Ask Deb

Get your short sale questions answered by the expert, Deb McMillan The Short Sale Queen®.

FAQ

What is a Short Sale?

A short sale happens when a property is sold and the lender agrees to accept a payoff that is less than the amount owed.

Why are short sales a strategy for a real estate investor?

Buying real estate with a short sale strategy can allow you to buy properties in great condition and in great school districts at BIG discounts. In working a short sale for the homeowners, the homeowner is able to avoid foreclosure and bankruptcy. It is a great feeling to create this win-win situation.

Specific Short Sale Questions Answered

Question: I called the courthouse and asked them about foreclosure records, and notices of default, and they said I would have to know a tax I.D. number to find them. My only other option was to get them from the newspaper when they come out. Am I asking the wrong clerk or is this the only way?

Answer: There is a website in my city that has all the foreclosures as they are filed. Sometimes a title company will provide them since they’re at the court house daily. Every Monday morning they send out an email that has all the Notices of Default sent out the previous week.

Another way to get info from the county courthouse is to go there yourself once a week if you can. They usually have computers set up that you can use to sort through the info and find the NODs yourself.

The first time I went, I had no idea how to use the computers or find what I was looking for. I found that the people behind the counter were friendly and willing to teach me. But they don’t provide this info over the phone.

The important thing to remember is that the freedom of information act (FOI) gives you the RIGHT to look at anything they have, you just have to jump through their hoops in order to get them to provide it to you.

If the courthouse proves too much of a hassle (it is a hassle)… your other options are:

a) Hire someone who is already doing work there (a clerk or paralegal) to do some work for you and email or fax you the information you’re looking for.
b) Get the info from the title company (they do this for free as a service, you just have to guage if the info is good/timely enough for you). We can go over how to ask for it if you need help with that.
c) Hire a list service provider to get it for you. Foreclosures.com is one, I think they charge about $50/month. There may be others… I have also seen some that do probate lists.

Question. I met with the seller and they told me that everyone they talked to (their credit counselor, a realtor or two, and the guy from Citifinancial they’ve been dealing with) told them that if somebody bought the property in a short sale, that they would still be responsible for the remaining balance that they owed AFTER I bought the property, and they were not interested in doing that.

Example (in case I didn’t explain that very well):

They owe 255,000
I buy the property from CitiFinancial for 200,000
They are responsible for the 55,000 left over.

Is there any truth to that? I told them that I would have to check with my partner because I specialized in pre-foreclosures and wasn’t as knowledgeable about short sales as my partner was. I LOVE using “my partner”….gets me out of a lot of questions.

Answer: Yes, it’s true. The bank CAN do that. Our job is to get them to NOT do that.

Ask at the first call to the bank. The homeowner won’t pay the different, right? They just don’t have any money and can’t possibly afford to pay the difference” Keep after them. Tell the bank the homeowner (HO) can’t afford to pay that amount. (in fact, tell the ho the bank expects them to pay the difference. They will let you know in a very passionate voice WHY they can’t pay anything. Write that info down. Then use it to dissuade the bank to go after the homeowner. And don’t take the first or second no as an answer. Keep after the bank, ask to talk to someone higher up (nicely of course) to give you another no and maybe not stop there.

The value we bring to the short sale (investors) is to make the deficiency judgment go away. Tell the bank the homeowner doesn’t want to file bankruptcy. (This just stalls the foreclosure and costs the bank more money.) Review the homeowner’s hardship letter. Use some of the items in there to get rid of the deficiency judgment too. Emotion and feelings and data are key.