Book Review
Title: "How to Use a Short Sale to Stop Home Foreclosure and Protect Your Finances"
Author: Robert Irwin
Publisher: McGraw-Hill, 2009; 208 pages; $18.95
With all the fancified, high-tech "gadgetological" stuff occupying our mental radar screens, sometimes the value of simplicity gets forgotten. In "How to Use a Short Sale to Stop Home Foreclosure and Protect Your Finances," prolific author Robert Irwin takes a back-to-basics approach to cut through the muddled media messaging, rumors and well-meaning (but often confusing or inaccurate) advice from all comers about short sales: "Do it!" "Don’t do it!"
In this short and sweet short-sale primer, Irwin reduces a short sale to the motivations underlying whether the bank will green light your deal, and offers a basic guide to the logistics of getting it closed.
Irwin opens "How to Use a Short Sale to Stop Home Foreclosure and Protect Your Finances" by sketching out How a Short Sale Works: "when you sell your home … for less than the balance you owe on your mortgages, it is called a short sale."
He goes on to set the stage for a book full of sound short-sale strategies tailored to create transactions that make business sense to the lender:
"(M)any lenders are willing to accept a short payoff (less than they are owed) when the owner cannot make the mortgage payments. The reason a lender will forgive all or a large portion of the unpaid amount of the loan is that a short sale saves it time and money by avoiding a more costly foreclosure procedure."
Basic, yes. But informative to would-be short sellers seeking a basic understanding of the procedure.
Irwin goes on to explain the mortgage dilemmas to which a short sale is a feasible solution, spells out the advantages of a short sale over a foreclosure, and provides some examples of homeowners who have successfully resolved their mortgage crises by divesting their upside-down homes and unsustainable mortgage payments via short sales.
In the next chapter, "How a Short Sale Can Help You," Irwin offers more examples of the upsides of short sales, but also injects some reality into the equation, with a briefing on the potential complications and ramifications of a short sale gone wrong, including glitches with junior mortgages and deficiency judgments. …CONTINUED
The following chapter, "Will a Short Sale Work for You?" covers the logistics of how expenses of short sale are handled, and compares the net sheets of a seller and a lender — moving readers into an understanding of how a lender approaches the decision-making around what to forgive.
In "How Do I Find A Good Short Sale Agent?" Irwin provides a cautionary tale illustrating the disastrous results of selecting an agent who can’t do the deal, and offers specific short-sale-related interview questions to ask your prospective listing-agent candidates.
Irwin also provides some basic tips on finding and negotiating a listing agreement tailored to the specific needs of short sellers, like insuring that a commission will only be due on the lender’s approval of the short sale.
Next, Irwin offers tips for "Preparing Your Home to Sell When You’re Not Going to Net a Dime," including several items he exhorts readers not to invest in fixing (while reminding them to disclose the needed repairs).
Then, he provides readers with questions and talking points for your initial conversation about short sales with your lender — Irwin even offers contact information for the major banks’ loss-mitigation divisions. In "Why Not Try a Loan Modification," Irwin answers the essential conundrum of short sales: why would a lender forgive debt to allow a short sale while refusing to reduce the owner’s principal to market value so the owner can stay in the home?
Irwin relates the answer he received directly (and anonymously) from a bank, ascribing its refusal to reduce balances to its fear of a cascade effect — the belief if the bank did write down balances, "very soon everyone who has a mortgage and is underwater (even those not behind in their payments) will want their lender to reduce the mortgage amount. The loss to the lender would be catastrophic and would quickly eat up its capital."
Irwin goes on to offer guidelines, checklists and exemplars for "Putting Together the Short Sale Package," real-world insights on "Rewards for Missed Payments and Other Tricks," and briefings on "Tax Consequences and other Dangers" often faced by short sellers.
He educates readers about attending to looming foreclosure guidelines, lays out some viable alternatives to a short sale that should be considered, and offers some cautions about scams to avoid before providing an appendix full of resources and a glossary.
This book — and the tutorials it contains — is very quick and easy to read straight through, as an introductory course for upside-down homeowners looking for a resolution. It would also serve well as a guide to refer to at various stages in the short-sale process.
While it is not the most comprehensive guide to short sales on the market, its lack of minutiae, its simplicity and overview perspective render it accessible and user-friendly for stressed out sellers seeking hope for coming up for air from underwater.
Tara-Nicholle Nelson is author of "The Savvy Woman’s Homebuying Handbook" and "Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions." Ask her a real estate question online or visit her Web site, www.rethinkrealestate.com.
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