John Latham has been in the foreclosure industry for over 20 years with his family’s foreclosure trustee business. He is also a Certified Short Sale Negotiator (CSSN) and a REALTOR® with Spinnaker Realty.
Brett: Hi, I am Brett Adams, BROKER® of Spinnaker Realty. I have with me again one of my agents, John Latham, and we are talking this morning about short sales. John, we’ve already talked about what a Short Sale is. And, we’ve talked about what the bank is looking for to see who might qualify for a short sale. And you’ve taken us through the process – what selling your home as a Short Sale looks like. Why would someone do a Short Sale over a Foreclosure? How is that better?
John: Well, it’s better for a lot of reasons. First of all, for the bank it’s better because they typically lose about thirty percent more on a foreclosure than they do on a Short Sale. And after the foreclosure, the bank is responsible for the maintenance, the holding costs and securing the property. And like the homeowner, the bank will have to deal with the market drop that has devalued the house and has brought about this situation.
A Short Sale is also better for the owner. It is a dignified exit. It looks just like a typical residential sale. You tell people what you want them to know, and you don’t have to tell them any more than that.
You also avoid the stigma of foreclosure. A Short Sale lets you satisfy your mortgage obligation to the best of your ability.
And it lessens the stress and gives you options. It puts you back in control.
A Short Sale usually also stops the foreclosure process, and that certainly is better.
Brett: Now you mentioned that there are financial benefits to the bank. Are there any financial benefits to the homeowner?
John: Absolutely! Usually homeowners don’t make house payments during the Short Sale process. There is no payment at closing. The bank pays the REALTOR® commissions, the bank pays the seller closing costs, and it also minimizes the credit impact for the homeowner much less than a foreclosure would impact their credit.
And finally, it minimizes your deficiency obligations.
Brett: John, that’s a pretty big word! What exactly is a “Deficiency Obligation”?
John: A Deficiency Obligation is the difference between what is owed to the bank and the amount the bank actually receives from the Short Sale.
The bank has the option to go to court and pursue a judgment for this difference. This amount is usually much lower in a Short Sale than it is in a foreclosure. And in the past, banks have typically not pursued a judgment after a Short Sale.
There are a lot of benefits to pursuing a Short Sale. It is usually the much better choice over foreclosure.
If you would like more information about Short Sales, take a look at the other videos, or give me a call.
And remember, you are not alone. There is hope, and there is help!
View the previous video in this series: The Short Sale Process
