As a Real Estate Attorney in Miami Florida, and especially in the last few years I’ve seen some people struggle with the concept of a “short sale”.
They are unhappy with their financial situation sure, but in addition to that many question whether a short sale is the right thing to do from a moral stand point.
After all they bought a home which they are now barely able to keep payments and are upside down on the debt.
Not in my clients’ experience, but in some cases Banks have gone as far as to threaten people by taking a moral stance on the issue. Guilt is a powerful incentive when you have a conscience, and they know many people feel bad about that aspect of the situation.
It’s easy to feel trapped when you think there are no options. The good news is that every problem has a solution!
It’s all Business my Friend!
For most hard working people this wasn’t part of their plan. They are in a low point in their personal and even professional aspects of their lives and need a fresh start and a clean slate.
The last thing they need is to feel guilty about a business decision they need to make.
And that’s exactly what it is:
A business decision!
As an Attorney I provide legal advice and find the best possible legal solution to my client’s predicament. My role is both supportive and educational, then I aid in the transactional aspect which is problem solving in its very nature.
In order to ease these feelings of remorse when they are obvious, my approach is as I mentioned, educational.
It’s a Contract
I focus their attention on the fact that a Home/House/Property is an investment held together by a contract between them and the bank.
This contract explains the terms and options for both Bank and home owner. You as the home owner have the right to stop making payments at any time if you choose to, and the bank has the right to take the property back.
It’s a business decision no different than any other where the circumstances were unexpected, have changed, or where it no longer makes sense to hold to a bad investment.
Sometimes defaults and short sales are done in a strategic manner, to protect the client from further economic loss and stop the bleeding. If the circumstances are unfavorable to you, something has to be done about it. If they are unfavorable to the bank, they will do something about it.
Insurance companies change their rates on us yearly, especially if the wind blows too hard down here in South Florida. When they change their rates, they change their contract and they did so because their circumstances apparently changed… like weather patterns!
Win-Win Outcomes For All Parties!
So there are options for everyone. You can stop making payments at which point the bank will take the property back. Yet there is one more option for both which is to renegotiate the contract,
…which is precisely what a short sale is!
You as the seller go to the bank and say I’d like to renegotiate the terms of our contract based on your current situation.
The Bank will weigh your offer against the other alternative which is to foreclose on the property, and then make a decision one way or another.
I then negotiate on your behalf with the bank to find the best possible solution for both parties.
But as “your attorney” remember I always represent your interests first.
In many cases, we are able to negotiate the lender providing the seller with additional incentives:
- Ultimately, the losses are not only stopped, but the client can be paid up to $35,000 from the lender at closing, with
- all closing costs paid by their lender as well the balance of the mortgage (referred to as the deficiency balance) waived and forever forgiven.
As such, the short sale results in a well thought out exit strategy with the client winning at the end. This may ease the immorality of it all.
So you see there is no morality clause in any contract. If there was it wouldn’t be a contract, it would be a promise… and it would carry a lot less weight and certainly no exchange of money!
A short sale is a business decision based on the need to renegotiate a real estate contract, and we should be glad that it exists as an option to find an alternative to what comes as close to a win-win scenario for everyone.