| Question |
Answer |
| What is a short sale? |
A short sale is necessary when the outstanding loan and liens against a property, combined with the closing costs, are greater than the proceeds from the sale of a propery. In such a case, the lender agrees to accept less than the full payoff amount. |
| How can a Realtor help me? |
We work with your lender to negotiate a payoff that allows the home to be sold at or below market value. We agressively market your home to attract buyers and assist you through the entire sales process. |
| What if I can pay off my mortgages, but can't pay my closing costs? |
Because home values are continuing to drop, homeowners who don't adjust their price because they need to pay closing costs are flirting with disaster. This situation still qualifies as a short sale. |
| Will the bank come after me if I do a short sale? |
We will negotiate a full release of your loan at closing, which means the bank will forgive any deficiency between what you owe and the proceeds the bank receives from the sale. Always consult an accountant or attorney for your particular situation. |
| Who pays the commission? |
In a short sale, the lender pays the commission. You, the seller, pay no commission. |
| Can I do a short sale if I'm in foreclosure? |
The bank will definitely be willing to work with you in this case. It is extremely expensive for banks to foreclose on properties and banks are not in the business of selling houses. |
| Why should I do a short sale? |
Your lender can file a deficiency judgment against you and possibly file a 1099 for forgiven debt, which is income to the IRS. You may be hit with a large tax bill. Your credit will recover much more quickly from a short sale than a foreclosure. |
| Can I stay in my house while the short sale is being negotiated? |
Yes. You can stay in the house until closing. While a short sale is being negotiated, the lender can put the foreclosure process on hold until the short sale is accepted, which can sometimes be several months. |
| What should I avoid at this time? |
Avoid investors offering to pay off your debt if you sign over your deed or pay them an up-front fee. They will tell you not to contact your lender or send them any money. The worst thing you can do is to cut off communication with your lender at this time. |
| What happens to the part of the loan that the lender forgives? |
The lender will write off the deficiency as a loss. TheMortgage Debt Relief Act of 2007 allows you to avoid receiving a 1099 for the deficiency if you do a short sale on your primary residence before 2012. |
| What do I have to do during the short sale process? |
You will simply need to gather some financial information and fill out some forms to provide to your lender. We handle all the negotiations and the sales process for your home. |
| Can any realtor do a short sale? |
Most realtors have not had any training in short sales, which are very different from regular sales. Before trusting the outcome of your short sale to a realtor, ask them if they've ever done a short sale before and what training they've had to perform short sales. |
