Northern Virginia Short Sale Sellers: You Can't Sell to Your Family!

Northern Virginia short sale sellers can't sell to family members. Surprised by that? You shouldn't be. Many lien holders, like Wells Fargo for instance, require that short sale transactions be arm's length. That means selling to someone you don't know.

Why do short sale lien holders impose this condition? Well, if you aren't able to pay back the amount of money you borrowed, the lien holder doesn't want you to maintain the privilege of living in the property, or the ability to buy it back at a reduced price.

I was contacted by a local short sale seller's sister recently. She wanted to buy her brother's listing and had been in contact with the listing agent about it. The listing agent strongly discouraged it, but she couldn't understand why. After all, she was a real estate investor. Why wouldn't she be able to invest in the property?

Mind you, it was a one bedroom, one bathroom condo well outside the metro Washington, DC area. Not the first property that comes to mind for an investor. If she wanted to invest, there were plenty of other, better opportunities. But, the lack of arm's length was clouding her judgement. Really, she just wanted to help her brother by buying the place....exactly the kind of the thing the lien holder didn't want to happen. The last person the lien holder wants to help is the person that just defaulted on paying the mortgage and can't repay the money they borrowed.

I advised this sister it was a bad idea to even try. In the long run, she would be hurting her brother's chances of getting a viable buyer. You see, in Northern Virginia, our MLS requires that a home be placed as CONTIGENT when a ratified contract is presented to the lien holder for short sale approval. And with Bank of America and their 120 day approval period getting longer, well, that was 120 days that her brother would be unlikely to get another offer from another buyer. So why put in 120 days to soemthing we knew had a high liklihood of not being approved.

Arm's length transactions are a must when it comes to having a legitimate shot at short sale approval. Northern Virginia short sale sellers can give themselves the best chance of success by keeping their family out of any contractual dealings. That's advice you can take to the bank!