I have a client "hell bent" on doing a short sale even though we have an offer $5000. short of her loan payoff. I believe I've covered all the negatives. Advise please.

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Bob "RealMan" Timm, Owner of Ward Co Notary Services retired RE Broker (Ward County Notary Services)

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Jeffrey Jones

AZ Home Seekers - San Tan Valley, AZ

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It seems clear to everyone that that walking away losing $5000 makes so much more fiscal sense than trying to do a short sale, that may or may not even go through. Once you look at the costs and being 1099'ed for any debt that was written down, its clear that there really aren't any benifits.

Dec 25, 2014 11:20 PM

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Bob "RealMan" Timm

Minot, ND
Roy Kelley

Gaithersburg, MD

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Kevin J. May

Florida Supreme Realty - Hobe Sound, FL

Serving the Treasure & Paradise Coasts of Florida

I find that lenders are not forgiving the debt like they used to. Depending on value received this could be extremely beneficial to get out clean you might say. It's subject to a lot of factors but at average home prices the tax burden could easily exceed $5,000 by itself.

Dec 25, 2014 12:38 PM

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Bob "RealMan" Timm

Minot, ND
Roy Kelley

Gaithersburg, MD

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Bob "RealMan" Timm

Ward County Notary Services - Minot, ND

Owner of Ward Co Notary Services retired RE Broker

John, you may have hit the nail on the head. Debbie, YUP, just $5,000. after all fees and everything. I have mentioned that it usually takes Wells Fargo a year to complete a short sale and the fees keep piling up. On top of that they may only get bargain hunter offers and end up owing much much more.

Dec 25, 2014 11:37 AM

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Roy Kelley

Gaithersburg, MD
Debbie Gartner

White Plains, NY

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Debbie Gartner

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Please forgive my ignorance here as I'm not a realtor. But, do you mean that their net is only $5000 short AFTER realtor and/or any other fees are paid off?

If the answer to above is yes, it SEEMS to be that they would be better off taking that offer vs. continuing to pay to mortgage for many many months. But, I may be completely misunderstanding.

I guess I would ask the question why? They might be a valid financial reason. E.g. they don't have the money to pay the $5000 + realtor fees + capital gains. I don't know as I don't fully understand the situation.

Dec 25, 2014 10:48 AM

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Bob "RealMan" Timm

Minot, ND
Roy Kelley

Gaithersburg, MD

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Jon Kolsky

Kolsky Realty & Management - Long Beach, CA

Licensed California Real Estate Broker

Bob "RealMan" Timm ~ you can lead a horse to water, but getting them to drink it a whole different story... Wow, I wish I could give you a better answer, but I got nothing other than what I stated

Dec 25, 2014 10:42 AM

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Bob "RealMan" Timm

Minot, ND
Roy Kelley

Gaithersburg, MD

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Tony and Suzanne Marriott, Associate Brokers

Serving the Greater Phoenix and Scottsdale Metropolitan Area - Scottsdale, AZ

Coldwell Banker Realty

Advise them to have an attorney negotiate that part of the transaction on their dime!

Jun 23, 2018 06:06 AM

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Bob "RealMan" Timm

Minot, ND

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Dipti Thakkar

LAER Realty Partners - Andover, MA

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What about the third party approval?

May 09, 2018 09:59 PM

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Bob "RealMan" Timm

Minot, ND

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Praful Thakkar

LAER Realty Partners - Burlington, MA

Metro Boston Homes For Sale

Sometimes we just leave it to God....

Jun 18, 2017 10:23 PM

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Bob "RealMan" Timm

Minot, ND

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Annette Lawrence , Palm Harbor, FL 727-420-4041

ReMax Realtec Group - Palm Harbor, FL

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Bob,

I shall make a dangerous assumption and believe that the price point of homes in Minot ND is well below $100,000. If this is true, and the seller can not 'see the light' you must consider the reality. This is a business, not a hobby.

Good business choices, for homes of proper value, would include collaborative efforts to make the $5,000 dissappear. Such effort makes a significant difference in the assurance of closing element most owner find of great value.

Your job Bob, is to bring a solution that makes business sense to you and solves a problem for the buyer and seller.

Dec 26, 2014 02:09 AM

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Bob "RealMan" Timm

Minot, ND

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Roy Kelley

Retired - Gaithersburg, MD

The seller simply may not have the funds to get to settlement even thought it is only $5,000. It is really smart for the buyer to walk away with only a $5,000 difference?

Dec 26, 2014 12:57 AM

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Bob "RealMan" Timm

Minot, ND

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Bob Crane

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Not something that I have felt worthy of my time.

Aug 25, 2019 02:31 PM

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Rainmaker
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Bob "RealMan" Timm

Ward County Notary Services - Minot, ND

Owner of Ward Co Notary Services retired RE Broker

Kevin, I have been warning her that she could end up getting far less for the home and the bank demanding the difference.

Jeffery, agreed!

Gabe, good point about an attorney, I have not suggested that yet.

Roy, I have been keeping in touch with the Buyers agent as well and you are right, if they love the house $5,000. is not that much to make the dream a reality.

Annette, great perspective. The average single family home in Minot ND (excluding townhouses, condos, and mobile homes) is about $310,000. Our area is experiencing the largest oil boom in the WORLD at this time.

Dec 26, 2014 10:40 AM

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It seems clear to everyone that that walking away losing $5000 makes so much more fiscal sense than trying to do a short sale, that may or may not even go through. Once you look at the costs and being 1099'ed for any debt that was written down, its clear that there really aren't any benifits.
I find that lenders are not forgiving the debt like they used to. Depending on value received this could be extremely beneficial to get out clean you might say. It's subject to a lot of factors but at average home prices the tax burden could easily exceed $5,000 by itself.
John, you may have hit the nail on the head. Debbie, YUP, just $5,000. after all fees and everything. I have mentioned that it usually takes Wells Fargo a year to complete a short sale and the fees keep piling up. On top of that they may only get bargain hunter offers and end up owing much much more.
Please forgive my ignorance here as I'm not a realtor. But, do you mean that their net is only $5000 short AFTER realtor and/or any other fees are paid off?

If the answer to above is yes, it SEEMS to be that they would be better off taking that offer vs. continuing to pay to mortgage for many many months. But, I may be completely misunderstanding.

I guess I would ask the question why? They might be a valid financial reason. E.g. they don't have the money to pay the $5000 + realtor fees + capital gains. I don't know as I don't fully understand the situation.
Bob "RealMan" Timm ~ you can lead a horse to water, but getting them to drink it a whole different story... Wow, I wish I could give you a better answer, but I got nothing other than what I stated
Advise them to have an attorney negotiate that part of the transaction on their dime!
Bob,

I shall make a dangerous assumption and believe that the price point of homes in Minot ND is well below $100,000. If this is true, and the seller can not 'see the light' you must consider the reality. This is a business, not a hobby.

Good business choices, for homes of proper value, would include collaborative efforts to make the $5,000 dissappear. Such effort makes a significant difference in the assurance of closing element most owner find of great value.

Your job Bob, is to bring a solution that makes business sense to you and solves a problem for the buyer and seller.
The seller simply may not have the funds to get to settlement even thought it is only $5,000. It is really smart for the buyer to walk away with only a $5,000 difference?
Kevin, I have been warning her that she could end up getting far less for the home and the bank demanding the difference.

Jeffery, agreed!

Gabe, good point about an attorney, I have not suggested that yet.

Roy, I have been keeping in touch with the Buyers agent as well and you are right, if they love the house $5,000. is not that much to make the dream a reality.

Annette, great perspective. The average single family home in Minot ND (excluding townhouses, condos, and mobile homes) is about $310,000. Our area is experiencing the largest oil boom in the WORLD at this time.