How We Turned A Likely Overland Park Short Sale Into A Break Even, Credit Saving Deal

Checking The Pulse Of The Kansas City Real Estate Market

There’s many homeowner’s out there who are behind – or about to get behind – on their mortgage payments. Many of these stories don’t have a happy ending and that’s one of the unfortunate realities of today’s real estate market. But with an understanding of how real estate is done today, the focus can be shifted to minimizing the financial and credit damage that is done to a homeowner. Sometimes the moon’s align and a situation even turns out much better than anyone expected. Recently, I had an Overland Park family that had all but accepted foreclosure as their fate. After having their income level drastically slashed, they’d been keeping up with their mortgage payment by using up their savings. With those funds almost dried up, they asked to meet with me in what amounted to a last-ditch effort to avoid foreclosure.

The home was less than 10 years old but needed significant updating and repairs due to deferred maintenance. Adding those estimated costs to the typical costs of selling, we then factored in the sales prices of comparable homes. We were very likely looking at the makings of an upside down home seller. I explained we had a good shot at getting a short sale through but I also went over how a short sale would still affect their credit scores. It would almost certainly keep them from buying another home for one to two years… and possibly more. They said they understood and were ready to get things moving because they were running out of money. As we got things moving, I explained there was a small hope that we could sell their home at a break even but it would take the moon’s aligning. We concluded we had less than a month to try to achieve a scenario that would make it a break even and do no harm done to their credit.

They prepared the home as best they could and we priced the home appropriately, factoring in all our goals. What occurred was a quick, near full price offer. Along with the contract negotiations was a verbal understanding that the home seller had no money for repairs and that by not asking for any, the buyer could likely get a quick 30 day closing while avoiding having to deal with the purchase as a short sale. There was another fortunate piece to the puzzle in that there wasn’t another real estate agent involved. This meant the entire real estate commission stayed with the listing broker and typically when this happens, a listing agent who works both sides of the transaction gets compensated with the full commission.

But after running the final estimated proceeds/deficit sheet for the seller, it was apparent the seller was upside down by an amount that was less than the full real estate commission. Understanding the good it would do this family if I helped out on the real estate commission charged, I made some changes to the listing agreement that allowed them to sell the home at a break even. It saved the seller’s credit and in the end they were able to then go and purchase a smaller home, that fit well within their new financial means. I got to be their buyer’s agent in that home purchase and it was a win-win situation all the way around.