Considering a short sale? Short sales are free at ADDvantage Real Estate Services

Wednesday, October 14, 2009, 1:25PM

By: Keith Gordon

Unfortunately many Florida homes are valued less than what's owed to the lender. The decision to short sale your home or condo depends on many factors.

Most people are concerned and confused about the credit impact of a short sale, whether the lender will come after you for any deficiencies and if the lender will accept you (and your credit/assets) as a short sale.

These questions are somewhat easily answered. First, your credit will take “a hit” for about 4 years but far less than a bankruptcy or a foreclosure (10 years credit impact). The reason lenders prefer a short sale to a foreclosure is the turn-a-round time for liquidating their ‘bad-asset’ is rather fast for a short sale when compared with the high costs of a foreclosure.

Lender will not seek a ‘deficiency judgment’ against the homeowner for the short sale ‘short fall’ which is the difference between what you owe and the lender net return from the sale. No one will be coming after the sale like a bill collector. If that were the case, short sales would not be a viable option. We get a full release and satisfaction of debt from the lender. They may seek a promissory note from you for a fraction of what's owed (10-20 year note and a low interest rate) but not a judgment for the short fall. This is the primary reason why you would ‘short sale’ as opposed to getting foreclosed upon.

Lastly, not everyone is suited for a short sale because if you can't prove ‘hardship’ then the lender may take a position that if you want to sell, fund your own short fall and pay this negative balance at closing. Hardship is rather easy to prove for most short sales. For example, under-employed, no money, less than $50,000 liquid assets, no liquid assets, low assets, retirement, age, health, stress or mental health or rapid depletion of available assets or cash. The ones that can't prove hardship and shouldn't attempt a short sale are those people with excellent credit, good income, cash in the bank and enough cash to close the ‘bad-asset-home’ and still have a life.

We (ADDvantage) will run your short sale for free. You can list your home online (100% electronic sign-up) at We list the property as a ‘full-service short sale 6% listing’. The lender pays our commission and all your closing costs. You pay nothing unless they request a note for a portion of the deficit.

As well, the lender will likely not pay us a 6% commission but rather negotiate our fee to 5%. We split that 5% between the buyer's agent and us as the listing agent.

Additional things to consider when doing a short sale in Florida.

Your credit will take a ‘hit’ for at least four years but better than a foreclosure. This may prevent you from buying another home for 4 years with the current underwriting practices. I fully expect these rules to change because there are plenty of excellent credit risks out there that have done a short sale. Greed in lending will return but just not to the extreme of 2000-2004.

The lender may request a note for a percentage of the short sale deficit. These days, lenders are attempting to get a note from everyone...The poor, the unemployed, and the not so poor. The more assets that you have the more they will likely want and get a note. Of course, your retort to them is ‘hardship’ and no!!! If you must give a note to the lender, make it as small as possible and fight the whole way. Notes are usually negotiated between the seller and the lender.

If the home is a primary residence, the IRS will forgive the shortfall deficiency and allow you expunge the loss. The lenders will 1099 you for the loss or deficiency. Seems weird but the IRS looks at losses as money barrowed and not paid back and taxable. The short sale “short-fall” is viewed as “earned income” and taxable. If the home is not primary, the IRS expects to get their share of the 1099 gain/loss. I hope in the near future, the IRS will make deals with short sellers to lessen this tax penalty.

There are many so called “short sale” experts offers their services and often use techniques that I do not believe are in the best interest of the seller. I do not take “any” offer to “get the ball rolling” at the lender. I want an offer that has the following:

  1. I want a buyer that will be patient. Ideally, a cash buyer, but that is unlikely. I would prefer my buyer to be investor, but again unlikely. If the buyer is an end user, then I would hope they have 120 days to hang in there. Short sales can take anywhere from 65 to 130 days depending on the lender, how many lenders are involved and the loss mitiagator assigned to the file.
  2. I need a buyer's agent that understands short sales especially if their buyer is an end-user because if they don't, their buyer likely doesn't understand what's going on either and that may hurt the deal.
  3. I want an offer/contract that matches what the lender will accept. I don't want the lender to counter our offer. I want them to accept it! Seems easy and often it is. The listing broker is responsible for setting the list price and better do their homework. The listing agent needs to do what's called a BPO (Broker's Price Opinion). This is an estimate of value that, if listed at that price, would bring multiple offers in a short period of time.
  4. I want a cooperative seller. The seller must be proactive and help with the short sale process. It is extremely important for the seller to be available and helpful. At times, the lender will request additional information and addendums.

Getting a short sale “sold” is our specially and rather easy for us as we are the largest flat fee MLS listing broker in Florida and we sell tons of homes in Florida for many reasons. We have excellent customer service (9:00am-6:00pm 7 days a week), give excellent pricing advice to our sellers (we always recommend listing at the ‘market’ and leave no room to negotiate), we are very good at Internet marketing (Yahoo, MSN,,,, BargainNetwork, AOL, Craigslist and hundreds more sites.) We are members of 33 Florida Realtor Associations and list home for sale in Miami, The Florida Keys, Naples, Marco Island, Amelia Island, Jacksonville, Ft. Myers, Tampa Bay, Gainesville, Ocala, Daytona, Tallahassee, The Florida Pan Handle, Orlando, Weston, Ft. Lauderdale, Sarasota, and just about every small city in Florida.

Please don't be concerned that my office is in Holiday, Florida because I represent sellers in every Florida city as all my work is done by email and phone.

Call me any time and I would be glad to answer any questions that you may have. 727-942-2929 or 1-877-232-9695.

Or, go to to list your home free and 100% online!