Short Sale Your Home

Short Sales Looking More Attractive in the Treasure Valley

A year or so ago, short sales were the ‘S’ words that nobody, buyer’s agents, seller’s agents and buyers themselves wanted to be involved in. Banks were not very cooperative, they put listing agents through the ringer and were not very negotiable on price. If a buyer hung in there long enough and a whole lot of other variables worked out, we had an occasional success story. It came with the cost of frazzled nerves, frustrated and emotionally spent ‘victims’ to the short sale process itself. The success level was low at best.

Well, circumstances have changed and banks have seen the light. Banks actually make out better, financially, if they can negotiate a short sale rather going through the costly expense of a foreclosure. Some banks are even negotiating short sales even if the mortgagee (owner) is not behind on payments (hey, that makes sense, keep the money flowing in). So here we are with more ‘express’ short sales with many banks giving an approval in 3-6 weeks after an offer and short sale hardship package is submitted, rather than 3-6 months. An added note: Homes with 1 loan/1 bank or 2 loans/1 bank are much easier to negotiate with than 2 loans/2 banks, however all can be negotiated successfully.

There are currently more Short Sale homes on the Market than REO's ( Bank Owned ). Banks are allowing home owners to continue making payments while offering their home as a Short Sale, avoiding 30, 60 and 90 day late payments.  It makes perfect sense to us all including Banks. Hey, they lose a lot less money by accepting payments, allowing short sales, avoiding the cost of forclosures and in most cases they sell for more money because they're in much better shape. 

 I have extensive experience in listing Short Sales for homeowners to avoid foreclosures and saving them from a possible 7 year credit restoration period.  In most cases they are able to qualify for a new home that is priced at the current market.  I have also placed many buyers into short sales successfully and at the right price.  One of the biggest and most important differences in purchasing a Short Sale vs an REO is the homes condition.  Short sale homes are, in most cases, in much better shape than a Bank Owned Home because the home owner is trying to avoid foreclosure so they fix up, clean up and keep up their homes. 

Are You Qualified for a Short Sale?

Before you eagerly climb aboard the short sale bandwagon, consider the following to determine whether you may qualify for a short sale. If you cannot answer yes to all four requirements, you may not qualify for a short sale.

• The Home's Market Value Has Dropped.

  Hard comparable sales must substantiate that the home is worth less than the unpaid balance due the lender. This unpaid balance may include a prepayment penalty.

   

• The Mortgage is in or Near Default Status.

  It used to be that lenders would not consider a short sale if the payments were current, but that is no longer the case. Realizing that other factors contribute to a potential default, many lenders are eager to head off future problems at the pass.

   

• The Seller Has Fallen on Hard Times.

  The seller must submit a letter of hardship that explains why the seller can not pay the difference due upon sale, including why the seller has or will stop making the monthly payments.

  Examples of hardship are:

   

  1. Unemployment
  2. Divorce
  3. Medical emergency / sudden illness
  4. Bankruptcy
  5. Death

  Short Sale Consequences

   If you do not receive an offer, you will not qualify for a short sale. It is also dependent on the lender accepting the buyer's offer. If the lender rejects the offer, a short sale will not take place.

   

  • Tax Consequences

    If the lender agrees to the short sale, the lender may possess the right to issue you a 1099 for the shorted difference, due to a provision in the IRS code about debt forgiveness.

    You should speak to a real estate lawyer and a tax accountant to determine the amount of short sale tax consequences, and whether you can afford to pay those taxes, if any.

     

  • Blemished Credit Report

    While the damage to your credit report may not seem as significantly bad as a foreclosure to you, creditors may not make the distinction.

  If you are a homeowner who may be facing a foreclosure and would like some advise please give me a call or input your info below.

  Always seek legal counsel before attempting to pursue a short sale. A real estate agent cannot give you legal advice.