United Realty Group
Scott A. Field, MBA, REALTOR®

Foreclosures and Short Sales Explained

What is a Short Sale?

There is much confusion over the meaning of the term “short sale”.  Whether you’re considering buying or selling real estate, it is an important subject.  When I research our market in South Florida for a market analysis for a seller or when I search the MLS listings for a buyer, often there are short sales in the search results.


There are many misconceptions about what the term “short sale” means. Many people think that a short sale is any sale that is priced below what the Seller paid or below what is owed to the bank. While both of those conditions are often true, they are not what determine a short sale as defined by those of us in the real estate business.  


Short Sale: Definition

A true short sale occurs when a Lender agrees to accept a price less than what is owed on a mortgage. The Seller is still the person that bought the property from the Lender, but they don’t have the financial resources to close the sale without the Lender’s cooperation. The Lender must be willing to accept a loss.


A short sale must close before the Lender forecloses on the property. Foreclosure proceedings are often moving forward while a short sale transaction is in process.


Sellers are required by the Lender to prove financial hardship and inability to meet their mortgage commitment.


Short Sale Information for Sellers

Why would a Seller want a Short Sale vs. a Foreclosure?

It is a sad fact that the majority of people going into foreclosure have just given up, and they never realized that they may have a much better option. If the homeowner is assisted by a team who understands the short sale process, there is a strong chance that foreclosure can be avoided.


Many homeowners don’t think they can afford to sell. This is a tragic assumption, because most Realtors only charge a commission if a sale is made, and the Lender pays the commission! A foreclosure is much more damaging to a person’s credit rating than a short sale. A short sale is a settled account, where a foreclosure is a default.


Many job applications and security clearances are challenged by a foreclosure. Foreclosures remain on a credit history for at least 7 to 10 years.  A Seller can bring their credit rating back up from a short sale in 2 to 3 years or less.


Short sales are much more work for the Realtors involved, as well as the title company handling the transaction. I cannot emphasize enough how important it is for the Seller to be supported by right team.


From my viewpoint, it is well worth the extra work, knowing that my assistance can help make such a huge difference for the financial outlook of my client, the Seller.


If you're wondering if a short sale may be the best option for you, I welcome you to contact me for a confidential consultation.


Short Sale, Foreclosure, and Distressed Property Information for Buyers

Which is easier for a Buyer: Short Sale, Foreclosure, or Motivated Conventional Sellers?


There is no way around it, short sales are less certain and more likely to take longer than other sales. Long delays in responses from the Lender are common, for initial offers and subsequent negotiation.  Many Buyers and Realtors prefer to stay away from short sales for this reason.


Any Buyer considering a short sale should expect delays in the negotiation and often delayed closing, along with a lot of extra paperwork. It is possible to work on a short sale for months, and even then, the transaction could fall through. In my personal experience, short sales have taken anywhere from one month to one year to close.


This is not to say that a Buyer should turn these listings away, as long as they have plenty of time and patience. Investors often can afford to wait it out. If you need to be closed and moved into your personal residence by a certain date in the near future, you should probably not take the risk. 


Foreclosures are typically more straightforward than short sales, because the Buyer is dealing directly with the Seller, who is usually the Lender, the Asset Manager or the Loan Servicer.


There is inevitably more paperwork with a foreclosure than with a conventional sale, but usually not as much as in a short sale. There are often delays in response time, but again, rarely as long as in a short sale.


Lenders are not in the business of owning property, and do not want to carry the expenses any longer than necessary.  They will often price their inventory, known as REO (Real Estate Owned), at prices that are lower than comparable properties on the market. In a seller's market, there are often multiple offers on those properties. The seller will then usually ask buyers for their "highest and best" offer. 


Motivated Conventional Sellers are owners who feel they have to sell, and have enough equity or personal capital to sell their property at an aggressive price.


Of course, many Sellers who are hoping for a short sale are motivated, and so are Lenders, but we’re talking about conventional sales here, where Lenders are not involved on the Seller side.


Life events usually drive the motivation, including job relocation, health issues, estate sales, and divorce. These Sellers usually respond quickly, the sales normally require standard contracts, and closings can occur in a normal timeline. There can be delays if multiple family members, attorneys and accountants all are involved in the negotiation process.


Question: “We offered full price for a short sale, and the offer was refused! How can this happen?”


Answer: All short sales are subject to the approval of the Lender, who may not approve the amount they will receive even if a Buyer offers the full asking price in the listing.


Because Sellers are motivated to sell before the Lender forecloses, they reduce their asking price until the property gets shown and hopefully, offers come in. Realtors who are knowledgeable in the short sale process offer very valuable assistance in the pricing strategy that will be acceptable to the Lender and that will bring potential Buyers in the least time.


Often, Realtors will seek short sale properties for their Buyers that have already had an offer refused, so they can find out what amount was acceptable to the Lender if the Lender made a counteroffer.     


I'm Here to Help! 

If you're seeking assistance with selling your property short, or as a buyer with finding and negotiating a great deal on a short sale, foreclosure, or other distressed property, I welcome you to contact me for a free consultation.

Copyright© 2015 by Scott A. Field. All rights reserved. No reproduction is permitted without the author’s express permission.    


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Scott is awesome! He helped us to find the best 3 places to live since we have being working with him. First of all, he has an eye for a right place :)), what I mean is he actually picked up a house for us to rent while we were in Europe, we came back and we arrived straight into a new house, everything was done by Scott for us while we were abroad. We trust his judgement, he is educated, sensitive to customer needs realtor and a super great person to deal with! He does excellent research homework and doesn't waste your time. Choose Scott and be happy :))


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~ Ronna S

There are few other agents that are as experienced and educated and professional as Scott Field. He has a MBA and extra education in handling distressed properties. He goes to great lengths to make sure his clients are well informed on all steps along the way and all options available to them, and clients are well served with his high attention to detail and never-ending energy. He works very hard for his clients.


~ Susan S

Scott was my real estate agent on a short sale family home purchase. He was extremely professional, experienced, friendly and accommodating. He spent time to understand what I was looking for within my budget. Scott invested time to show us properties that met our specifications. The home we wanted and liked the best was a short sale. Scott was very informative and articulate about the short sale process. The home was encumbered with two liens which makes it twice as difficult to get acceptance. Scott held our hands and assured everything appeared promising during the entire four months. Further, Scott as an experienced professional had great insight on which mortgage broker would get me approved within the hard deadline set by the lien holders. We had 20 days to close and it happened. Without Scott's dedication, the short sale transaction may have not been a success. I would highly recommend Scott.


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Scott and I serve on the Board of Directors of the Realtors Commercial Alliance of the Realtors Association of the Palm Beaches. As president for 2012, I appreciate Scott for his thoughtful and thorough approach to the issues we deal with in attempting to navigate the association throught these troublous times. Scott takes his function of the Board seriously, which means that he applies his own experience and intelligence to our affairs. He is not a seat-warmer, but someone who truly brings an often fresh perspective to our discussions. Not only does he serve on the Board, but serves the Association in several other capacities as well. You can tell a lot about a person by how they approach a voluntary task. Scott takes his relationship with the Association seriously, and serves from the heart. You really cannot ask or expect more than that from a person: he is there for us. I value my relationship with him because of his excellent spirit in our professional and personal interactions.


~ John S.

If you're looking for an Agent with outstanding insight into the "big picture" of purchasing a home, Scott Field is the right choice. Not only was he able to locate exactly what I was looking for, he properly advised me on making the right offer, not too high, not too low, so I wouldn't lose what I wanted. He's great! Spot on!


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At the time I met Scott I was about to get married. I wanted to short sell my house and my husband was buying us a new house. Scott gingerly walked us through everything we needed to do. His expertise and patience enabled us to get everything done timely and professionally. I have since recommended Scott to a friend and she too had a totally great experience with him. If you are looking for a man of integrity, Scott is the real deal. It doesn't matter if your spending $100K or a million plus. He treats each client like they are his only client.


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I worked with Scott most of this year looking for a home in West Palm Beach County. All I can say to sum him up is "he is the best". Always there for any questions I had and he tolerated my many phone calls & e-mails. He was successful in finding me a home that was within my budget and continues to be there for me if I need anything even after I closed on the house. I now even consider him my friend and would gladly recommend him to anyone. You won't regret it!


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I first met Scot Field when I sold a tri-plex where he was the realtor for the buyer-I was very impressed that he & his partner cold called me to see if I'd be interested in selling-his buyer was very specific about what he wanted to buy & where. Early in 2010 I found myself very interested in buying a multifamily investmentment property specifically in Coral Springs that was in foreclosure. He was great-only showed me exactly what I was looking for-I'd definitely recommend him.


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Scott Field takes the time to educate clients to understand the specifics involved to make the most educated decisions on what most importantly is the outcome clients want. He will listen, take the time and deliver what you are searching for. He seems to go a bit more on the personal level to assist his client, made me feel very comfortable. I feel that he is working for me rather than just doing a job, to see me succeed at my goals. Thank you Scott, Sincerely, Daniel P. Boca Raton FL.


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~ Adam P

I have worked closely with Scott on a number of projects over two decades, and his performance always exceeds expectations. Scott's relentless pursuit of solutions, marked by an ability to think outside the box as others are tied to conventional thinking, makes him an invaluable team member in any consulting situation. He blends - better than most - his academic intelligence and actual work experience, which generally means achievable results for clients. Scott is a great collaborator, possessing the qualities of a good leader and a good team player at the same time. My expectations have always been high with Scott, and yet he always meets and generally exceeds them. In countless situations, he has left organizations better than he found them. And ultimately, the best recommendation is that if I were to assemble a team of a half dozen people with whom I might work indefinitely, he would be a member of that outstanding group. I recommend him unequivocally.


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