The 7 Most Dangerous Short Sale Myths PANTONE 540 C
© Distressed Property Institute, LLC 2009 800-402-0335 www.cdpe.com Page

“Rumor travels faster, but won’t stay put as long as the truth.”
Will Rogers

One of the most dangerous and pervasive issues the real
estate industry faces today the overwhelming amount of
misinformation in the marketplace. Now t a week goes by
that we don’t hear “someone told me…” or “I once heard…” followed
by the latest rumor or false truth being spread among agents.
It is simple what happens with one of these misconceptions, it goes
from rumor, then the rumor is believed, the belief is repeated and
before long it is accepted as truth. This is only reinforced when the
individual who started the rumor hears it from someone else! Then
it is confirmed!

The reality is it may never have been true to begin with. Following
are the seven most dangerous Short Sale Myths that have been
perpetuated in the market today. With your help we can reverse the
damage that is being done!

Short Sales are Impossible and Never Get Approved

Nothing could be further from the truth!

Are short sales more difficult? Yes.

We have agents who collectively are getting thousands of short
sales approved on a monthly basis. The reality is that while they
do require some extra effort, however with Short Sales and
foreclosures expected to be up to 50% of the market for the
foreseeable future you need understand them, well.

Banks are Not Accepting Short Sales; They are Waiting on a Bailout

Really? We hear this constantly; the reality is
that banks (and the government) are trying to
do anything they can, within reason, to avoid
foreclosing on property. To think that they would
deny a Short Sale in hopes that some future
legislation will pass and pay them for their loss is
preposterous.

The reality is that more banks are aggressively
pursuing Short Sales and agents who understand
how to process them. Freddie Mac® recently hosted
a national training webinar for real estate agents
where they expressly stated the organizational goal
of “eliminating distressed assets through modification
or short sale”.

A Borrower Must be Behind in Their Mortgage in Order to Negotiate a Short Sale

While it is true that initially some lenders wanted a borrower to be
in default before they were willing to consider a short sale—this
trend has almost all together reversed. Today lenders are looking for
verifiable hardship, monthly cash flow shortfall or pending shortfall
and insolvency.

If your client meets these three requirements and is running out
of money to continue paying their mortgage—list the property
immediately! Don’t wait until the countdown clock to foreclosure
has started and you have even less time left.

Buyers are Not Interested in Short Sales and Avoid Them

Again, if we continue to perpetuate this myth it may become
true—thankfully the reality is that today it is not. In fact you may
not have yet however you will soon get a call from a buyer who says
“I only want to look at foreclosures and Short Sales!”
Short Sales and Foreclosures have become synonymous—not with
issues—but with GOOD DEALS. International buyers specifically are
interested in these properties.

Bank Would Rather Foreclose than Bother with a Short Sale

The average foreclosure on a $200,000 property can cost a bank
as much as $30 to $80,000! This is before we take into account the
affect on the bank on their reserve rates, lending abilities, staff and
REO resources or more. If your seller is qualified, rest
assured that lenders are more than ready to work
with you on your short sale now.

Doesn’t it make sense that in a declining market
you would want to sell an asset that is losing money
right now rather tomorrow? It makes more sense to
lenders as well.

There is not Enough Time to Negotiate a Short Sale Before Foreclosure

This is a myth that probably hurts homeowners
the most. Many don’t realize that foreclosure is a
process and there is time. Be aware of the timeframe in your state
and be ready to explain it to your potential clients.
These days many lenders will stall a foreclosure with as little as
a phone call form the borrower letting them know that they are
trying to sell. Almost all lenders will stall a foreclosure with a
legitimate contract, in our view there is time up to the day the ‘gavel
falls’ and the property is lost.

The 7 Most Dangerous Short Sale Myths PANTONE 540 C
© Distressed Property Institute, LLC 2009 800-402-0335 www.cdpe.com Page