I was sharing my message with a real estate company on Wednesday and I mentioned that all indications are that banks will be leaning away from foreclosures and leaning toward ‘short sales’.

After class, one of the agents came up to me and told me about one of her listings. The seller was behind on the mortgage and knew they would be hearing from the bank at any time. The other day the dreaded letter was received. However, to the seller’s surprise, the letter talked about how to ‘short sale’ the house – NOT FORECLOSURE!

The letter started:

If you are experiencing affordability issues with your mortgage payments, you may be eligible for a workout program, known as a “Short Sale”.

What is a Short Sale?
A short sale is a workout program that allows a borrower to sell the property, even if the proceeds are less than the loan payoff, due to low property value. If approved, a Short Sale option can help you avoid further collection activity or foreclosure action.

The bank, one of the three giants, gave a detailed explanation of the process, a checklist of items they needed from the seller, a ‘Realtor Short Sale Guide’ with instructions on how the realtor should handle the transaction (including special phone numbers to call) and a timetable on exactly how long the approval process would take.

Some of the exact sentences from the three page letter:

A short sale is designed to help people avoid foreclosure.

A short sale can save some of the embarrassment and stress of a foreclosure action.

Upon final approval, a short sale can help homeowners avoid furtner collection activity or foreclosure action, which can result in adverse credit reporting and possible tax liabilities.

Realtors are generally allowed 5% to 6% commission.

Please do not delay, we are eager to assist you.

They claim that the entire process should take no longer than 37 days from notice of offer to full written approval.

This is absolute proof of the changing dynamic in ‘short sales’.

Make sure you make this category part of your 2010 plans!!

KCM Members: For the November special feature, I will be giving you the seller’s checklist, the Realtors Guide, the timetable broken down by item and other suggestions to enhance your ‘short sales’ package. It should be available by mid-month.