What is a Short Sale?
Answer: A short sale is something lenders or your mortgage holder will use to discount your mortgage balance owed to help liquidate your house to cover a portion of the mortgage to assist you and your lender avoid post foreclosure and its effects. With the rise in foreclosures, home values are sinking fast and lenders will discount your home mortgage balance or the amount you owe on your principal to avoid the cost of foreclosure.
Why would a lender discount a mortgage or deed of trust?
Answer: Lenders realize that once they take a house from the homeowner for non-payments or repossess a home for their mortgage or deed of trust, things get worst for them. Foreclosure or Bank Repos scream deal and future buyers for that home will want a bargain deal for a fire sale. Everyone knows that a foreclosure property should sale for less than other houses that are owned by private sellers on the open market, so to avoid holding onto a property for 6-8 months a lender will usually like to deal with a homeowner and their buyer to save at least $20,000 better known as take back fees. Taking a hit early means they can put their money to use faster and start earning money again.
How do I know if my house qualifies for a short sale?
Answer: Usually if you are at least 30 days behind on your mortgage payments, your lender is willing to talk about taking a discount to get a bad loan off their books. Plus you have to be over financed meaning after you pay all of your bills you don’t have any money left over for gas, food and other things that will keep your from making your payments. That is just the basic qualifications. You should contact us immediately to see if you qualify for a short sale at 704.500.0026
If my lender accepts less than I owe on my home, will I be responsible for the difference?
Answer: Sometimes a lender will try to come after a homeowner for the balance that is left over after they accept the discounted payoff. If they do, this is known as a deficiency judgment. As a buyer we will only purchase your home if your lender is willing to waive their rights to come after you for the balance. Most of time this is no problem and they put this wording in writing on your final payoff letter. If they waive their rights to a judgment, they will issue something similar to a 1099, which will become taxable. Our accountants have informed us that if a homeowner doesn’t have the means or money to make the payments on their house which resulted in a short sale, they can arrange for the difference to be written off. If you decide to do a short sale, we can recommend our accountant that will take care of the capital gains from the sale and let you know exactly what you can expect. My accountant also said that homeowners are able to write off $250,000 of debt that is issued by lenders for single persons and $500,000 for married couples. That means that if your lender accepts a discount that leaves a balance of $249,999, you will be in the clear and my accountant can apply the necessary deductions.
I received a letter from the banks attorney saying a sale date is set to auction my home, is it too late?
Answer: Do you mean that your lenders attorney sent out a notice of default or notice of trustee sale, as long as you have at least 2 weeks before the auction date, lenders are willing to work with homeowners and postpone the sale in order to avoid paying high cost to repossess your home. Although it is best to start communications with your lender and inform them that you want to work on a short sale so they can send you the paperwork needed to start the process. If you decide this is an option for you, we can arrange the paperwork and start the process to set up the purchase afterward we will buy your house.
Do short sales affect credit?
Answer: Yes, your credit report may show that your mortgage has been “paid off, less than full”. This will let future creditors know that you didn’t keep your obligation to pay off your mortgage, but it shows that you made a responsible attempt to get the lender majority of their money and that you had integrity. One thing you must realize the sooner you start the short sale process and sell your home the better. The longer you wait the more delinquent marks you will have on your credit report. So if you wait until 2 weeks before the auction of your house, and its takes another 4 months to work out the short sale, your credit will still be taking a hit showing 30, 60, 90, and 120+. Those two types of marks each can really hurt your credit. Once the Notice of Default has been issued and a foreclosure date has been set then most lenders require you to wait 3 years before you can buy another home. This can be avoided if you can save up a 5-10% down payment and find a homeowner willing to offer you owner financing, otherwise it will take 3 years to buy again.
How much can I get if I short sale my home?
Answer: Lenders don’t want you to receive any money as a result of them taking a discount. This makes sense, since they are the ones taking a loss. Any proceeds they have you sign a waiver saying that you won’t get any money at the closing. Now some lenders will agree to pay you $1,000 for moving expenses and to put down on a new place to live, but most will not allow you to receive any money. The only lender that insists on you giving $1,000 is FHA, others might not.
My lender sent a letter through their attorney, do I have to leave my house now, and is that a foreclosure?
Answer: No, the letter from your lenders attorney is to put you on alert which is known as a notice of default or notice of trustee sale, and that you need to make up your mortgage payments within so much time since there’s an auction sales date set. Only after the sales date or auction then are you forced to move from your house. Foreclosure is when the auction takes place or bank repossession. In the letter from your lenders attorney you should have two dates, one is the date you are ordered to go to court to plead your case. The second date is the actual foreclosure auction sale which is the last day you own the property. Some states have a redemption period after the foreclosure auction date of 1 year and others have redemption periods as short as 10 days. Check your state laws to see how long you have after the sale to vacate your house.
Is a Short Sale, public information?
Answer: The only parties that know about your property in a short sale transaction are the buyer, your lender and your realtor if one is needed. Your family, friends and neighbors won’t know about your short sale unless they are of a P.I. Wink. Wink. You can walk away from your house with your head up, knowing you sold your house without your lender taking the house back.
What can prevent a short sale?
Answer: A short sale consists of a few documents that your lender must review. Your financial picture, an offer, the value and what they can expect to make. Most real estate agents fail to provide an offer to purchase and the bottom line the lender can stand to make. If the lender doesn’t have everything they need they will not review your short sale. That is why most homeowners that have their house listed with a real estate agent doing a short sale the owner will most likely lose their home if they don’t have the cash to make up their back payments.
What does that mean?
Answer: If your real estate agent doesn’t have a buyer that can purchase your house before your auction date then you will lose your house. Without the right paperwork your file will never leave the lenders desk and no agent will ever counter.
My house is listed, what can I expect?
Answer: Well if your house has been listed over 30 days and you haven’t received a solid offer, you can expect not selling your house for the next year. Most real estate agents don’t know the key components to process a short sale, and even less can produce the proper paperwork to make your file move through the lenders hands within days. Agents have a bad habit of not connecting with the right party in real time resulting in a foreclosure on your behalf. Once you lose your house they want to have nothing else to do with you until you are ready to buy another house. Otherwise after your house is repossessed they won’t lose any sleep and will pursue their next listing. They aren’t willing to purchase your house if no offer comes through the wire, that is why it’s important to work directly with your buyer so your lender can save real estate agent fees and commissions.
I don’t know the proper paperwork to start the short sale, now what?
Answer: First you must contact your lender to order the proper package or we can order the paperwork needed to get things going. Without a complete package your file won’t be touched. We know how to get your file in the right hands so we can purchase your house fast. It’s not about who you know at the banks like your real estate agent wants you to believe. In fact it’s against the law to have an insider within your mortgage and try to work a deal through them. This is illegal and is what most agents want you to believe. That is a lie and lenders will never agree to a personal relationship with an agent because that relationship will eventually hurt homeowners.