Alexandria Virginia Real Estate | Short Sale Myths

Alexandria VA Short Sales and Real Estate Information

One of the most dangerous and pervasive issues the real estate industry faces today the is overwhelming amount of misinformation in the marketplace. Not a week goes by that we don't hear "someone told me" or "I once heard" followed by the latest rumor or false truth being spread among agents.

It is simple what happens with one of these misconceptions, it goes from rumor, then the rumor is believed, the belief is repeated and before long it is accepted as truth. This is only reinforced when the individual who started the rumor hears it from someone else! Then it is confirmed!

The reality is it may never have been true to begin with. Following are the seven most dangerous Short Sale Myths that have been perpetuated in the market today. With your help we can reverse the damage that is being done!

1. Short Sales are Impossible and Never Get Approved

   Nothing could be further from the truth!

   Are short sales more difficult? Yes.

   Are they impossible? No, No, No!

   There are many knowledgeable and experienced agents who collectively are getting thousands of short sales approved on a monthly basis. The reality is that while they do require some extra effort and time, however with Short Sales and foreclosures expected to be up to 50% of the market for the foreseeable future, understand that they will be around for a while.

2. Banks are Not Accepting Short Sales; They are Waiting on a Bailout

   Really? We hear this constantly; the reality is that banks (and the government) are trying to do anything they can, within reason, to avoid foreclosing on property. To think that they would deny a Short Sale in hopes that some future legislation will pass and pay them for their loss is preposterous.

   The reality is that more banks are aggressively pursuing Short Sales and agents who understand how to process them. Freddie Mac; recently hosted a national training webinar for real estate agents where they expressly stated the organizational goal of "eliminating distressed assets through modification or short sale".

3. A Borrower Must be Behind in Their Mortgage in Order to Negotiate a Short Sale

   While it is true that initially some lenders wanted a borrower to be in default before they were willing to consider a short sale—this trend has almost altogether reversed. Today lenders are looking for verifiable hardship, monthly cash flow shortfall or pending shortfall and insolvency.

   If you meet these three requirements and are running out of money to continue paying your mortgage—list your home immediately! Don’t wait until the countdown clock to foreclosure has started and you have even less time left.

4. Buyers are Not Interested in Short Sales and Avoid Them

   Short sales are not for every buyer.  If you have time contraints, and have a short window to look for homes and close on your new home, then short sales are not ideal for you. Again, if we continue to perpetuate this myth it may become true—thankfully the reality is that today it is not. There are many buyers looking for real estate and homes for sale in Old Town, Del Ray, Kingstowne, and Manchester Lakes who only want to look at short sales. Short Sales and Foreclosures have become synonymous—not with issues—but with GOOD DEALS. International buyers specifically are interested in these properties.

5. Agents Can't Make Money with Short Sales

   Agents who have been trained as Certified Distressed Propety Experts (CDPE), have an obligation to help the homeowner avoid foreclosure.  CDPE agents are familiar with different work out options that do not require selling the home.  In these cases, we have successfully avoided foreclosure and hopefully earned a client and raving fan for life.  If a short sale is the chosen alternative, then the real estate commission is paid by the bank, not the seller. 

6. Bank Would Rather Foreclose than Bother with a Short Sale

   The average foreclosure on a $200,000 property can cost up to $80,000! This is before we take into account the affect on the bank on their reserve rates, lending abilities, staff and REO resources or more. If you are qualified, rest assured that lenders are more than ready to work with you on your short sale now. Doesn't it make sense that in a declining market you would want to sell an asset that is losing money right now rather tomorrow? It makes more sense to lenders as well.

7. There is not Enought Time to Negotiate a Short Sale Before Foreclosure

   This is a myth that probably hurts homeowners the most. Many don't realize that foreclosure is a process and there is time. Be aware of the Virginia Foreclosure Timeline.  These days many lenders will stall a foreclosure with as little as a phone call from the borrower letting them know that they are trying to sell. Almost all lenders will stall a foreclosure with a legitimate contract, in our view there is time up to the day the ‘gavel falls’ and the property is lost.