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Short Sales

The Short Sale Solution - What Exactly is a Short Sale?

This is when a homeowner, in conjunction with their lender, sells their home at the current market value which is often lower than what the owner actually owes on their mortgage.

Foreclosure vs. Deed in Lieu vs. Short Sale

 
Credit Implication
Tax Implication
Foreclosure 200-300 point reduction + No new home purchase for 7-10 years Some States Deficiency Judgment*, Issue 1099 for sales vs. loan difference
Deed in Lieu 200-300 point reduction  No new home purchase for 7-10 years Some States Deficiency Judgment*, Issue 1099 for sales vs. loan difference
Short Sale 40-80 point reduction from late pays; can purchase home in a year with credit repair Issue 1099 for sales vs. loan difference*

* Deficiency Judgment: a judgment lien against the borrower whose short sale or foreclosure didn't produce produce enough money to pay off the mortgage in its entirety.

Tax Implications of a Short Sale Credit

I am not an attorney or accountant so I cannot give tax or legal advice.  You are best advised to please consult an accountant and/or an attorney.

The Short Sale Process

While every short sale is unique in its details, we can provide a basic outline that depicts the typical process in a short sale.  It can typically take an average of two to three months from the submission of an offer to closing.

Default on Payments from Homeowner Property Listed For Sale Short Sale Package Submission Workout Negotiator Assigned (BPO or Appraisal ordered)
 Negotiate Short Sale / Sell Property

Homeowner misses payments causing the lender to initiate collection efforts.

Homeowner determines a short sale is the only option after consulting with an expert.

Necessary paperwork complied by Home owner.

The success rate tends to be greater the earlier the homeowners starts the short sale process.

Homeowner works with an expert to determine the property value through Comparative market Analysis (CMA) and Broker Price Opinion (BPO).

If total owed is greater than the property value, a short sale can be the best option.
Property lists the home for sale.

Short sale package is created with documents from realtor.

Lender reviews package to determine eligibility of short sale.

The lender orders a Broker Price Opinion (BPO) to assess the value of property and determine the minimum sale price needed.

Lender then assigns the negotiator

Offer accepted  by lender, final details are negotiated. Approval received  from the lenders investors.

Any other property commitments/liens (e.g., second mortgage) must be settled prior to the sale.

Final HUD-1 agreement from lender received.

* Refer to www.irs.gov and Consult Tax accountant to see if you qualify for the “Mortgage Forgiveness Debt Relief Act of 2007” (Expires 2012)

I think I need to short sell my house. How do I get started?

CLICK HERE  or Call us today at 571-236-3641 to request an appointment.

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