The Short Sale, better known as “The Long Sale”
A short sale can be an excellent solution for homeowners who need to sell, and who owe more on their homes than they are worth. In the past, it was rare for a bank or lender to accept a short sale. Today, however, due to overwhelming market changes, banks and lenders have become much more negotiable when it comes to these transactions. Recent changes in corporate policy and the Obama administration have also improved the chances of getting a short sale approved.
But to be technical, here’s a more official definition:
A homeowner is ‘short’ when the amount owed on his/her property is higher than current market value.
A short sale occurs when a negotiation is entered into with the homeowner’s mortgage company (or companies) to accept less than the full balance of the loan at closing. A buyer closes on the property, and the property is then ‘sold short’ of the total value of the mortgage.
For homeowners to qualify for a short sale, they must fall into any or all of the following circumstances:
Financial Hardship – There is a situation causing you to have trouble affording your mortgage.
Monthly Income Shortfall – In other words: “You have more month than money.” A lender will want to see that you cannot afford, or soon will not be able to afford your mortgage.
Insolvency – The lender will want to see that you do not have significant liquid assets that would allow you to pay down your mortgage.
This seems simple enough, but it is a complicated process that takes the expertise of experienced professionals. Here at A-K Real Estate, Inc. we are ready to identify all possible options and, when possible, assist in the quick execution of a short sale transaction. A-K teams with attorneys, accountants and experienced negotiators to deal with the servicer, lenders, investors and insurers to get your home sold. The lenders pay for all of the fees at closing, including sales commissions, service fees, condo/hoa liens, state and county taxes and other closings costs to sell your home. There is never a charge to the homeowner. We have over 20 Million dollars in SOLD short sale properties in the MD, DC and VA within the past year.
Mortgage Forgiveness Debt Relief Act
http://www.irs.gov/irs/article/0,,id=179073,00.html
Frequently Asked Questions:
WHAT IS A SHORT SALE? A short sale is when a mortgage lender agrees to accept less than the amount that is owed on the current mortgage. The mortgage company then releases its lien against the property to allow the property to be sold.
WILL A SHORT SALE STOP A FORECLOSURE? No, however it is possible the lender could postpone the sale date, pending review of a short sale submission. Postponement of the foreclosure sale date is within the sole discretion of the lender.
WILL MY CREDIT BE IMPAIRED? Yes, short sales are reported to the credit bureaus and will likely result in a reduced credit score. Requests can be made to the lender to report the short sale transaction in such a fashion as to minimize the negative impact on your credit report. Of course, it is possible that other remedies (such as foreclosure) that a lender may elect in the event that you default on your mortgage may have a more substantial, negative impact on your credit score.
WILL THERE BE TAX CONSEQUENCES? There may be important federal and state tax consequences associated with a short sale. For more information visit: http://www.irs.gov/irs/article/0,,id=179073,00.html. Please consult with an accountant or other tax professional to help you with this issue if you have further questions as to whether a short sale transaction will have tax implications for you.
WILL I OWE ANYTHING AFTER A SHORT SALE? Possibly; in negotiating a short sale we will request that your lender waive any deficiency for unsatisfied debt that will remain after your property sale. Waiving a deficiency is completely within the lender’s discretion and we cannot guarantee what position your lender will take or that we will be able to successfully negotiate a complete release of liability on your behalf.
WHAT HAPPENS IF I DECLARE BANKRUPTCY? Once bankruptcy is filed there is an automatic stay that halts collection activity against you. If you declare bankruptcy while we are assisting you with a short sale we will continue the process once the bankruptcy is dismissed or discharged, the bankruptcy trustee abandons its interest in the property or the bankruptcy court issues an order allowing the sale of the property.
DOES A SHORT SALE TAKE LONGER THAN A TRADITIONAL SALE? Yes, the transaction may take anywhere from thirty days to over a year to complete. Patience of all parties to the transaction is absolutely necessary.
WILL A SHORT SALE STOP A FORECLOSURE? No, however it is possible the lender could postpone the sale date, pending review of a short sale submission. Postponement of the foreclosure sale date is within the sole discretion of the lender.
WILL MY CREDIT BE IMPAIRED? Yes, short sales are reported to the credit bureaus and will likely result in a reduced credit score. Requests can be made to the lender to report the short sale transaction in such a fashion as to minimize the negative impact on your credit report. Of course, it is possible that other remedies (such as foreclosure) that a lender may elect in the event that you default on your mortgage may have a more substantial, negative impact on your credit score.
Follow Us!