seller. Hol- lingsworth said the letter can outline reasons ranging from “my wife has cancer to I lost my job to I used to make $700,000 a year and now I make only $400,000.” In the end, it’s the bank that de- cides whether to waive the deficien- cy or insist on cash or a promissory note from the seller. In some cases, Hollinsgworth said, the bank will ask for cash and a note, depending on what the bank thinks the seller
can afford to pay. He said last year, one of his clients owed $3.3 million on a house that sold for $2.2 mil- lion. The lending institution wanted an $80,000 promissory note, to be paid over 20 years with no interest. In another case, the bank asked for a $150,000 note. Hollingsworth pointed out that these are extreme cases. The bank often forgives the deficiency in exchange for a sale that will allow the lending institution to regain at least part of its money. He emphasized that how much a potential seller owes on a loan is irrelevant. Beyond the question of whether the loan payments are up to date – most banks won’t even consider a short sale unless the homeowner is behind on his or her payments – the lender looks at only two factors: the current value of the home and the seller’s financial condition. “It has nothing to do with I’m
upside down a million dollars,” Hol- lingsworth said. Short sales are a fairly re- cent phenomenon, according to Holllingsworth, brought on by the nationwide collapse of the hous- ing market. He said they used to be called settlements, and, in most cases, banks simply foreclosed on homeowners who couldn’t make their loan payments. Now, with millions of homeowners owing more than they can sell for, banks are backing away from getting into the real estate business. Hollingsworth suggests that at
least trying to sell short is a better op- tion than letting the bank foreclose. “If you don’t like the terms, then
you can let them foreclose,” he said. “That’s where you’re headed anyway. There’s no reason not to at least at- tempt a short sale.”
For more information about short sales, contact Jamie Hollingsworth at (843) 886-4056 or
IOPsold@aol.com.
CarolinaHomesAndInteriors.com |
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