Short Sale Landing
Short Sales-
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Q & A
What is a short Sale?
Will there be future liability after a short sale?
Why a Short Sale instead of a Foreclosure?
Will I get a 1099 with a Short Sale or will there be Tax Liabilities?
What happens after a Short Sale is complete?
Can I sell my home to a relative and have them sell it back to me?
Can I keep the appliances including the washer and dryer?
I have not been able to keep up with some repairs, can I still do a Short Sale?
What does a Short Sale do to my credit?
How long does the lender have to go after me for a deficiency judgment post Short Sale?
What do I need to provide for a short sale to be successful?
What is a Short Sale?
A short sale is when a home is sold for less that what is owed for the home. There may be a primary and a second equity line or 2nd mortgage. All lien holders need to be in agreement for a short sale to take place.
Will there be future liability after a short sale?
While the goal is to have no liabilities after a short sale, it is completely dependant on the lender. We always try for complete exoneration but understand the lender may not allow it. You may have to go from a secured loan to a unsecured loan on part of note or you may have to pay some out of pocket to be able to come to an agreement to do a short sale (some sort of payment at closing). You are under no obligation to do something with a short sale that you are not comfortable with.
Why a Short Sale instead of Foreclosure?
The biggest reason for selling your home as a short sale vs. letting the bank foreclose or walking away, is that you have control of the short sale. You are the seller. You say yes or no to the terms. You decide who, what, when and where in all the areas of the sale. If a foreclosure takes place, you have no control of when you have to leave the home, what they sell it for, what your future liability may be.
Will I get a 1099 from IRS or will there be tax liabilities?
In a short answer, there could be. To elaborate a little more, it depends. It depends on whether it is one loan or more. There is a new law that exempts primary home if it's under a certain amount and only on the purchase money note. Other depends also. The best thing to do is make an appointment to discuss your situation. We may ask you to seek some legal council before proceeding.
What happens after the Short Sale is complete?
You will have to vacate the home at closing. You will have to show up to closing and sign all the paperwork just as in a regular sale.
Can I sell the home to a relative and then can they sell it back to me?
It is up to the lender as to whether they will allow a relative to purchase a short sale. In most if not all cases, the lender will not allow this and it states so in the agreement for short sale agreement. There can be some future legal repercussions possibly if you try to do this without full disclosure to the lender.
Can I keep the appliances including washer and dryer?
Whatever was in place when you purchased the home, should be in place when you leave the home for a short sale. If there was a washer and dryer as part of purchase, then a washer and dryer should be in place for the short sale. This is usually what is required for the lender to approve the short sale.
I have not been able to keep up with my home repairs so the home is falling apart, can I still do a short sale?
There is a possibility that you can still do a short sale. As part of your hardship letter, you will list that due to economic reasons you have not been able to care for certain repair items and then list them. It will ultimately be up to the lender. They usually want the home in good marketable order to be able to complete a short sale but we are seeing the banks be a little more flexible with this issue. The main thing is to document anything that is due to a hardship.
What does a Short Sale do to my credit?
We have seen short sales reduce ratings as much as 250 points personally. There is no hard and fast rule. It all depends on other variables with the creditors standings in other areas. It will have a dramatic impact but a foreclosure will have more and will last much much longer, as long as 7 years in most cases.
How long does the lender have to go after me for a deficiency judgment post short sale?
Currently as of the writing of this answer, the statue of limitations was 5 years. You should verify this with an attorney as we are not lawyers and laws change so rapidly that you want to be up to date with the latest information that only a lawyer would be up to date on this information.
What do I need to provide for a short sale to be successful?
There is paperwork that must be provided in order to be successful in a short sale. Your Realtor will be able to provide the entire list of what's needed. A partial list includes the last two years income tax, last two bank statements, a hardship letter, last two pay stubs. You need to be willing to provide all the documents requested by the lender or they will not approve a short sale.
How do you decide what price to sell my house in a short sale?
The decision on price to sell your home is made based on what the market will bare. We will prepare a comparative price analysis based on homes that sold in your area and price the home based on what it is worth at the time in a distressed sale. It is important not to price the home too high as no one will want to overpay for a home and too low, the lender will not approve the sale. Your lender will also prepare or have prepared for them a broker price analysis so as to determine the price is a market value.
How long does it take to sell a short sale?
Once we have an offer on the home, is usually takes 3-6 months on a typical short sale. This time can be more or less depending on the lender and their experience and volume and proceedures for short sales.
I am interested in doing a short sale with my home. What is my next step?
Contact a Realtor (hopefully we have earned your business). Call us at 239-368-8520 or email us at shortsale@aaarealtyllc.com. We can meet with you to discuss your individual needs and access the steps to get started. It is important that you don't wait until your home is too far in the foreclosure process.
The quicker you start this process, the greater your chances of being successful.
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