What is a Short Sale Prince William Home Sales – Stacy Magid

What is a Short Sale?

If you’re thinking of selling your home, and you expect that the total amount you owe on your mortgage will be greater than the selling price of your home, you may be facing a short sale. A short sale is one where the net proceeds from the sale won’t cover your total mortgage obligation and closing costs, and you don’t have other sources of money to cover the deficiency. A short sale is different from a foreclosure, which is when your lender takes title of your home through a lengthy legal process and then sells it.

As a  Short Sale and Foreclosure Resource Specialist I have been very successful in closing many short sales.  I can help!

1. Consider loan modification first. If you are thinking of selling your home because of financial difficulties and you anticipate a short sale, first contact your lender to see if it has any programs to help you stay in your home. Your lender may agree to a modification such as:

·         Refinancing your loan at a lower interest rate

·         Providing a different payment plan to help you get caught up

·         Providing a forbearance period if your situation is temporary

When a loan modification still isn’t enough to relieve your financial problems, a short sale could be your best option if

·         Your property is worth less than the total mortgage you owe on it.

·         You have a financial hardship, such as a job loss or major medical bills.

·         You have contacted your lender and it is willing to entertain a short sale.

2. Hire a qualified team. The first step to a short sale is to hire a qualified real estate professional and a real estate attorney who specialize in short sales. Since I am a certified Short Sale and Foreclosure Resources, I have the information that can assist you with this process.

I can:

·         Provide you with a comparative market analysis (CMA) of your home

·         Help you set an appropriate listing price for your home, market the home, and get it sold.

·         Ease the process of working with your lender or lenders.

·         Negotiate the contract with the buyers.

·         Help you put together the short-sale package to send to your lender (or lenders, if you have more than one mortgage) for approval. You can’t sell your home without your lender and any other lien holders agreeing to the sale and releasing the lien so that the buyers can get clear title.

3. Begin gathering documentation before any offers come in. Your lender will give you a list of documents it requires to consider a short sale. The short-sale “package” that accompanies any offer typically must include

·         A hardship letter detailing your financial situation and why you need the short sale

·         A copy of the purchase contract and listing agreement

·         Proof of your income and assets

·         Copies of your federal income tax returns for the past two years

4. Prepare buyers for a lengthy waiting period. Even if you’re well organized and have all the documents in place, be prepared for a long process. Short Sales can take anywhere from a few weeks to many months. Each short sale is different and based on many different circumstances.

When the bank does respond, it can approve the short sale, make a counteroffer, or deny the short sale. The last two actions can lengthen the process or put you back at square one. (Your real estate attorney and real estate professional, with your authorization, can work your lender’s loss mitigation department on your behalf to prepare the proper documentation and speed the process along.)

5. Don’t expect a short sale to solve your financial problems. Even if your lender does approve the short sale, it may not be the end of all your financial woes. Here are some things to keep in mind:

·         You may be asked by your lender to sign a promissory note agreeing to pay back the amount of your loan not paid off by the short sale. If your financial hardship is permanent and you can’t pay back the balance, talk with your real estate attorney about your options.

·         Any amount of your mortgage that is forgiven by your lender is typically considered income, and you may have to pay taxes on that amount.  Be sure to consult your real estate attorney and your accountant to see whether you qualify.

·         Having a portion of your debt forgiven may have an adverse effect on your credit score. However, a short sale may impact your credit score less than foreclosure and bankruptcy.

Note: This article provides general information only. Information is not provided as advice for a specific matter. Laws vary from state to state. For advice on a specific matter, consult your attorney or CPA. 

 

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