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How To Sell My Omaha House With A Short Sale
How To Sell My Omaha House With A Short Sale
Interview With Kim Stephens, Realtor In Omaha
My name is Ben Souchek, and I’m with The Sierra Group Pro Home Buyers and also a licensed agent here in Nebraska. And today, I have a guest, Kim Stephens, who is a realtor in Omaha, Nebraska, to discuss short sales. I had the benefit of working with Kim a while back on one of our client’s needs for a short sale, and she was able to get that processed very quickly with a cooperating lender, which was always good. And so I just wanted to bring her on today and kind of discuss short sales, some of the things about them. And anyway, thank you, Kim, for being here.
If you could, just tell us a little bit about yourself and how you got into this niche, because it’s definitely a niche, and just tell us your story.
Kim: So back in 2008… Whenever I say 2008, there’s so many people that go, uh, because everybody remembers where they were in 2008 when the market crashed. But my husband had several hot tub stores and we lost that business. So long story short, in a nutshell, we had to short sell our home. The frustrating thing about that was prior to 2008, we had a lot of equity in our home, but we tried to save it. So we took all that equity out of our home and tried to put that in the business. But we couldn’t keep the business going, so the bottom line resulted in a short sale. I was not a licensed agent at the time, but I had a real estate agent that said, “Okay, we have to do a short sale.” He had never done a short sale before.
Most agents were trying to get educated on how to do them because there were so many happening, and the lenders didn’t know what they were doing. So it was quite a mess. But anyway, so this agent listed my home and it was taking quite some time. And while he had it listed, I thought, if I got my license, I could probably get this finished out and really start helping people. I didn’t know the laws. I didn’t even know what questions to ask. You don’t know what you don’t know, right? So I got my license very, very quickly and ended up finishing out my own short sale. And I thought, I am going to help people. This is going to be my mission. I am going to help people that were in the same position as me. I’m going to learn these laws and everything.
So I just started diving in and helping these people. I partnered up with a gal from DVG Realty. We started doing them from her kitchen table. It was pretty hilarious. But back then, it was very, very hard to work with the lenders. I think the lenders were overwhelmed. They were very mean sometimes. You’d be on hold for hours. You’d be faxing things in the middle of the night to them. But lenders have gotten much easier to work with. There’s not as many short sales around as there were in 2008. So anyway, through my adversity, I had been able to help others, and I just love that. It’s very relatable.
I feel like I’m very relatable because when I sit down with a client, I can say, “Listen, this happened to me too,” and it puts them at ease because it’s a very stressful situation. So that’s how I got into the business.
Ben Souchek: Thank you for sharing that with us. You’ve definitely been there, done that. And so certainly know what others are going through and what it takes to go through that process and come out the other side. But first, I guess, what is a short sale for those that don’t… Maybe they’ve heard the term, but don’t know a lot about it. Again, obviously it’s kind of a niche, especially even in real estate, not every agent does them, knows how to do them, or should be doing them. So what is a short sale?
What Is A Short Sale
Kim Stevens: Basically a short sale is where the homeowner owes more on their mortgage than it’s going to sell for. So as a listing agent, it’s my job to negotiate with the bank for them to take less than what is owed on that property. So a lot of times when I’m sitting down and discussing this with a potential short sale client, they say, “Well, yes, I’m upside down. I don’t have the money to pay them back.” It’s something that we call a deficiency balance. The beauty of a short sale is the bank forgives the deficiency balance. And clients might say, “How do I know the bank’s going to forgive that deficiency balance?”
Once the short sale is approved, they will send a letter, and it will specifically state in that letter that they waive the right to seek that deficiency balance. That’s actually the first thing that I look for in a short sale approval letter because that’s very important, because why would a homeowner go ahead and do a short sale if they were just going to have to pay back the deficiency? That wouldn’t make sense. That is why it’s short because it’s short to the bank. That’s why they call it a short sale. It can be kind of a lengthy process. So I always say the only thing short about a short sale is you’re short to the bank. Sometimes they move very quickly, like the one you and I did together. I think it was 10 days. It was crazy how fast that bank responded. But typically, the average timeframe is going to be about three months to do a short sale.
What Is The Cost To A Home Seller To Do A Short Sale
So it doesn’t cost the seller anything to do a short sale. That is another beauty of a short sale. The bank will pay all of the closing costs. They pay my commission. The seller really basically lists that home and has no out of pocket expense. To me, it’s a no brainer. If you’re struggling, if you’re underwater and it costs you no money to do the short sale, why won’t you do it? You know? So yeah, the bank pays all the fees. It’s great for the homeowner.
What Makes A Good Candidate For A Short Sale
A great candidate would be somebody who’s struggling to make payments. They know that they’re not going to be able to sell their house for more than what they owe on it. Maybe their house has a lot of repairs. One thing that I see that’s so common, Ben, is a lot of people say, “I could afford my mortgage,” but then the furnace went out or the air conditioner went out or the roof leak and they didn’t even have the money for the deductible on the insurance, and then that leak led to something else. And now all of a sudden, the home is in need of so much repair and they just don’t have the money to fix it up. And basically as long as there is a true financial hardship, the short sales are approved. I’ve done hundreds of short sales since 2008.
And I think I can maybe count on one hand, honestly, how many short sales… Well, they were still approved, but maybe the bank said, “Hey, you’ve either got a lot of assets or it looks like you make a lot of money. We’re going to ask you to maybe contribute $2,500 to the sale,” or sometimes maybe $500 to the sale. But out of hundreds and hundreds and hundreds that I’ve done, there’s only been a handful. I mean, if you have a true financial hardship and you are upside down on your mortgage payment, you’re just a great candidate.
Can A Home Owner Sell A House With A Short Sale
If They Are NOT Behind On Mortgage Payments?
That’s where it gets a little tricky, but it’s definitely an option. I’ve seen that before too. And a lot of times these clients, they’re not behind on payments, but they’re robbing Peter to pay Paul to keep current on payments, maybe they’re borrowing from family members and they’re like, well, yeah, we can make these payments, but it’s getting really tough. So this is where it gets a little bit sticky. I can’t legally tell somebody not to make a house payment. I have to be very careful about that. So I’ll never tell them not to make a house payment. I will never say that. But what I will tell them is talk to your bank, see if you have to be behind on payments to do a short sale.
A lot of times banks will say, “No, you don’t have to be behind on payments in order to qualify for a short sale.” Some people are in the military and they want to maintain that good credit, so they don’t want to be behind on payments. I have seen that happen before. Usually through the course of it though, the homeowners usually end up stop making their payments while they’re doing the short sale because they just say, “We cannot afford it anymore.” Usually if there’s a way that they can afford that payment, they’re going to continue, and there’s something that they can work out from the bank, restructuring the loan or something. Usually there’s always a way to work it out, even if they aren’t behind on payments. But again, usually the robbing Peter to pay Paul.
What Are The Implications Of A Short Sale To A Home Owner?
There’s very few implications. The one thing that is a very important question to ask the homeowner to ask their CPA is what are the tax consequences? Once you get a short sale approval letter, something that they always put in there that says, “You’ll be issued a 1099 for the deficiency balance. Get with a tax advisor,” I am not a tax advisor, So I am never going to tell a client that there aren’t any tax implications to do a short sale. I’m going to say, get with that CPA. He’s the true professional. What I have been told by several CPAs is if they’re insolvent, meaning there’s no assets there, and typically when somebody is doing a short sale, they have no assets.
If they’re insolvent, there won’t be any tax implications. There’s some form that they can fill out. So they’re not only forgiven the deficiency balance, but they’re not taxed on the deficiency balance either if they’re insolvent. And 99% of my short sale clients since 2008 have been insolvent. But I will always tell them refer to your CPA to get tax advice from the professional. Outside of that, it’s two to three years before you can buy a home again. I’ve actually had clients call me that are about two and a half years out from completing a short sale and they’re like, “Kim, our situation has improved. We would love to buy a home again,” and I say, “Okay, let’s get with the lender.”
Will I Be Able To Buy A Home After A Short Sale?
And I’ve had like three just within the past four months that have called me and said, “We would really love to buy again.” They’ve gotten with the lender. They’ve told them three years from the date that you completed that short sale is when you have to wait. So I’ve heard two years, but three years lately with just the experience that my clients have had. They’re telling them to wait three years before they can buy again. So it doesn’t mean you can never buy again, right? It just means that once you get on your feet, you can own that home again, which was great for us. We were able to buy a home again. We got our credit in check. We started making good money. We were able to buy a home again. No problem. So there’s very few implications for doing a short sale.
Will A Short Sale Hurt My Credit?
Another question I get is, how bad is it going to hurt my credit? That’s another question I get from clients. And I’ll say, “Well, how many months are you behind on your payments now?” And they’ll say, “I’m six months, seven months.” Usually their credit isn’t going to get hurt any worse with these. You’re already six to seven months behind on payments. Your credit’s already pretty shot. So your credit is going to drop. I always have questions like how big is my credit score going to drop? I don’t know. I can’t answer that, but it does take a dip. There could be potential tax implications, but get with the CPA. He can probably figure that out for you. And there’s no money to do a short sale. It cost you nothing. They waive the deficiency balance. There’s very few downsides to doing a short sale.
A Short Sale May Help You Avoid Foreclosure
Here’s another very important thing to realize, Ben. If you are in foreclosure, if you have a foreclosure date set, or if you’ve even received a notice of default from the bank saying, “Hey, if you don’t come current, we’re to start pursuing foreclosure,” please contact me immediately. Don’t wait. So many people get frozen in fear and they just put it off and put it off. And now before you know it, the foreclosure date is two weeks out. I can’t help them at that point. It’s just gone too far. It’s too late. The best time to reach me would be right when they get that notice of default, or if they’re already knowing, hey, I’m struggling. I don’t know how long I can keep up on my payments. It’s just a conversation. It doesn’t mean that we have to do a short sale right now, but it’s just a conversation.
Don’t ever put it off. I’ve seen that before. And then it’s just too late for people.
Does A Home Owner Have To Move Out Of The House To Do A Short Sale?
Actually there’s different investors. So every investor has different guidelines. For example, Wells Fargo might be the one servicing your mortgage. It might be US Bank, but the investor could be Fannie Mae, Freddie Mac. You might have an FHA loan. So every investor has different guidelines. But especially if your loan is with FHA, it’s much better to stay in the home because part of FHA guidelines qualify for a short sale is you have to be maintaining that property. So even if you’re not living in the property, you bet you have to be maintaining it. You have to have utilities on. You have to be maintaining the lawn. So to me, why wouldn’t you live in the home until the short sale is completed?
If you’re not making payments and they’ve suspended the foreclosure date while you’re working on the short sale, that just gives you a chance to get on your feet. I would always suggest staying in the home as long as you can. For the people that don’t want to stay in their home or maybe they’ve already moved out of state, that’s fine too. It’s not a requirement that you live in the home. But if you have an FHA loan, it’s just much easier because you should be maintaining that lawn and keeping the utilities on and stuff.
But either way you can still qualify for a short sale whether you live in it or not. A lot of people say, “I got this notice. Oh no, I have to move out.” No, you don’t. I will say, “Stay in there as long as you can until you get that short sale approval letter and we have a closed date, then go ahead and move out.”
Other Thoughts On How A Short Sale May Help A Home Owner
Behind On Their Payments?
We’re speaking a lot of generalities and everybody’s situation is different. But honestly, a short sale is just such a beautiful thing. If you don’t want that foreclosure on your record, a short sale is always going to be a bigger benefit on your credit. And there’s so many people… Everybody thinks I’m the only one going through this. No, you’re not. Trust me. There are so many people that have these financial hardships. I just think if I would’ve known back then when I did my short sale what I know now, I would have just… I thought, oh no, I’ll never buy a house again. Again, there was nobody there to educate me. I just thought my life was over. But had I had the information back then that I do now, I would have been, this isn’t so bad.
It’s not the end of the world. It was so much better for us than walking away from our home and having a foreclosure on our record. It’s just a great thing if you’re in trouble, if you’re underwater, if you can’t make those payments. And you know you can still buy a house again. It’s not a forever thing. It’s not something that defines you. And I was telling people, you can look at being a victim or you can look at this as having this adversity happen in your life and make something of it. It doesn’t mean it’s the end of the road for you. You can always rebuild your credit and get another house. And just the fact that you can sell your home on a short sale with zero money out of pocket, your deficiencies forgiven, it’s a no brainer to me.
Options That May Be Available To Stay In The Home
The only thing would be if you want to stay in your home, then you’re going to need to work with your bank to do a loan modification or get those payments, caught up somehow. Maybe you pay a little bit extra a month if you truly want to keep your home. Then that’s a whole different conversation. But if you’ve had it, you want to just be done with it, a short sale is a perfect thing for you. It could just be the answers to what you’ve been looking for.
Would You Like More Information On Selling A House With A Short Sale
I’m sure other people that will see this will appreciate all the information and know that there are options out there for them and know that there’s a great person that can help them. And of course, in our situation, it becomes to where this is a good option. You can certainly help with the short sale, and my company, The Sierra Group Pro Home Buyers is a cash buyer that can be a buyer and close whenever they want to. So thank you again, Kim, and look forward to talking to you soon.
If you would like more information on selling a house with a short sale or what other options may be available for your specific situation, please contact us TODAY with filling out the form below, or just calling toll free (855)-291-5005.
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