Short Sale Nightmare - a Seller speaks!

August 5, 2008

Those of you who read my blog regularly know that I have been calling to Ban all short sales.

The amount of short sales in Maricopa County, which includes Phoenix, Scottsdale, Paradise Valley, Tempe, Fountain Hills, Tempe, Mesa, Peoria and Glendale has stricken a healthy AZ multiple listing service (ARMLS) with thousands and thousands of homes for sale that have not yet been approved by banks or lenders.

Thus, (for the most part) they are not truly available for sale at those prices.

For the most part, they are arbitrary numbers picked by Realtors who want to make a sale with little input by desperate sellers who (fore the most part) could care less where it sells.short sale nightmare in phoenix

Yes, I know the seller should care because they will be responsible for the deficiency receive a 1099-S from the lender and owe the IRS taxes.

However, most sellers who are selling short, facing foreclosure and being forced from their home are not too concerned with a bill from a lender or the IRS when they have no money to pay in the first place.

The result of all this short sale mess are stories that I hear every day.

I have started a regular blog post called short sale horror story of the week (which you are now reading) in which I share experiences of other real estate professionals or buyers working with banks to get transactions approved and closed.

However, this week my short sale horror story is about a seller who just experienced a short sale nightmare.

  • Mr & Mrs. Seller listed their home for sale in the beautiful town of Fountain Hills, AZ for $399,000.
  • They were not behind on their mortgage payments when they realized that they wanted to sell the home.
  • Home Sellers were concerned if prices drop further, the deficiency owed would be even greater.
  • They sent their short sale package, including hardship letter to the bank for approval to sell short.
  • The bank, ‘Big Bank’ asked for further supporting financial information to see the Seller’s resources.

What ‘Big Bank’ noticed that Mr. & Mrx. Sellers had taken money from their home equity line which they used for living expenses. They also put some money from the HELOC in a savings account. There was about $10,000 left in that account which was for ‘emergencies’.

However, guess what bank the sellers had that $10,000 emergency savings?  You got it.  Big Bank.  Yes, the same ‘Big Bank’ they were hoping to short (sale) .

Well you probably know what happened. Big Bank froze the account of the Sellers.

Big Bank said they had every legal right to do so per small print language of the loan docs that no one takes the time to read of the Home Equity Line through ‘Big Bank’.

Now,  the Sellers have no money;  though,  hey , at least  they are approved for the short sale.

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Make sure you work with experts who have negotiated short sales successfully with lenders.

I have included some names of the best Short Sale Experts in the real estate business:

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Copyright © 2008 By James Wexler, All Rights Reserved. *Short Sale Nightmare - a Seller speaks!*

Contact James Wexler (480) 221-8080 for all your Phoenix | Scottsdale area Real Estate needs

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Written by James Wexler · Filed Under Articles, Short-sales / Foreclosures 

Comments

4 Responses to “Short Sale Nightmare - a Seller speaks!”

  1. Barb Romeo on August 5th, 2008 8:42 am

    If been hearing more and more about banks repossessing money that was taken from home equity accounts. These institutions have determined that since the money is in essence unsecured because the real estate is worth much less than the loans, it is too great a risk to leave the money out there.

  2. Leif Swanson on August 5th, 2008 9:03 am

    Short sale listings are clogging the MLS system in the Phoenix area. There are over 6,100 active short sale listings right now vs. 52,500 total active listings. That’s 11.6% of listings that are short sales.

  3. Phyllis Harb on August 18th, 2008 7:17 pm

    Great post!!!! In my Glendale, Calfifornia neighborhood I call this MLS Pollution. Shame on our MLS for allowing these listiings to not be RED tagged as a maybe might sell at this price.

  4. Jonathan Benya on August 20th, 2008 11:52 am

    I agree with the idea of striking short sales from the MLS! You might want to adjust your short sale info though; as of December ‘07, sellers are not tax liable for deficiency amounts.

    http://www.teambenya.com/charles_county_real_estat/2007/12/worried-about-a.html

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