How many REALTORS have been surprised near the end of a short sale approval process by being presented a promissory note for our sellers as part of the deal? It can be quite a shocker for a seller who has been expecting this to be a no cost (or at least low cost) transaction for them. To be faced with a 10k-20k or more note, can cause much increased stress and may jeopardize weeks or months of hard work.

While these notes can often be negotiated down, or even eliminated, it is always a very good idea to prepare your client for the possibility. This is especially true if they refinanced along the way and put cash in their pocket. In some of these cases, the lender may just want to see a little participation by the seller in the final solution.

Since every short sale is unique, and every lender has different guidelines, it is impossible to predict who may be offered the promissory note as part of the approval. For that reason, it is always a good idea to set expectations for all the possibilities, good and bad. Then when the bad ones come about, our clients aren’t taken by surprise. Conversely, when they don’t happen, everyone is relieved and we are rightly perceived to have done our job well!