ARE YOU STRUGGLING TO MAKE YOUR MONTLY PAYMENTS?*
Do not file for bankruptcy! Although filing for bankruptcy may seem ideal due to your outstanding financial debt, filing for bankruptcy will hurt your ability to complete a short sale. A short sale is a form of bank and creditor collection, so declaring bankruptcy will not allow the bank to collect from you. There are rules for bankruptcy that impede the short sale process.
What is a short Sale?
Everything you need to know about a short sale.
1. The “short” in “short sale” has nothing to do with the amount of time involved in the process of buying a short sale home. It refers to the seller coming up short on loan payments. Purchasing a short sale home requires three months to a year to close, depending on negotiations between the seller, buyer and bank. Offers submitted, must await approval of the bank and whether or not the bank accepts the offer could prolong the closing time.
2. A short sale is the result of homeowners trying to avoid foreclosure, but is not the same as a foreclosure. The homeowner does not have the finances to continue with loan payments and therefore tries to work out a deal with the bank by selling their home for less than the amount owed on the mortgage.
3. Not everyone qualifies to sell their home as a short sale. Homeowners must meet eligibility requirements, which go as follows: you must be denied for loan modification, you must provide legitimate reasons why you can no longer make payments and provide documentations supporting this. You will need to provide full access to financial documentation such as updated bank statements, taxes, W-2’s, paystubs, etc. All documentation MUST be supplied and be accurate or lender could decline sale.
4. Just like foreclosure homes, short sale homes may need repairs or extensive repairs. Home repairs may have been neglected because the homeowner did not have the finances to pay for those repairs. Set up a time to check out the home and hire a trusted inspector to check the home for the degree of damage. You are free to ask sellers to pay for damage, but in most cases short sales are sold “as-is” which means the buyer cannot ask the seller to pay for any damage found in the home. Also, sellers may not have the finances to pay for any damage. In this case, the buyer will be responsible for fixing the home and should take into consideration the cost of repairs while deciding to make purchase.
5. Bank will pay seller money to relocate. Not all banks participate but depending on your current situation you may be entitled up to $3,000.00 in relocation expenses at the time of closing.
6. A short sale home does less damage on one’s credit than a home that was foreclosed on. One can take out another loan for a home typically three years after, as opposed to a foreclosure, which could take five years for one to be able to take out a loan. These particular times are estimated and can change.
7. At the time you get approved for a short sale, the banks will let you know if they will put a deficiency judgments against you or if they will waive you from all debt. A deficiency judgment is an unsecured money judgment against a borrower whose mortgage foreclosure sale did not produce sufficient funds to pay the underlying promissory note, or loan, in full. If you are the seller, the bank can sue you for the loan balance on the home, so it’s important to protect yourself. Talk to an experienced real estate agent or an attorney for more information on deficiency judgments and how to go about it.
8. You can have sever tax consequences if you simply walk away or foreclose on your home. After short sale is closed at the end of current fiscal calendar year lender will provide a 1099 on remaining amount due to bank. Due to the fact your home was sold you will only have a fraction of what originally would be given when not short selling your home and can speak with account for tax advice.
9. No out of pocket closing expenses for seller. All closing cost and fees are paid by lender or negotiated with buyer and seller if not approved. Typically, lender will pay one year of outstanding taxes and homeowner association dues.
When selling you home as a short sale it is the utmost importance to find a professional with hands on experience. Short Selling your home can be the relief you need, buying a short sale home can be the best investment made, to be a win, win situation for everyone involved. It does require all participants to be communicative, responsible, and motivated during the transaction, including the real estate agent. If you don’t find a buyer quickly, you can still face foreclosure so choosing a good real estate agent is crucial. We have a dedicated team to help you throughout the process without the hassle of you chasing down paperwork sent to the bank. I’m that great real estate agent that will take the stress off of the seller or buyer and try my best to make the process go as smoothly as possible for you. I will honor to stand by throughout the transaction with full dedication, communication and responsibility.
Call me today for more information. Stacey Towns 863-557-3034
Selling or buying a short sale home? Call Stacey Towns today! (863) 557-3034