I have spoken with a lot of Bankruptcy attorneys about why their clients foreclose rather than short sale their home pre/post bankruptcy.  The answer I get is typically along the lines that it is a complex process that includes many legal and tax ramifications and it is just easier and more certain to Foreclose.  While this may be true, I still think that short selling your clients home could be more beneficial to your client and here is why.

1. Fannie Mae will let your client re buy in as little as 2 years with a short sale! If they have a foreclosure even after the bankruptcy they will be taken out of the market for 5 to 7 years minimum.  This could mean tens of thousands of dollars in lost opportunity and enjoyment.  Yes, I realize that after a bankruptcy your clients credit is typically damaged.  Most credit repair experts claim that they can have clients credit rehabilitated in 6 months to 2 years  after bankruptcy with simple techniques for rehabilitating credit.  This is perfectly in line with Fannie Mae guidelines.  They can get back in the game a whole lot faster!  And its worth it and worth the effort now that the housing market is at a low point.

2. Your client can potentially stay in your home longer for an additional 1 to 9 months for Free! Yes with foreclosure your bankrupt client stays in the house for 4 months for free during the foreclosure proceedings.  And all of the short sales that we have successfully completed have taken minimum of 6 to 12 months.   The bank will actually stall the foreclosure up to 4 times in order to complete the transaction.  The bottom line is that it saves them time and money for us to find a buyer ready and willing to pay and for them to not have to take the home back into reo inventory.  At $2,000 to $3,000 per month that is a lot of extra cash that your client may be able to save.

3. This process if FREE! Yes we get paid, and it typically comes out of the banks net proceeds.  Your clients does not have to pay to have us working on their side to help them clean up their housing situation.  This is a value added process with nothing for them to lose.  If we are not successful, they owe us nothing and the worst that can happen is foreclosure which is what was planned anyway.

4. We actually will pay up to 10% of commissions earned to help your client move! Its guaranteed with every successful short sale referred from an attorney.  That could be up to a couple thousand dollars towards moving expenses.  It is a huge bonus that helps pay the actual cost of the bankruptcy.  That is a great gift to give your clients.  I am sure they need it.

5. Its the right thing to do. Avoid the stigma of Foreclosure! When I talk to potential landlords and home sellers, I can get them to understand the need to work with a client that has short sold their home and or filed bankruptcy.  But its really difficult if not impossible when my buyer client has a foreclosure on their record.  There is just too much stigma attached to foreclosure. So much that we don’t even take them as clients.    Its the difference between having a D on your report card vs. an F.  If you can avoid it, don’t do it.

I know that every client has different circumstances and some have second trust deeds and more complicated tax scenarios.  And that is OK.  With every short sale we do, we have the client consult with their CPA and or an attorney and work it with a unified game plan that is best for the client.  We always negotiate with the lenders in the best interest of the client and at the end of the day, if we don’t present them with a better win, then they can cancel with nothing to lose.  We are that certain that what we are doing adds value that we are willing to work on the cum.  Now that’s putting your money where your mouth is.  Give us a try, you will be glad you did.  We have an outstanding short sale record.

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