Short Sale Mythbuster

Short Sale Myths... exposed!

The short sale experts at The LAMB Group have helped thousands of homeowners choose the best course of action for their home and mortgage concerns. Over the years, we've seen more inaccurate statements online than we can count. So we felt it was time to debunk those "myths" with SHORT SALE FACTS that we've proven true countless times over the years.

Myth #1:   A short sale will hurt my credit

The Truth: Although credit impact varies, experts agree that a short sale impacts credit much less than a foreclosure does

According to Alex Charfen, founder of the Charfen Distressed Property Institute, a short sale can affect your credit score by as little as 50 points if you're paying all other bills on time. And in some anecdotal cases, short sales may have little negative impact on your credit at all. In contrast, according to, a foreclosure can impact your credit by up to 300 points.

There are other things to consider that go beyond credit scores alone. For the full details, click here to watch our short sale vs. foreclosure video.

Myth #2:   A deed-in-lieu is the same as a short sale

The Truth: In many ways, a deed-in-lieu is basically the same as a regular foreclosure.

The primary difference between a deed-in-lieu of foreclosure and a typical foreclosure is... the sale at the courthouse steps. With a deed-in-lieu, you are allowing the bank to foreclosure on you, voluntarily. If you really love your bank and want to save them some money, a deed-in-lieu is the way to go. Otherwise, it offers no substantial benefit to you.

Myth #3:   Any REALTOR® can sell a short sale

The Truth: Absolutely not... even self-proclaimed "short sale specialists" often have very limited experience and absolutely no training whatsoever.

This is by far, the most damaging short sale myth in the entire industry. Most short sale failures are the direct result of the lack of experience of the REALTOR® who is managing the short sale and their victims are the countless homeowners who unknowingly choose the wrong agent.

A short sale is one of the most difficult and complex transactions anywhere, in any industry. The professionals at The LAMB Group have helped thousands of short sale homeowners and we'll be the first to tell you... we don't know everything! But we've seen just how little that the rest of the so-called "short sale experts" know and, in all honesty, it is truly scary.

Never, ever trust your short sale to anyone who has closed less than 50 transactions in the last year. Recent volume matters. And if you you don't confirm experience first, you may be risking one of the most important transactions in your life with no real assurance that your REALTOR® knows anything more than you do.

Myth #4:   I'll still owe the bank money

The Truth: The vast majority of our closed short sales result in complete forgiveness of the remaining deficiency.

When a home sells in foreclosure or as a short sale, the balance of the mortgage that is not paid is called the "deficiency." Afterwards, the bank can file for a Deficiency Judgment and then this huge debt of $10k, $50k, sometimes $100k or more can haunt you for the next decade of your life. It'll attach to other property you own and it can even become a wage garnishment if you happen to live in a state that allows it.

But that's not necessary!

What happens to this deficiency (and whether they agree to release it) depends on a lot of variables. The kind of loan, the investor, your mortgage bank/servicer and then, of course, the short sale professional who is representing you... these factors will all play a role and will determine whether you have to repay the debt or not.

Every client with The LAMB Group receives free short sale attorney representation. This can have a huge impact on the success of your transaction, but perhaps nowhere is it greater than in the area of deficiency release & forgiveness.

Did you know that it is illegal in the Carolinas for your real estate agent to argue a deficiency? Yes, if the bank approves your short sale and then states that you have to pay back the remaining amount owed... by law, your real estate agent can't do anything about it. If they do, they're at risk of losing their license.

Our short sale attorney (your short sale attorney) will fight for you and will do whatever it takes to eliminate the remaining amount owed so that you can truly walk away from this transaction and never look back. We begin the fight at the onset of the short sale by taking proactive steps towards preventing the bank from requesting the deficiency re-payment in the first place. And this educated dedication to your goals continues until the closing.

Many of our methods have been developed as a result of the vast experience of our associates and are not "taught" anywhere. As a result, almost all of our short sales result in FULL DEFICIENCY FORGIVENESS. Nothing can ever be guaranteed, but with The LAMB Group, your chances of success will surely be much better.

Myth #5:   I have to be behind on payments

The Truth: This used to be true, but not any longer.

Banks and servicers are beginning to realize that accepting short sales for homeowners who are not behind on payments will actually offer a greater savings to them. As a result, most major investors and mortgage servicers now allow short sales, even for mortgages which are current.

To be clear, you are NOT required to make your payments in a short sale. But when you're still making payments, your financial hardship can be more difficult to prove. After all, you haven't missed a payment yet so who's to say that you ever will? To be successful, your short sale agent will have to prove "Imminent Default" to your mortgage investor or servicer. In other words, we have to prove that (sometime in the future) you will eventually miss a payment and go into foreclosure... unless they allow the short sale now.

This is not always an easy thing to do. By law, real estate agents can only send in your financials and ask, "What do you think?", and in a short sale where Imminent Default must be proven, this is simply not enough.

The LAMB Group associates and legal team understand what it takes to be successful, even if you haven't missed any payments. If you can manage to make your payments and this is something that you want to do, we'll make sure that you can protect your credit by staying on track with those mortgage payments, all the way through the short sale process.

Myth #6:   I have a foreclosure date, it's too late for me

The Truth: As long as your foreclosure sale date is at least 10-21 days away, we can still help.

Depending on your bank, there are about 4-8 different ways to "stop" a foreclosure. And no matter how determined your bank "seems" to be about foreclosing on your home, we will absolutely know something that could be done, that might still be able to help you.

All we need is 10-21 days and your chances of getting a foreclosures postponement or cancellation are well above 75% when working with The LAMB Group. Those odds certainly make it worth the effort, so if you have a foreclosure scheduled - every day, every hour matters. We need to get started toward stopping it, immediately. Call us right now at (888) 244-4760

Myth #7:   A short sale is too complicated for me

The Truth: Our associates do all of the work... so you don't have to.

Whether you don't understand short sale documents or you just don't have the time to fill them out... no busy homeowner actually wants to deal with short sale documents and tasks. Let's face it, it's not something that you want to do in the first place.

That's why we’ve developed a system that takes all of the work out of doing a short sale. You simply sign one small package of documents and then, mail/fax/email/text copies of your income statements every 30 days, until we close. Other than typical tasks associated with moving, that is 100% of the additional effort required from you. This allows you to focus on everything else that matters most in your life while we handle the short sale, 100%.

Myth #8:   A short sale takes forever

The Truth: The LAMB Group can get an offer approved (on average) in about 60 days.

If you haven't already, please see Myth #3, above. The time it takes to process a short sale is directly related to the person or company that is processing it on your behalf. We obtain approvals a lot faster than the rest of the short sale industry because we know how to overcome the obstacles that cause delays.

The overwhelming majority of the short sale industry has just a minute fraction of our experience, in terms of both volume and years of service. We help more homeowners and we've been doing it for a lot longer. So we know how to make them happen faster as a result.

Myth #9:   I will not qualify for a short sale

The Truth: Even if your bank has said this previously, we can usually get you approved anyway.

There is always a reason that someone is declined for a short sale. With enough time and so long as your income doesn't vastly exceed your expenses, there is always a way to turn a declination into an approval. In fact, there are hundreds of ways so for more information about exactly what we can do to get you approved, call us today. (888) 244-4760

Myth #10:   The bank declined my short sale... it's pointless to try again

The Truth: Almost everyone with a hardship can be approved for a short sale, regardless of the circumstances

The bank was too slow! The bank wouldn't accept the offer! The bank never called me back! The Bank! The Bank! The Bank!

If you've ever tried to do a short sale and failed then you've probably heard this before. The banking industry - and specifically, the loss mitigation sector - is probably the most convoluted and disorganized branch of commerce in the entire world. Put simply, they are remarkably bad at what they do.

However, if we want to be successful, can we really blame failure on a corporate giant who is never going to change? No. We have to look inward and find those things that WE can do to overcome the problems which are inherent to the short sale industry. The problem is, almost no short sale agent does that. They play the blame game as if that's going to help you reach your goals. It isn't.

Short sales that fail are simply transactions that were facilitated by a real estate agent or attorney who doesn't have the experience, management systems, and industry connections necessary to overcome typical short sale hurdles. The LAMB Group has been successful in this industry for longer than almost anyone else because we have learned how to overcome virtually every obstacle to success. We know banking supervisors, vice presidents and even governmental regulators who can get the job done. In this industry when, at first, your bank doesn't succeed... you really have to try again.

Whatever you do, don't assume that everything has already been tried - if you haven't worked with The LAMB Group, we can nearly guarantee you that there is something else that your last representative just didn't know about. And the vast majority of the time, that "something else" makes the difference between success and failure for you.

Myth #11:   I'll get $30,000 cash back

The Truth: This happens... but very rarely.

Many types of mortgages offer small relocation incentives, but usually they range from $750 to $3,000. We have helped homeowners receive as much as $11,000 in short sale incentives at closing but, considering just how many homeowners we have helped to close short sales, the percentage that receive over $3,000 is very, very small.

Many short sale agents claim that you can make up to $30,000 because Bank of America & JP Morgan Chase once offered this incentive to homeowners in a press release. As you can imagine, this created a lot of buzz, and that was exactly what they wanted. But we have the experience to know... just a handful of homeowners across the nation received that amount of money. Almost everyone else (probably 99.9%) did not receive more than $750-$3,000.

At The LAMB Group, we believe there are a lot of excellent, long-term reasons that a short sale is the best choice for so many homeowners across the nation. And we don't think it's ever necessary to exaggerate, because the reality is that the real benefits are already pretty amazing to begin with.

Myth #12:   I'll have to do a lot of repairs

The Truth: Repairs are never required... but small repairs can help a lot.

In a short sale, damages of major systems are actually much less of a problem than cosmetic damages. For items like windows, HVAC, roofing and foundation, your bank will allow the property to be sold for a reduced amount, which will sufficiently compensate the buyer.

However, when it comes to less expensive things like carpet and paint, the bank doesn't concede nearly as much money. This can lead to discrepancies between the bank's opinion of value and the buyer's opinion. Of course, cleaning your carpet or re-painting can fix this easily; however, if you cannot afford to do that, don't worry. We employ many strategies that can help to overcome valuation discrepancies that stem from repair concerns.

One way or the other, no matter the condition of your home, it is possible to find success when working with The LAMB Group.