Short Sale Disclosure In San Antonio

By rerockstar • December 8th, 2009

Shhhh… Don’t Tell The Neighbors.

Today, in an email from Trulia, I noticed an interesting question about short sales and disclosure. Real estate agent Cathy Cataletto of Staten Island posed several questions to agents across the nation regarding short sales and how we (and if we) are to disclose them (real estate laws vary widely by state) to potential buyers. Her question was not born of ignorance, but the sort of question where she was looking to start a conversation around the topic to see how agents across the country differed in the disclosure of short sales.

After writing my answer, I thought it might be something good to cover here, as we do see many short sales in San Antonio (not as many as some states, like California). As a brief primer, a short sale is when the bank agrees to take less money from the sale of your home than what you owe on your loan. This can be a list price below what you owe, or a a price above what you owe, but after closing costs and Realtor® commissions are subtracted, you wouldn’t have enough to pay off the balance of your loan. Basically, you come up “short” when paying off your loan. Short sales are notoriously difficult and time consuming, but with the right people by your side, they can be done and can be a great alternative to foreclosure.

Disclose, Disclose, Disclose.

The quick and easy answer on whether to disclose short sale status to a potential buyer is an emphatic YES!! In San Antonio, we are required to mark potential short sales within the MLS and we are able to search for potential short sales for our clients. However, it is not required for us to put any information about that within the public remarks section, which the public sees when looking at homes online. I find that most agents do though, as it’s better to get the information out there and not wait to be asked.

Agents have passed on the old mantra of “location, location, location” for “disclose, disclose, disclose.”

Regardless of the San Antonio MLS’ requirements, I would still argue that we need to disclose the potential for a short sale to a buyer and their agent. Why, you might wonder? Short sales can take a long time to take from offer to closing. Imagine I’m selling a home (that I know is a short sale) and you and your agent go see it and decide you love it. You write an offer and your agent submits it to me. It could take days to months to even get an answer on a short sale offer. Would you want to wait that long? Wouldn’t you want to know up front of that possibility? Wouldn’t you be furious to find out…after you took time off work to view the home and write the offer? I certainly would be if I was in your shoes.

What will the neighbors think?

One of the points brought up during the discussion was the feelings of the home owners going through the hardship. Obviously, if you are moving towards a short sale, you are experiencing some sort of financial hardship. No one jumps up and down and says “Whoopie, we’re falling behind on our mortgage and we’re going to sell our house as a short sale!” Let’s face it, times have been tough lately and many of our friends, families, and neighbors are facing difficult times. First of all, there is no shame in admitting that you need help. Second, selling your home as a short sale is better than allowing it to move all the way to foreclosure. In fact, I’d go so far as to say a short sale is a sign of a smart, forward thinking person. Getting out of the situation (without running away) before the situation is unstoppable (foreclosure), to me, is an admirable trait.

I can understand why no one wants to share that kind of personal information with the world and even more so, the neighbors, but the options are much worse. Foreclosures are public record. Foreclosures can cause much more damage to your credit report. A short sale can be the best option when there is no way to catch up on your payments. No one wants to face it, but sometimes facing our biggest fears only makes us stronger. So, although you may not want the neighbors to know about your financial hardship, which is better – allowing the neighbors to watch as the bank sends a locksmith to your door and changes the locks one day or disclosing your home’s sale as a short sale?

If you’re behind on your payments and think there’s no way out, call your lender. Don’t let it drag on – do it as soon as possible. Speak with them – openly and honestly about your situation and how you got there. They may be able to help. Before it gets to the point that the lender is ready to foreclose, speak with a Realtor® about your options. Open up to them and let them know what’s going on. You’ll need to speak to your lender and get their authorization for a short sale (they require a “short sale package” be sent to them, your Realtor® can help you with this). Your Realtor® will then work to market the home and get it sold. It’s not a cut and dry process and the banks can be frustrating as hell with short sales. You might want to scream and you might want to cry, but you can get through this – many already have.

If you have questions about short sales, foreclosures, or what you’ll need to prepare to begin the process, get in touch with me and I’d be glad to help you move a few steps closer. It won’t be the most fun ride you’ve ever been on, but together we can get through it and back on your way to getting back to life without that weight on your shoulders.

photo courtesy of TheTruthAbout…