Short Sale "Experts" Offer Incredible Advice

by M. Anthony Carr

Type in "make money in short sales" and the latest search results return 112 million web pages on this timely real estate topic. Wow, imagine that, there are nearly four times as many web pages for short sales than for "real estate investing" and about three times as many for "foreclosure."

What's really scary is that once the clicker clicks through to the web site – you find that many of the sites are nothing more than fronts for e-books and e-courses being sold by online book distributors – individuals, really, who don't appear to actually have any short sale experience.

The first two sites I hit on were from

1) A writer of mystery books in Arizona and

2) Another web hoster who likes to hike, according to their personal profiles (which are devoid of any real estate experience). And yet, these are the top search results for "making money in short sales." Seems like they're just cashing in on the short-sale craze”.

So, here's the skinny, short sales take months to consummate. They are only for the strong at heart and patient buyer. In the Washington, D.C. market, which is in full recovery, we have seen some of the craziest scenarios play out. Here are other items you need to understand.

• It's not a way to "steal" a property before foreclosure – most short sales settle for more than what the bank could get from a foreclosure process.
• Just because your contract is accepted, doesn't mean you'll go to settlement – even if you've already spent money on inspections, surveys, appraisers, etc.
• Multiple lenders prolong the process. Here's where it gets really petty – a second trust will hold out as long as possible to try to get the first trust to relinquish more capital to them – even if it would force the house into foreclosure (where the second trust would then get absolutely nothing.)
• Owners selling a home in short sale don't have to cooperate with you. If they want to prolong their time in the house, they can haggle, delay signing paperwork and perform other deal-killing activities, to stay in the house longer – without paying a mortgage.
• Many times sellers review multiple contracts after they've accepted an offer. The paperwork usually stipulates this and so the buyer should be aware that just because the seller accepted their offer – it doesn't mean they are the only buyer to be considered.
• If you're buying with FHA or VA – it may be more difficult to get the transaction approved. FHA and VA both have appraisal inspections, where the mortgage appraiser also inspects the condition of the property. If the lender determines it will cost too much to fix the property to the appraiser's standard, they can let go of your contract (even after you've now paid for the home inspection and the appraisal).

The best place for you to get believable, credible information is through an experienced agent who has actually negotiated and settled short sales transactions. Forget the "experts" online who just want to make a quick buck.