Underwater? Pros and Cons of Trying a Short Sale

Seattle Bubble regular Kary Krismer recently wrote a pair of posts drawing on his legal and real estate experience to give a relatively unbiased look at the factors to consider when you’re thinking about whether you should or shouldn’t try a short sale if you’re underwater and want to get out of your home.

On the pro side:

  1. Avoid a Foreclosure on Your Record
  2. Less of an Impact on Credit Scores
  3. Shorter Time to a New Loan
  4. Less Embarrassment
  5. Possible Waiver of Deficiency on Junior DOTs
  6. Tax Consequences
  7. Extend Time In House (“Free Rent”)

And on the con side:

  1. Less Time in House (Less “Free Rent”)
  2. Possible Deficiency
  3. Tax Consequences
  4. Annoyance of Selling an Occupied Home
  5. “Manufactured” Judicial Foreclosure
  6. Potential Liability to Buyer

Click through to the pro or con post for his full write-up of each reason.

What about you? If you were (or are) underwater on a home that you don’t want to (or can’t) keep anymore, would you give a short sale a try? Why or why not?

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About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market. Tim also hosts the weekly improv comedy sci-fi podcast Dispatches from the Multiverse.

97 comments:

  1. 1

    Thanks Tim!

    To understand some of those reasons, especially those in both the pro and con side, you need to read the piece.

    If anyone has any additional reasons, I’d love to hear them.

  2. 2
    BJ says:

    A biggie and not included in that list is the stress, frustration and time consumed in dealing with idiots (banks and investors). It can be a serious, emotional roller-coaster ride.

  3. 3

    RE: BJ @ 2 – That is true, but that’s probably more true for the professionals (agents and short sale negotiators) that have to deal with the bank. Hopefully they can shield their clients from most of that. Somewhat surprising I didn’t add that given how much I do not like dealing with banks.

  4. 5
    David Losh says:

    How many times are we going to go over this?

    These articles are irresponsible.

    It makes it sound as though a short sale is a choice, “a short sale will be a personal decision.” There are actual policies, and procedures for short sales that include a hardship. Many short sale negotiators claim that hardship is easy to prove. Well, if it were that easy every one should be short saling today.

    The second thing is that if you lie in this process you are subject to the law.

    Third is that you don’t know until the day of closing what a bank can throw at you. You may be promised a waiver of deficiency, but at the day of closing that may be missing from the package, there again that waiver is also predicated on the information you, as the seller provide.

    I could go on, but it would take a lot more than the space provided to go into detail.

    You need an attorney who will agree to represent you in this process.

    As long as we are throwing around opinions, because that is all these articles are, speculation, and opinion; foreclosure or Deed in Lieu of, looks like the better option.

    I just don’t think at this stage of the game I would continue playing games with the bank that screwed me to begin with. In my opinion I would take the option that is in the contract that I signed with the bank rather than starting a new process that may open me up to further liability.

  5. 6
    David Losh says:

    RE: Jill Schlicke @ 4

    I don’t trust government programs, but this was an option I never thought of. It makes sense.

    As for the second, the second gets something which is more than they will get in any other case.

  6. 7

    By David Losh @ 5:

    How many times are we going to go over this?

    These articles are irresponsible.

    It makes it sound as though a short sale is a choice, “a short sale will be a personal decision.” There are actual policies, and procedures for short sales that include a hardship.

    No David, what’s irresponsible is responding with out reading. The topic is should you try a short sale. Of course the bank might not approve it, depending on your circumstances. The second piece actually mentions that as a possibility.

    Third is that you don’t know until the day of closing what a bank can throw at you. You may be promised a waiver of deficiency, but at the day of closing that may be missing from the package, there again that waiver is also predicated on the information you, as the seller provide.

    It’s not going to be the day of closing, but the piece mentions that you might not know until the bank approves it, and that the bank’s position might be ambiguous. The piece also mentions the new legislation which ties the banks’ hands on owner-occupied properties.

    http://apps.leg.wa.gov/documents/billdocs/2011-12/Pdf/Bills/House%20Passed%20Legislature/2614-S.PL.pdf

    I just don’t think at this stage of the game I would continue playing games with the bank that screwed me to begin with. In my opinion I would take the option that is in the contract that I signed with the bank rather than starting a new process that may open me up to further liability.

    First, not every bank that has a undersecured loan screwed their borrower. Second, you’re likely already liable on the debt unless the bank non-judicially forecloses. Most of the time you wouldn’t want a worse result than that, but sometimes that might be okay.

  7. 8

    I added a new reason to attempt a short sale:

    7. Future Bankruptcy

    If the owner is contemplating a bankruptcy, a short sale before the bankruptcy might reduce the amount of their “consumer debt”, allowing their bankruptcy to be a business bankruptcy. Alternatively, a short sale would affect the owner’s secured and unsecured debt levels, possibly allowing the owner to file a Chapter 13 reorganization.

  8. 9
    David Losh says:

    RE: Kary L. Krismer @ 7

    I did read it, and it’s irresponsible.

  9. 10
    Pegasus says:

    Just more false information being spread by a real estate agent. Nothing original about that. You would think they would learn but time has proven that is not the case. Losh is right. Stop spreading false information for profits.

  10. 11
    David Losh says:

    Let me more clear, there are millions of home owners who are underwater. There may be billions of home owners who are under water globally.

    We are in better shape than in Europe, China, Japan, South America, or places like Dubai, or Mumbai, but it is all a massive cluster of banking gone bad.

    How is it remotely possible that banks made so many miscalculations? In the Billions, or even Trillions of dollars.

    We have these mechanisms of short sale, foreclosure, and bankruptcy that need to be considered as whole solutions to our personal debt. It isn’t a choice, if you have choices then you have options, and right now banks are in the drivers seat.

    You need to be prepared for consequences. You need to be ready to defend yourself in court, so get legal advise from a person who will be representing your personal case.

  11. 12
    jesus christ says:

    dont bother.just walk away son,and leave the keys on the kitchen counter.then move way.
    best decision i ever made in this whole mess.

  12. 13

    By David Losh @ 9:

    RE: Kary L. Krismer @ 7

    I did read it, and it’s irresponsible.

    David, don’t assume that something is irresponsible just because you can’t understand it.

  13. 14

    By Pegasus @ 10:

    Just more false information being spread by a real estate agent. Nothing original about that. You would think they would learn but time has proven that is not the case. Losh is right. Stop spreading false information for profits.

    What do you think is false?

    I’m a bit surprised with your reaction. It isn’t a terribly positive article for short sales. Only a few “great” reasons to do a short sale.

    1. To get the second to waive a deficiency.
    2. To improve a bankruptcy situation.
    3. To get more “free rent” time in the house.

    The rest are just okay, good or questionable, and then there are a number of reasons not to do one.

    Seemingly you’re basing your opinion on the status of the author, rather than the merits. But if not, what is false?

  14. 15

    By David Losh @ 11:

    Let me more clear,

    Rather ironic you would start with that phrase, and then head straight into a bunch of nonsense.

    But yes, attorney advice (and tax advice) is critical. Many brokerage firms won’t even allow an agent to list a short sale property until there has been attorney review. That’s a policy I fully support.

  15. 16
    David Losh says:

    RE: Kary L. Krismer @ 15RE: Kary L. Krismer @ 13

    Every one should be very careful about the limit scope of your articles which are simply a means of self promotion.

    Mortgages have become the biggest scam in the world, and you are offering a band aid, but hey, maybe some one will give you the gift of a Real Estate commission in the process.

    If any one here has a house that is “underwater” that they want to get rid of, talk to an attorney, who can actually help you, and consider your entire debt situation.

  16. 17
    S-crow says:

    Just learned of a prior client this morning who found out from their employer that their wages are now being garnished by said 2nd lienholder (major national bank). Maybe it does not pay to strategically walk away/choose to stop paying your mortgage. Every situation is different. When borrowers are claiming hardship and tax returns are pulled along with the data the IRS may have on investment income, etc….it might be harder to explain “earnings vs. hardship.” When cells phones, auto debt and other consumer debt is being paid on time and yet the mortgages are in arrears it might be a red flag when lenders pull credit from time to time.

    The housing debacle has turned into a Chess game that also includes politics. Some win, some lose but in the end we all pay for this one way or the other.

    S-crow

  17. 18

    By David Losh @ 16:

    Every one should be very careful about the limit scope of your articles which are simply a means of self promotion.

    Mortgages have become the biggest scam in the world, and you are offering a band aid, but hey, maybe some one will give you the gift of a Real Estate commission in the process.

    If trying to provide as unbiased of view as I can is self-promotion–then I’m guilty as charged.

    And I’m not “offering” anything. Short sales exist as an option. I’m explaining some of the reasons to do and to not do a short sale. The biggest reasons both for and against pertain to the deficiency and tax liability. For many agents, their sales pitch would hit on the first three reasons I noted, which I merely consider okay reasons to do a short sale.

  18. 19

    By S-crow @ 17:

    When cells phones, auto debt and other consumer debt is being paid on time and yet the mortgages are in arrears it might be a red flag when lenders pull credit from time to time.

    The other thing that can clue them off is a sudden stop in payments, after having been timely in the past. Usually people struggle a while and then stop.

    Was the situation you described a strategic default with a second mortgage in place? I’m not sure what they expected. I do know one person who managed to get a pretty good settlement on a second position debt. Something like 10% of the amount owing.

  19. 20
    David Losh says:

    RE: Kary L. Krismer @ 18

    There has never been a time when there were this many underwater properties.

    You just refuse to admit we are in exceptional times.

    There are millions of short sales, and foreclosures. This isn’t some whoops moment where some poor haplass home owner made a mistake.

    Banks lent billions or trillions of dollars. Billions of dollars were lent over the value of the property. This wasn’t some mistake that happened. This was a calculated scam between a lot of investors, banks, and financial markets.

    People need to hire attorneys willing to represent them from beginning to end. That cheat sheet primer has been circulateing for five years, you reprinting it, at this point, is irresponsible.

    As S-Crow points out I don’t think the banks have gotten started yet on what they will do to people next. What’s the next scam coming from the banking community? Do you have a clue, or are you just here to sell your services?

    Hey, BTW, what are people supposed to do with these remedial gems of wisdom? Where should they go next? What’s the next stop on the Kary Krismer sales train?

  20. 21

    By David Losh @ 20:

    RE: Kary L. Krismer @ 18

    There has never been a time when there were this many underwater properties.

    You just refuse to admit we are in exceptional times.

    WTF are you talking about? Are you just making stuff up now? When have I ever said anything like that?

    You’re pathetic. Calling me irresponsible and then making up things I’ve said.

    How about this. Why don’t you find one thing in either of those blog posts that is incorrect or otherwise wrong. Otherwise, STFU.

  21. 22

    By David Losh @ 20:

    As S-Crow points out I don’t think the banks have gotten started yet on what they will do to people next. What’s the next scam coming from the banking community? Do you have a clue, . . .

    Wow. Who was one of the first people here pointing out that when a first position creditor forecloses, the owner will still owe the debt on the second mortgage? That’s hardly groundbreaking news or something that needed to be predicted. It’s hardly a “scam.”

    When you sign a note you are liable on the note unless there’s a defense to the note. Another creditor foreclosing does not give rise to a defense in Washington State.

    You clearly don’t have a clue.

  22. 23

    What is true is that there has sprung up a ” short sale” industry full of charlatans and hucksters. Short sales specialists, short sale negotiators, and real estate agents who stand to make a buck off of someone’s misfortune.
    I can see why someone would want to avoid foreclosure. What I can’t see is why more people aren’t guided towards doing a ” deed in lieu of foreclsoure”, where, with the lenders permission, the troubled home owner just gives the house back. Maybe some attorneys make those recommendations, but in the real estate industry, it’s all short sale, all the time.

  23. 24

    RE: Ira Sacharoff @ 23 – Deeds in lieu don’t work where there are junior interests, and you have to get the bank to agree to take it back. You can’t just record a deed to them, as you note. I suspect the banks would rather have the owners sell it, so that might be part of the reason there aren’t more short sales.

    But you hit on part of the problem. Agents push short sales! Bankruptcy attorneys push bankruptcies! That’s part of the reason why I did the two pieces, to try to have a relatively unbiased discussion of the advantages and disadvantages.

    Also, there are other options, including, foreclosure, deed in lieu, loan modification, bankruptcy (Ch. 7–Ch. 13), and the ever popular–keep making your payments. Some of those would be an alternative to a short sale, some a backup to a short sale if it doesn’t succeed, and some are done in combination with one of the other remedies.

    And again, with almost all of them, you need to consider the tax consequences!

  24. 25
    David Losh says:

    RE: Kary L. Krismer @ 22RE: Kary L. Krismer @ 21

    You wrote these yesterday? Then call me pathetic? Did you copy these from a 2008 Real Estate section of the Sunday paper?

    This is just wrong, and irresponsible of you to be promoting yourself in this way.

    Wake Up! Look around! By shear volume you must be able to tell we are way past the time when you should be counseling people about short sales or foreclosure, or even promoting the idea.

    You warned people about second lien liabilities? Who are you trying to fool now?

    Take the dog, and pony show down the road. Don’t try to beat me down with your lack of knowledge, you just don’t have the ability.

  25. 26
    Ray pepper says:

    At the present time I cannot advise people to engage in a short sale of their property in Washington State. There are far too many financial Incentives on the horizon.

    For those underwater In 2012- I will reiterate:

    Never-Ever walk away!
    Due diligence and Fight for what is yours!
    Hamster wheel while you wait …
    Don’t be stupid !

  26. 27
    BJ says:

    By Kary L. Krismer @ 3:

    RE: BJ @ 2 – That is true, but that’s probably more true for the professionals (agents and short sale negotiators) that have to deal with the bank. Hopefully they can shield their clients from most of that. Somewhat surprising I didn’t add that given how much I do not like dealing with banks.

    You actually think it’s more stressful and frustrating for the agents and negotiators than the owner and/or an entire family who owns the property and literally has everything to lose?

    I tried to short-sale for over a year and while we had the best agent we could ever ask for who helped us with every little step, it’s impossible for the agent to “shield” you from the emotional roller-coaster ride. There is still a lot of hands on needed by the property owner during the process.

    It was a complete nightmare re-submitting paperwork after paperwork due to “lost” forms by the loan servicers, hitting 90 expiration dates because they didn’t get to our paperwork in time, our loan being sold off three different times (yes, three!) during the process and having to start all over again.

    We had multiple offers but the investors had a set number according to “their figures” even though the market (and our many comps) told them otherwise. Eventually they decided to just send it to the court house because they thought they would get some bidding war and receive their net amount. They ended up receiving $50,000 LESS than they would had they just accepted the highest and best while it was on the MLS!

    I don’t regret trying the short-sale process and anyone reading this thinking about doing it please don’t let my story discourage you. There are many banks and investors out there with common sense and are willing to work with you to get it done. But just be aware that it could be a huge cluster f$*k of hoops to jump through and most of it won’t make any damn sense and frustrate the hell out of you.

    IMO, the biggest positive out it all is #7 on that list — extended time in the house (free rent)

    The short-sale will likely delay and buy you time (usually at least a year) to save up. Funny looking back on it, one of the things I worried about most in the beginning was receiving constant calls from the mortgage company at work — that never even happened once.

    Ray really preached it here a lot (and he is completely right) — if you are seriously underwater stop paying now. Unless you absolutely love your home get out. It’s not worth it. Live rent free and save up all that $$ for your next house or rental that will have a cheaper mortgage or rental payment.

  27. 28
    David Losh says:

    RE: Ray pepper @ 26

    I think you also advocate doing the loan modifications, and I would caution people about doing that.

    Banks are asking for financial information. Banks are criminals, they will use that information against you in a court of law.

    You should get the advice of an attorney then bleed as much as you can out of these crooks. Fight for what is yours, and give these thieves nothing.

  28. 29

    By David Losh @ 25:

    RE: Kary L. Krismer @ 22RE: Kary L. Krismer @ 21

    You wrote these yesterday? Then call me pathetic? Did you copy these from a 2008 Real Estate section of the Sunday paper?.

    Huh? No, I wrote it all entirely myself. It’s based on something else I recently did what was aimed at a lawyer audience.

    Again, what do you think is wrong or otherwise incorrect with the piece. If you don’t have anything you can point to that is wrong or incorrect, then STFU. You don’t know squat about real estate or the law. You are becoming a troll, very ignorant and misguided troll.

  29. 30

    By David Losh @ 28:

    RE: Ray pepper @ 26

    I think you also advocate doing the loan modifications, and I would caution people about doing that.

    You should get the advice of an attorney then bleed as much as you can out of these crooks. Fight for what is yours, and give these thieves nothing.

    David, you’re in no position to advise anyone about anything. You don’t understand squat, particularly as squat pertains to real estate and the law.

    The only thing you do have right is people should consult with an attorney. I would also note, however, that as part of the National Mortgage Settlement some banks are actually contacting borrowers directly. Some of those deals sound so good people think they are scams. So consult an attorney. And also, consult your tax adviser. Loan modifications can have tax consequences.

  30. 31
    Ray pepper says:

    RE: David Losh @ 28 – David I advocate doing all the loan modification paperwork but I advocate doing it for reasons above and beyond the loan mod. Again, David. Hamster wheel.

    However, some partners did get loan mods of a lifetime that made perfect sense. In other words the principle was dropped to current market value ( or less) and they saved nearly 100k while jogging the hamster wheel.

    Underwater homeowners stop crying! You hold ALL the cards especially in Washington State!

  31. 32

    By Ray pepper @ 31:

    However, some partners did get loan mods of a lifetime that made perfect sense. In other words the principle was dropped to current market value ( or less) and they saved nearly 100k while jogging the hamster wheel.

    This is perhaps a good example of the reason to consult a tax professional. That $100k you save might be a taxable event, because it’s cancellation of debt. If you don’t qualify for the Mortgage Debt Relief Act and are not insolvent, that could be $100,000 of income on your 2012 tax return, with a payment due 4/15/13! Given the fact that the banks are sometimes the ones contacting the borrowers, I could see that easily happening.

  32. 33

    RE: Ray pepper @ 31 – BTW, I would add that getting that type of deal is probably dependent on your lender being one of the six (or so) creditors that were part of the National Mortgage Settlement. They have billions of dollars they have to blow, and now one cares much how they blow it. And apparently it’s also dependent on it not being a loan held by Fannie or Freddie.

  33. 34
    Ray pepper says:

    RE: Kary L. Krismer @ 32 – that was not the 100k. I was talking about. From 3 years plus of no mortgage payment upside down homeowners stash away vast sums of money while the banks suck wind and even pay taxes and insurance. Because we all know that you don’t tread the wheel without having the lender pay EVERYTHING!

    The principle cram down is a bonus gift if the homeowner decides to accept it and the implications. Btw. The astute homeowner who knows how to travel on the wheel will get another year plus in the home post trustee sale and a financial gift on the way out.

    Stop crying friends!

  34. 35

    RE: Ray pepper @ 34 – Those people with higher payments might have to worry about judicial foreclosure, perhaps especially now in light of the Bain Mers decision.

  35. 36
    Ray pepper says:

    RE: Kary L. Krismer @ 35 – People can worry about whatever they want but each month that goes by the competent upsidedown homeowners are getting paid very well to “worry.”

  36. 37

    BJ, post 27, for some reason your post won’t copy, but yes a good agent should be able to shield the client from a lot of the concerns. That’s true on every transaction, not just short sales. Of course, it’s not possible to stop someone from worrying entirely, but a lot of the things you’re talking about you could have been shielded from. Also, part of it is setting up expectations from the beginning, for example being warned that paperwork might need to be submitted multiple times.

    I’m not saying that an agent should keep a client totally in the dark, but there are a lot of things that they can deal with that would not require client involvement.

  37. 38

    RE: Ray pepper @ 36 – If they end up in judicial foreclosure, the “payments” they think they are receiving may very well have been only illusory. Again though, that would likely only be for upper income individuals.

  38. 39

    Not directly related to my pieces, but here’s another Trulia blog piece where someone attempting a short sale discovered that the banks have a right called setoff. If you owe a bank money and are in default, they can take the money that is in your other accounts.

    http://www.trulia.com/blog/paul_nelson/2012/08/thinking_about_a_bellevue_short_sale_don_t_let_your_lender_levy_your_bank_account#c121616

    Yet another reason to consult an attorney prior to attempting a short sale. I think a real estate agent would be very unlikely to think of that.

  39. 40
  40. 41
    BJ says:

    By Kary L. Krismer @ 37:

    BJ, post 27, for some reason your post won’t copy, but yes a good agent should be able to shield the client from a lot of the concerns. That’s true on every transaction, not just short sales. Of course, it’s not possible to stop someone from worrying entirely, but a lot of the things you’re talking about you could have been shielded from. Also, part of it is setting up expectations from the beginning, for example being warned that paperwork might need to be submitted multiple times.

    I’m not saying that an agent should keep a client totally in the dark, but there are a lot of things that they can deal with that would not require client involvement.

    Of course my agent gave us a heads-up warning on the process and expectations. But I guarantee it’s always more stressful for the homeowner than the agent.

    Kary, how many short-sales have you listed for clients?

  41. 42

    By BJ @ 41:

    By Kary L. Krismer @ 37:Kary, how many short-sales have you listed for clients?

    I do very few short sales, because I’m not that big of a fan of them. I don’t consider the non-judicial foreclosure to be that bad of a result, and I’ll tell potential clients that. Most of the ones I do on the seller side are for bankruptcy trustees. For bankruptcy trustees the considerations that would push an owner to other options are not present, and there are actually some benefits to the debtor if the trustee is successful. For individuals I don’t try to push them into doing a short sale. The last person I referred out to an attorney didn’t try a short sale, and they apparently managed to settle their second position creditor loan. I consider that a good result.

    As an aside, Losh has access to that information, but rather than looking it up he makes the assumption my piece was for the purpose of self-promotion. It is true that with the July numbers, I’d be more willing to take a short sale now than in the past, it’s still not something I’m going to try to focus on. But if someone knows the advantages and disadvantages of a short sale, I’d be happy to help them accomplish the task.

  42. 43

    By BJ @ 41:

    But I guarantee it’s always more stressful for the homeowner than the agent.

    You don’t know how much I worry about things! ;-)

    Seriously, my attorney training taught me to always prepare for the worst case scenario, which means you have to think of what that could be. That, for example, is why I advise buyers on short sales not to give notice to their landlord until the transaction actually closes. I don’t want to end up with a client who has no place to live. And that’s why I worry about things like a deed for trust trustee actually continuing a foreclosure sale they claim that they will continue.

    When I first started doing real estate a lot of people would ask how I liked it compared to practicing law. My answer was that it really wasn’t helpful being an attorney because I was aware of all the things that could possibly go wrong in a transaction. I envied agents who were ignorant of those concerns, and could just go on with their lives assuming a transaction would close, because they almost always close.

  43. 44
    Ray pepper says:

    RE: BJ @ 41 – Let me respond to this. There is no greater stress to anyone then the occupants of a home that is in the midst of a short sale or a foreclosure. By this I mean the home owner or a tenant.
    The agent representing a seller or buyer has the peace of mind to return home in a stable residence.
    To mention the supposed stress of an agent, in this transaction, is both inexcusable and thoughtless.

  44. 45

    RE: Ray pepper @ 44 – Nothing worse, IMHO, than an agent who is either ignorant of what can go wrong for their clients or doesn’t care about things going wrong for their clients. You’re clearly one or the other. Which one is it?

    Real agents care about their clients and what happens to their clients. And part of that is shielding their clients from as much stress as is possible. Yes both a short sale and a foreclosure can be stressful, but there are ways to help people cope with that. Information and knowing what to expect goes a long way. Knowing someone competent is looking out for them also helps.

    As to being “homeless” the client doing a short sale or being foreclosed will likely have to move. That’s the very point of doing a short sale! That doesn’t mean they will be homeless. Implying that as their biggest concern is hardly insightful, especially for someone who thinks nearly everyone should be foreclosed. Newsflash–when they get foreclosed they have to move. That’s exactly what you’ve been advocating here. If it’s so stressful, why have you been pushing people in that direction? Rather obviously you don’t care about their stress.

  45. 46
    Pegasus says:

    Sure looks like one of those much heard about real estate bidding wars that finally won the deal! In a couple of years some clown real estate agent will try to convince the buyer as to why a short sale is really a good deal for him with made up baloney reasons like it is less embarrassing than a foreclosure and will look better on his credit….yuk yuk! He will forget to mention that he, the real estate agent, won’t get paid a commission if the seller goes for a foreclosure and that the banks are in love with short sellers versus foreclosures. Wonder why?… wink, wink. Obviously tremendously important reasons why a real estate agent would lie to a potential seller.

  46. 47

    RE: Pegasus @ 3 – You never have said what you thought was false in my blog pieces.

    Perhaps you didn’t notice that I said the credit score wasn’t a very good reason and that it was “the most questionable reason” to do a short sale. And you obviously missed the point that I thought the embarrassment factor was a merely a good reason (on an okay/good/great scale), but only for those who would be embarrassed. Do you think you can speak for all people about what embarrasses them? You apparently embarrass rather easily since you want to stay anonymous. You shouldn’t be so tough on those who might be embarrassed by being foreclosed. You should relate to them!

    But come on now. You said I was spreading a bunch of false information. Back up your statements! What was false?

  47. 48
    Pegasus says:

    RE: Kary L. Krismer @ 4 – As Losh said we have already discussed your baloney before. No point in arguing with a clown that will drone on endlessly denying everything and clogging this blog once again for the 1000th time with garbage. Go spread your manure on Trulia where it belongs.

  48. 49

    RE: Pegasus @ 48 – In other words you can’t point to a single thing that is wrong. Thank you for admitting that through your actions.

    And LOL on the relying on Losh part. That’s precious!

  49. 50
    Ray pepper says:

    RE: Kary L. Krismer @ 49 – Kary, In the past I would engage with you but your expertise and professionalism was displayed here in full clarity with your remarks of STFU to fellow bloggers. I’m very surprised Tim gave you the air-time for advice in this arena.

    David’s mind is open to criticism on virtually every entry but utilizing tact and respect should be warranted.

    My opinion has not changed in years in what people should do. First and foremost will always be to take care of yourself and family first because nobody else will. The banks will represent their own interests and it’s up to the upside homeowner to get educated NOW more then ever.

    This blog topic did nothing for anyone because, as usual, the truth gets skirted and very few will tell you the truth in such a forum.

  50. 51
    David Losh says:

    Kary, insulting people isn’t a discussion or argument.

    Best of Luck.

  51. 52
    David Losh says:

    RE: Ray pepper @ 31

    I agree the loan modification can be a great thing.

    In some cases people got liar loans, and are now submitting financial statements that may not match.

    All I’m saying is that people should think through a strategy before they start.

    In my opinion some pencil pusher will start going through files to see if the bank can claim they were the victims of fraud.

  52. 53
    Pegasus says:

    RE: Ray pepper @ 50 – Kary dominates the posts here at the Bubble and mostly with nonsense and bashing of others. The fact of Tim promoting Kary’s behavior, encouraging it and posting his false information is expected. Without Kary posting here non-stop the Bubble would have far fewer statistics to claim as a successful blog such as page views, posts, etc. It is a matter of survival for a blog that has past it’s prime and Tim is playing the real estate game now.

  53. 54

    By David Losh @ 51:

    Kary, insulting people isn’t a discussion or argument.

    Best of Luck.

    Neither is claiming something is “irresponsible” when you don’t have a clue what you’re talking about. You didn’t make any effort at all to refute what I said, but instead you just went off on a bunch of nonsense, as is your typical way.

  54. 55

    RE: Pegasus @ 53 – And even again, you still can’t say anything that was wrong in my article. You just want to say it’s “false information.” The reason for that is because you can’t do anything more. You’re impotent.

    Here’s a question for you. Did you know that was a false statement? If so, do you know what that makes you?

    I started post 1 by asking if anyone had any items to add to either category to express them. What I got instead was Losh calling the piece irresponsible because it was over his head, and you calling it “false information” because a real estate agent wrote it. But you’re complaining what I post here. That’s ironic.

  55. 56

    By Ray pepper @ 50:

    RE: Kary L. Krismer @ 49 – Kary, In the past I would engage with you but your expertise and professionalism was displayed here in full clarity with your remarks of STFU to fellow bloggers..

    I told Losh that twice. The first was when he completely fabricated arguments I’ve made in the past. The second was when he accused me of being a plagiarizer. Both times what I objected to was quoted. And both times the context was find something wrong with either blog piece, or STFU.

    When Tim posted the links to the pieces I was hoping for some useful feedback. Instead I got the Losh and Pegasus troll tag team.

  56. 57

    From the Albatross thread: By Pegasus @ 4:

    Try doing something meaningful like stopping the false promotion of short selling by the real estate industry. ..

    Promotion of short sales? Have you even read the two blog pieces? Apparently not.

  57. 58
    corndogs says:

    RE: Kary L. Krismer @ 57 – Wholly hell!…Krismer, this an outrage!! you know full well that Losh is mildly retarded!!! would you say FU to the Rain Man or Forrest Gump?… No you’d be committing abuse… you could go to jail for that I think. What’s next, are you gonna offer him candy and to sit on your lap?…. Stop the abuse before it goes too far..!!!

  58. 59
  59. 60
  60. 61
    David Losh says:

    OK, I have a few minutes.

    I’ve done short sales since 1986. I have done equity sharing, or taken unrecorded seconds on properties that were bought at foreclosure. The house we live in was bought by an amateur investor at a foreclosure auction.

    Distressed properties is something I have done a lot of. I know the system, I know the players. I like dealing with banks because it is all numbers.

    I also know that these guys don’t care about anything but the numbers.

    What concerns me is that banks lent hundreds of thousands of dollars over values they know, because these guys live, and breath the numbers.

    There was no mistake here, banks took a calculated risk to corner the Real Estate market place.

    Now, no one is “deciding” to short sale properties, they are being forced out of their homes.

    You say you want feed back? Well we have gone over all of these same points repeatedly over these past four years.

    Short sales, and foreclosures are devastating for families, and investors. It’s a loss. There are ways to do it, there are procedures to follow, and no two transactions are the same.

    I have have given you many examples of how the system works, and you don’t want to hear it. You don’t want to learn.

    You want to insult me, or Ray, or Ardell, or any one else who knows something.

    But you wrote these cheesey articles to get more feedback. It’s insulting, it’s irresponsible.

  61. 62
    David Losh says:

    RE: corndogs @ 58

    You are the big time investor who bought a property at the foreclosure auction. It’s a 1986 clear vertical grain cedar construction you paid $500K for and it’s in Gig Harbor.

    You claim it’s a dividable lot, and it may be, the slope is of some concern, but anything is doable.

    The neighborhood of new construction seems to top out at about $650K.

    So out of the options that I see you stand to take about a $60K loss, or you paid full retail for the property. Take your choice.

    So, I did run the numbers, and I’m just talking from memory. I ran the numbers because the person who called themselves Joe Hammy made some sense, you, not so much

  62. 63

    By David Losh @ 61:

    Now, no one is “deciding” to short sale properties, they are being forced out of their homes.

    Okay, I’ll take you at your word you believe that. But it’s not helpful to think that way.

    First, not every person who does a short sale is being forced from their home. Some people were relocated by their employer, and other people may have married with both spouses bringing one property into the marriage. So the choices for them would be foreclosure, short sale or perhaps renting the property out. And as I’ve mentioned, even for those in financial distress, there’s the ever popular “keep making your payments” option.

    Second, even those who are “being forced from their homes” have to decide what to do. Even doing nothing and let the house go to foreclosure is a decision. People who can no longer make their payments have to decide how they will be forced out, and they should attempt whatever option best fits their financial situation, their tax situation and their personality. There is no one best choice which is best for every person. My blog pieces are designed to give them a framework to help them make that decision, and to bring up issues they might not have thought of, such as determining their tax situation.

    Third, liking the two pieces doesn’t mean that you like short sales. I’ve been complaining here and elsewhere for years that banks take too long to make a decision. I’ve been complaining here and elsewhere about the actions of some real estate agents. Overall I really can’t say I like short sales, but that doesn’t mean that a short sale is not the best option for some people. People should make the decision of whether or not to do a short sale based on what is best for them, not what you or I think about short sales.

    Finally, your self-promotion claims are insulting. While each blog piece on Trulia can be categorized up to three ways, the most common category for my pieces by far is “agent to agent,” and those pieces are largely designed to warn agents about situations that might get them into trouble. For example, I repeatedly warned agents about the process of regularly lowering prices on their short sale listings on a schedule, as opposed to based on market conditions. After my second or third piece on that topic, two agents had their licenses suspended for 10 years largely because of that behavior. I will admit that some of what I write (e.g. how to win in multiple-offer situations) is promotion, but this piece was not. This piece was designed to help consumers make a tough decision, and also to help professionals develop a framework to help their clients.

  63. 64
    corndogs says:

    RE: David Losh @ 62 – Haha.. you ran the numbers? Thanks Rain Man! Did you run the numbers before you started your business ‘baby boomer house cleaning’?! If you are so knowledgeable about the world why does your end game suck so bad?

    Here’s your house..
    [Link removed by Tim. It crosses the line to link to someone’s home address if they didn’t link to it themselves first.]

    Here’s the JHammy house again
    http://www.zillow.com/homedetails/8223-Goodman-Dr-NW-Gig-Harbor-WA-98332/49162176_zpid/

    nough said?

  64. 65

    RE: corndogs @ 64 – It’s not cool to post people’s addresses on the Internet (even though yes that information is easy to obtain).

  65. 66
    wreckingbull says:

    You are one creepy dude, corndogs.

  66. 67
    corndogs says:

    RE: wreckingbull @ 66RE: Kary L. Krismer @ 65 – Losh posted his address on his own website… all you have to do is click on his name on any post here and go there. It’s the home base of ‘Baby Boomer Cleaning Company’. I wouldn’t waste anytime researching Forrest Gump! He wants to give his input about housing, here’s some input for him….. get some street appeal…. paint that dump or… something…

  67. 68
    David Losh says:

    RE: corndogs @ 67

    Actually it is the home of Seattle House Cleaning at http://www.SeattleHouseCleaning.com

    We are running a special until September 30th with a 20% discount for new regularly schedule customers.

    We are lowering our rate from $120 per hour for a team of three to $96 per hour.

    We only service the Seattle Area from about downtown to 145th,

  68. 69
    David Losh says:

    RE: Kary L. Krismer @ 63

    On you Trulia page you are saying you can help people with short sales, and REOs.

    That is self promotion.

  69. 70
    corndogs says:

    RE: David Losh @ 68 – Nice try Losh! Yeah right… we’re supposed to believe you bought a residential house to run your cleaning business that has 3 employees to run your business and you live somewhere else more cool…. No….. that’s where you live….. your ole lady is some kinda South American…. so she’s clearly running the cleaning business…… my guess is you’re on SSI…. based on the amount of time you have to F around on the internet……. BTW, I’m just posting things that you put on the internet yourself.

  70. 71

    RE: corndogs @ 64
    Absolutely uncool. Does it make you some kind of muckraking journalist to post a regular Seattle Bubble contributor’s address?
    No, it just makes you look like a stalker, a creep. It does not make you look legitimate.
    Disagreements here are a good thing and to be expected. Posting someone’s address, and then defending it? Get a clue. Should none of us ever dare to disagree with you because you might unearth something about us? And so what if Losh owns a housecleaning business?
    The Tim is by trade an electrical engineer. I think he knows a couple of things about real estate. And what you didn’t state is that Losh has more experience in the real estate industry than anyone else who posts on Seattle Bubble.
    Once again, it’s fine to disagree with anyone here and to express that. You didn’t expose Losh as a fraud because you posted a picture of his house. I could care less what his house looks like, and how fancy his house is doesn’t really indicate anything about how successful he is, but maybe now you will post his bank account information. Step back a foot, breathe, and maybe acknowledge, even to yourself, that you stepped over the line and did something wrong. Should I worry now that you’re going to break into my house to take a photo of my messy desk and post it?

  71. 72
    David Losh says:

    RE: corndogs @ 70

    We are willing, until September 15th to send a team of four for regularly scheduled cleaning service for $120 per hour. That works out to a 25% discount.

    Again Seattle House Cleaning at http://www.SeattleHouseCleaning.com

  72. 73
    wreckingbull says:

    Tim, I think it is time to depress the lever and flush corndogs. Post #70 and its race-baiting is pretty much just there to inflame everyone.

  73. 74
    corndogs says:

    RE: Ira Sacharoff @ 71 – Again. Losh posted his own address on the internet. I agree that a person should not have their privacy messed with unless they put that info out there themselves. Losh has a link from this site to his business and its location…. therefore it is free game….. sorry I don’t agree with you…. there is no difference for Losh to comment on the JHammy house when it wasn’t part of the conversation then it is to bring his house into the conversation.

  74. 75
    Ray pepper says:

    This entire thread is the most titillating and knee slapping comedy I’ve read in awhile here on the Bubble. Kary needs to bring on more topics so I can tune in and watch the bash parade. I find corn dog to be a riot and one remark in particular made me bust out laughing.

    I just don’t like when people tell others to shut up in an open forum. It’s a blog. Tim will delete when warranted and it’s not up to us to silence anyone.

  75. 76

    RE: Ray pepper @ 75
    Back to the subject of short sales/foreclosures/loan modifications:
    I think Ray probably has the most ” in the trenches” experience about these things, so I think it would be very informative for him to state how people get to stay in their homes for an extended period of time without paying their mortgage. Kary may have the legal expertise, but I think Ray is in a good position to explain what actual people do in the real world, legal or otherwise. It would need to be written in such a way that no particular method is being recommended. Let’s say I bought my house for 600,000 and now it’s worth 275, and I’ve been offered another job five states away. What are people doing in that situation??

  76. 77
    ARDELL says:

    RE: Ira Sacharoff @ 76

    I would like to add one thing to Ira’s question. There are many people who own condos that are underwater and when relocated for job purposes are “not allowed” to rent them due to the newer “rental caps” imposed by many HOAs.

    I know a young man who just rented his place in North Carolina after trying his best to come up with an answer within all of “the rules” he had to comply with. He no longer lived in the unit, he could rent it and continue to pay his mortgage. But the HOA said what, that he had to leave it vacant as a wasting asset? How can that be legal?

    He has rented it and the HOA has threatened to bring legal suit against him. He even tried to sell it because he had a large downpayment when he bought it, but nothing is selling in that complex as the only buyers are investors and no investors want them because they can’t rent them.

    Sometimes there is no good answer.

    So my question is:

    Is it better to rent it against the HOA rules, or stop making payments and let it go to foreclosure? If you can’t live in it because you now work 3,000 miles away and you are “not allowed” to rent it…what’s a person to do?

  77. 78

    By David Losh @ 69:

    RE: Kary L. Krismer @ 63

    On you Trulia page you are saying you can help people with short sales, and REOs.

    That is self promotion.

    That’s my bio page.

    http://www.trulia.com/voices/profile/Real_Estate_Pro-Renton_WA-344850/

    We’re talking about the blog piece.

  78. 79

    RE: ARDELL @ 77 – I think the place to start is figuring out the tax consequences between a short sale and a foreclosure.

    I’d be reluctant to rent for fear I’d be sued by both the tenant and the association, but that’s not really something I’ve thought about. That’s just an off the top of my head answer. Clearly a question someone needs their own legal adviser to answer.

  79. 80
    David Losh says:

    RE: Kary L. Krismer @ 78

    No, Kary, what bothers me is you are promoting yourself as a person who can help others with short sales, and REOs.

    That is the point of your pieces.

    You are blogging for business, without the knowledge or experience to help.

    People hate Real Estate agents because when they come to us for that help but they are confronted with a lack of ability.

  80. 81
    David Losh says:

    RE: corndogs @ 74

    but you told us you bought that house.

  81. 82

    By David Losh @ 80:

    You are blogging for business, without the knowledge or experience to help.

    Losh, stop with the insults. You’re in no position to assess my abilities. You have no real experience as an agent. Do I need to remind you why you’re now hauling garbage out of houses?

    Now if someone came to you to answer any question about real estate, they would be dealing with someone without the knowledge, experience, intelligence or education to help. Get over yourself. You don’t know what you’re talking about, and you’re in no position to judge anyone else.

    So for the third time, find something wrong with what I wrote, suggest another pro or con item to add, or STFUYSFM.

  82. 83

    By David Losh @ 81:

    RE: corndogs @ 74

    but you told us you bought that house.

    Give it up. . No one cares about that house, or your opinion of what it is worth. You’re not qualified to value real estate. I’d trust Zillow before I’d trust your opinion.

  83. 84

    By David Losh @ 72:

    RE: corndogs @ 70

    We are willing, until September 15th to send a team of four for regularly scheduled cleaning service for $120 per hour. That works out to a 25% discount.

    Again Seattle House Cleaning at http://www.SeattleHouseCleaning.com

    Your website in the FAQ section claims you’re licensed and bonded, but I can’t find anything active. What’s the deal with that? Are you an unlicensed contractor claiming to be a licensed contractor?

    https://fortress.wa.gov/lni/bbip/Search.aspx

  84. 85

    This is fun going through Losh’s website. Per our resident cleaning expert, Summer is the time to self-clean your oven! Presumably last week when we were over 90 degrees. :-D

    http://seattlehousecleaners.com/

    BTW, the reference to going through the website is related to a prior post held up in moderation where I asked Losh about his other website’s claim of being a licensed contractor.

  85. 86
    ray pepper says:

    RE: Ira Sacharoff @ 76

    Ira, there is so much to tell and maybe I will write a book someday but for now let me offer this hamsterwheel link again: http://homepreservationnetwork.com/blog-opinion-analysis/categories/listings/hpn-blog?start=35 and one of my favorite videos but is now getting dated: http://www.youtube.com/watch?v=CJiR0lu99_I

    What people are doing NOW is becoming almost comical and is causing great frustration on the banks trying to foreclose. Astute homeowners are stopping foreclosure in thousands of ways that would boggle your mind. Many more have attorneys do it for them to further put a thorn in the side of foreclosure attempts..In February a homeowner I know utilized pay check stubs from his brother, altered the dates and name to appear he is Active duty, and this clogged his pipeline due to his “military service.” I know this person personally and he has now been living in the home 5.5 years and has saved 135k in cash tucked away. He jokes in 20 more months he can buy the same home for cash!……Then there is all the homeowners who buy a cashiers check near trustee sale date, send it to the bank on the 9th hour, only to have placed a stop on it right when it was purchased and took their funds back….Or the homeowner who does have his house foreclosed at Trustee Sale and produces a fictitious lease that indicated the tenant purchased the property via a contract and placed 10-20k down and recorded it . This muddies the water because the homeowner (and fictitous tenant) utilize an Attorney that place multiple liens on the property while challenging the actual foreclosure. So many foreclosed homeowners (many I know personally) continue to live in the homes years after the Trustee Sale. So many thousands more I read about in my investor feed in Nevada and California.

    The one thing all these people have in common is the HATRED toward the Banks. Homeowners justify their actions by this statement which I hear over and over again…….”They have no right to my property!!!–They do Not have the note, they are foreclosing illegally, and until its LEGAL I’m not leaving!”…I hear this, or a variation of it, over and over again…All the thousands of ways to hinder the foreclosure have 1 goal in mind the last few years and that was to DELAY the inevitable. Now, however, the astute homeowners that are travelling the hamster wheel have changed their tune the last 6 months. They appear to be of the MINDSET that the home is actually theres. Nobody will EVER take it from them. They will fight forever, it appears, and do not really care about OWNING the home but instead using it for as long as they desire or until they get their big pay day.

    It just goes on and on and the RE Attorneys will be making a killing while the ASTUTE homeowner will be tucking it away while waiting for their BIG PAYDAY!

  86. 87
    AxlRose says:

    RE: ray pepper @ 85 – Did you confuse astute with scummy?

  87. 88
    wreckingbull says:

    Ray, do you have any other examples that don’t involve outright fraud? Or does being an ASTUTE homeowner always require it? While these stories are entertaining, I would be more curious about how one could handle things within the law, if there is even such a concept anymore.

  88. 89
    ray pepper says:

    call it scummy or fraudulent……….but the homeowners who hamster wheel feel the fraud was perpetrated on them first and they feel very comforted knowing that…

    When I state ” astute ” I want to reiterate that NOBODY will watch out for your family more then yourself. Walking away or doing nothing is idiotic. Fighting, while saving $$$ each and every month, is competent. When its all over and the properties are written down to current value one way or the other this decade, those who place themselves in a better financial position for their family, from this debacle perpetrated by Wall Street, have DONE THE RIGHT THING in my book.

  89. 90

    RE: wreckingbull @ 88 – I think criminal would probably describe some of that. Not a good option, but hey, if the goal is free housing! ;-)

  90. 91
    David Losh says:

    RE: Kary L. Krismer @ 84

    What claim Kary?

    You see this is how it always ends with you.

    You are right no one cares about the house, or my opinion. This is just entertainment, so get over yourself.

  91. 92
    ray pepper says:

    RE: wreckingbull @ 87

    Yes wrecking bull you can contact your lender and apply for the many different assistance programs that are offered. As I mentioned earlier some programs being offered that reduce your principle to current market value can be HUGE for the homeowner that desires to retain the home. But, as the hamster wheelers will tell you…take your time…turn documents in on close to the last day they are requested, and SAVE LIKE YOU NEVER HAVE BEFORE along the journey which takes years….Because in the end the cash you save maybe all you end up with!

  92. 93
    David Losh says:

    RE: ray pepper @ 85

    We just came back from California, and the prices are staggering. No one wants to lower prices to value. Where are these people going to go who have no jobs, no chance of a job, but they are sitting in a house the bank lent them $650K for. Well, now the house is worth maybe $435K, but I still don’t see it.

    The hamster wheel may be the only thing keeping everything afloat.

  93. 94
    corndogs says:

    RE: David Losh @ 81 – Don’t try to mind F me Losh. Just ’cause you look like Leonard Nimoy, it doesn’t give you Spock powers. You’ll just have to keep guessing on that one…..

  94. 95

    RE: ray pepper @ 92 – My understanding is that with many/most banks, on the National Mortgage Settlement offers, you need to wait for the bank to come to you with the offer. You can’t apply for it.

    That is the only program I’m aware of where you’re likely to get large principal reductions. Keep in mind, Freddie and Fannie seem to be opposed to them on moral grounds.

  95. 96

    RE: corndogs @ 94 – You had a bad experience at a Star Trek convention? ;-)

  96. 97

    One more thing on this topic. From doing this piece I’ve discovered that attorneys run the entire spectrum, with some who think almost no one should do a short sale, and some who think almost everyone should. Given that what advice sellers get may be a crap-shoot, maybe it’s more important that sellers see a tax consultant than an attorney. The tax consultant will presumably focus on things that really matter, like the amount of tax owing in different situations, and not deal at all in things that are more questionable or subjective, like improving credit scores and avoiding a foreclosure on your record.

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