Our Experience:Underwater-home

  • At any given time we are managing 6-10 short sales
  • We have worked with all major banks
  • Assisted individuals coming out of bankruptcy
  • Our background covers working out of a trustee
  • We have knowledge in 1st and 2nd home equity lines of credit

We understand the sensitive nature of short sales. We provide options with out signs: presenting to investors with out alerting the general public. Our office includes members of staff that have personally live through this experience.

Is There Life After Short Sale?

If you are feeling like life as you know it is gone forever, that you are doomed to be a renter forever, and that the entire world thinks you are a loser, chances are you somewhere in the middle of a short sale. If you’ve got the short sale blues, please take a minute for some self-diagnosis and therapy. Having suffered through a short sale personally and having helped a multitude of Boise homeowners work their way through short sales, I feel qualified to share some insight on the painful subject. Let’s run through the five phases of the short sale blues.

Phase 1. I can still make this work.

Typically, things don’t all come crashing down at once. Usually the troubles start with:

  • A layoff
  • An adjustable rate interest hike
  • Or some other “manageable” financial crisis.

As things start to slip, you’ll find yourself saying, “This is going to be tough BUT, I can still make this work. We’ll just tighten our belts and dip into savings—maybe even borrow a bit from family.” If you pull out at this phase—congratulations! You dodged a real bullet.

Phase 2. Uh-Oh! $%^!@#*

If things don’t work out quickly—either through picking up a great new job, getting a family member gift or some other miracle—the next phase is the !@#$% phase. The good news is this is the worst part. Once you make it past this, things only get better. You—along with thousands of others before you—will find yourself saying, “But I’ve never missed a payment in my life. I’ve got an 800 credit score.” You spend a lot of time imagining the police hauling you off to jail and debt collectors kidnapping your pets for ransom. All hyperbole aside, this phase of short sale blues is likely to be one of the worst time of your life. It truely feels like life is over.

Phase 3. Resigned Resolve.

If all goes well, you’ll spend as little time as possible in phase 2 and move quickly to “resigned resolve.” After talking to friends and perhaps speaking with a lawyer, you decide to put the home up for sale. Many borrowers quit making house payments at this point and for those who do, there are a few months of respite from the horrific financial pressure you’ve been feeling. You live with the hassle of people tromping through your home and slowly come to grips with the thought of leaving your home.

Phase 4. That Darn Bank.

Eventually your home will get an offer—either from an eager new homebuyer or from an investor. Here in Boise, home sales are up 16% from February to March. (Right now, approximately 20% of all sales are short sales.) With a willing buyer finally on hand, you are ready to sell the home and get on with life. Unfortunately, there’s a lot of work your bank has to do to authorize the sale. Short sales can take from a few long painful months up to many long painful months to complete. My worst took 11 months and three buyers. Virtually all of this time is spent waiting for the bank to approve the short sale. Although I don’t have statistics available, my personal experience as a Boise real estate agent is that over half of my initial short sale buyers walk away in frustration while waiting for the bank. Most short sales end up closing with the second or even third buyer.

Phase 5. Done and Moving On.

Finally, closing day arrives. While it’s nothing like the euphoric closing day you’ve had on past home purchases or sales, it’s nice to finally be done with it all. Long gone are the deep depression days of phase 2. You’ve found a rental which is probably saving you a few hundred dollars a month and you are determined to make the best of things going forward. Hopefully, you were able to avoid a deficiency repayment and can start again with a clean slate. Be aware you may receive a 1099 for the difference between what you owed and what the home sold for. For tax purposes, this will be counted as income to you. However, talk to your accountant, there are some legal and ethical ways to avoid paying taxes on that “gain.”

Good luck navigating your way through the short sale blues. And yes, there is life afterward:

  • You will likely be blocked from getting a traditional loan for 2-4 years.
  • But with enough down payment, you can get a loan faster than that.
  • You can also look at lease purchase or owner carry options.

My advice, if you are somewhere in the short sale process is to talk to someone who has made it through. Unfortunately, there are a lot of us to choose from. Things always seem a little better when you get some proof that there is indeed life after short sale.