The New & (Somewhat) Improved Short Sale Process

For several years, I have absolutely avoided the short sale process like the plague. For those who aren't clear, a short sale is a transaction in which the sale price is not sufficient to fully eliminate the seller's mortgage balance due. For this reason, the seller's lender must be willing to accept less than what they are owed (an amount short of the full mortgage balance). Traditionally, these sales require much more time and paperwork due to the circumstances. To add insult to injury, a different employee of the same bank (often in a different department, possibly even in a different state) is working on completing a foreclosure of the same property. Eligibility for the short sale process requires the seller to be late on their mortgage and to show financial distress. In fact, I have been involved in Gatlinburg short sale attempts that have failed after more than 6 months of hard work by my team only to have the property end up in foreclosure anyway. This is why we have not pursued Smoky Mountain short sales until now.

The reasons that we are now willing to attempt more Gatlinburg area real estate short sales are:
  • There are many homeowners who desperately need to sell but owe more than their property is worth.
  • I am tired of telling these owners that there is nothing I can do to assist them.
  • The short sale approval process for some banks has now been streamlined and automated systems now make success more possible.
There are however still downsides to the short sale option:
  • These transactions still take longer than a regular sale, though we are working a short sale now in which we may be able to close within 60 days or even less from the date we received an offer.
  • The seller must be willing to take the significant hit to their credit that results from the requirement that their loan be in a delinquent status.
  • Like a foreclosure, the bank doesn't lose the opportunity to pursue a deficiency judgment against the borrower in the future unless they agree in writing not to seek further recovery of their loss.
  • Pending short sales don't preclude the lender from going ahead with foreclosure.
There are certainly no easy answers for upside down home owners but short sales are now at least a somewhat more viable option.  Just another opportunity for buyers who are looking for a bargain!


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