Tag Archives: short sales

Is A Short Sale Still a Good Idea?

April 7, 2011

0 Comments

I get asked all the time about the short sale process. Is it a good idea? How bad does it damage your credit? Why does it take so long? While the process can be extremely length at times, overall it is still a good idea for those in a specific situation. We all know that market values on the majority of homes has dropped and in some cases quite significantly. If you are willing to take a loss on your home and want out of your current situation then a short sale is a great idea.

It will have an impact on your credit report but letting your lender foreclose on you would be worse. If you are in the position where you would request a short sale from your lender you might not need to be worrying too much about your credit. Chances are it is already somewhat damaged from late payments from your financial burdens. One of the requirements lenders look at is financial stress when considering your request for a short sale.

The length of the process can be cumbersome for most people. The name of the process is a bit of an oxymoron as there is nothing short about the process.  The good news is that congress is attempting to push through some legislation that would speed up the process. The length can be due to a backlog on your lenders end and then they may want to evaluate your request in several areas. Are you financially stressed to the point where they feel it would be worth taking a loss? Do you have a job? Gone through a divorce? Those things would help you in your request. Remember though, your lender does not have to honor your request but most will right now due to not wanting to take on another home.

Continue reading...

Is A ‘Short Sale’ A Good Idea?

April 2, 2011

0 Comments

If you find yourself upside down on your mortgage due to unforseen circumstances in this terrible housing market you should look into a short sale. A short sale allows you to sell your house for a loss and before the downturn in the housing market banks would rather foreclose. Your lender would have to agree to the short sale and they can deny your request if they choose.

The bank will look at several factors when evaluating your request. Have you lost your job recently? Has there been a death in the family? Have you gotten divorced? Is your home worth significantly less than what you paid for it? The bank will look at all of these circumstances before they make a decision on your request.

When it comes to your credit report a short sale is only very slightly better than a foreclosure and all creditors will be able to tell you sold your home in a short sale. Obviously this is better than being foreclosed. You may also run into a tax issue with the IRS. The IRS may treat the value of your home that is absorbed by the bank in the short sale as income on your end. That would make you responsible for paying taxes on that dollar amount.

The good news is that many lending institutions are willing to work with you on a short sale in this current market. You should look into every scenario before deciding on your path.

Continue reading...

The Short Sale Process

March 23, 2011

1 Comment

The short sale process can be cumbersome. There is nothing ‘short’ about a short sale so below I will list some things to help you prepare for the long short sale process.

If you are the seller there first thing you will want to find out is if you’re eligible.

  • Have you suffered a hardship?  This can mean divorce, unemployment, death, etc..
  • Do you owe more than the house is worth?
  • Impossible for you to modify your current loan
  • You cannot afford to pay your mortgage.

If you qualify you may be required to submit some or all of the following documents.

  • A letter of authorization allowing your lender to communicate with the bank.
  • HUD-1 or preliminary net sheet
  • Completed financial statement
  • Seller’s hardship letter
  • 2 years of tax returns
  • 2 years of W-2s
  • Current check stubs
  • Previous 2 months of bank statements
  • Comparative market analysis or list of recent comparable sales

If you’re lender finds that you are eligible and you move ahead with the process you would want to find a realtor who specializes in short sales. They will help you find the current market value of your home and expedite the entire process. They can save you a lot of time and wasted energy.

If you are the buyer:

  • Learn to be patient!
  • Hire a realtor that specializes in short sales.
  • Keep searching for other houses because short sales can be unpredictable.
  • Remember that you are essentially buying the property from a bank. They can be unpredictable.

Continue reading...

Short Sale Consequences

March 19, 2011

0 Comments

There has to be consequences, right? The government and credit agencies couldn’t just let you take a bath on your home and leave you be.

  • Taxes – In the event that your lender agrees to the short sale, it’s a good possibility they may be able to issue a 1099 for the difference on your unpaid balance. The provision lies in a section about debt forgiveness. You will want to consult a real estate lawyer who can help you estimate the potential amount of taxes you may owe under this provision.

 

  • Credit – A short sale will not appear on your credit report. However, the status of your loan will show up. If you are in default on your loan and you complete a short sale it would be considered a redeemed pre foreclosure. It’s often shown as ‘paid in full for less than agreed’. Creditors will know you completed a short sale and while you may not think its done a lot of damage to your rating, creditors ultimately make the final decision on whether to give you a loan, not your credit rating.

Continue reading...

Do I Qualify For A Short Sale?

March 19, 2011

0 Comments

Occasionally, your lender may allow you to enter a short sale while your home is in pre foreclosure status. Your lender does not have to allow you to enter a short sale under any circumstances. Here are a few things to check to see if you may qualify.

  • Has the market value of your home dropped? You will need to be able to show that your property is worth less than the unpaid balance on your loan. You may need to find other home sales in your area to compare and substantiate the drop in market value.
  • You are in the pre foreclosure stage. This means your loan is in default or near default. Now, this may not always be necessary if you qualify on many other items.
  • Seller has experienced a life changing hardship. This may include divorce, bankruptcy, unemployment, death, etc..
  • Seller has NO money. The seller will need to show the lender proof of all available assets and they will determine if the seller has the ability to pay or grant the short sale.

Remember that your lender may work with you on a short sale regardless of your circumstances so its best to inquire. A realtor will be able to answer any questions about a short sale that you may have.

Continue reading...

Should I Buy A Short Sale?

March 19, 2011

0 Comments

That is a good question to ask yourself when you are searching for a new home. You must consider all of your options in order to find the absolute best deal possible. If you come across a home that has a really low price there is a good chance it is a short sale.

Here are some tips to help you during the whole process.

  • Find an agent that deals in short sales. An experienced agent can help simplify the entire process and look out for your best interests. Keep in mind that these types of sales can take a long time to close and the right agent can get you there faster.
  • Don’t get overly excited about any short sale property. The process can take several months to complete sometimes and even then you may run into problems that may force you to dump the property and move on.
  • Buy title insurance. After you purchase title insurance the insurance company will do a comprehensive background check on the property. This is important because it will discover anything that may need to be brought to your attention. Back taxes, liens, and debts will all be discovered.
  • Not every short sale will be a bargain. Just because a property may be a short sale does not mean it will come with a great price. It’s possible the owner may have paid an inflated price originally and the current price may still be above current market value.

As you can see buying a short sale is a more difficult path to home ownership but if you find a great deal you should let your realtor know you are interested. Just remember that there is nothing ‘short’ about a short sale. Good luck in your home hunting!

Continue reading...

What Is A Short Sale?

March 19, 2011

0 Comments

What Is A Short Sale

In the current housing market you have surely heard the term ‘short sale’ mentioned many times. A short sale is when you reach an agreement with your mortgage company to sell the home for less than the current amount you owe. Why would your mortgage company or bank do this? With a large amount of foreclosures on the current market it could be a great deal for your bank. Some banks im sure are inundated with foreclosed homes and would like to clear out some inventory or not accept another. Getting something in the short term for a property is more attractive than sitting on the property hoping to sell.

If you are facing foreclosure you should look into a short sale. You can avoid the foreclosure process and in most cases the lender will forgive a portion of your current loan. This all sounds like a great idea and an easy out but of course there is a catch. It has a very high probability of damaging your credit and the lender may not agree to a short sale. Most lenders will only entertain the idea of a short sale if you are several payments behind or if you have gotten a default notice. They will also consider the short sale option if you have suffered a life changing experience.

Hardship Letter

If you proceed with a short sale you would need to provide your lender with a short sale hardship letter. This letter will explain to your lender why you should be granted a short sale. The worse you can make it sound the better because these letters all get read by an actual person. They are not just a formality but can make or break the decision made by your lender.  Some things you would want to point out in your hardship letter:

  • Divorce
  • Job Loss
  • Employment Relocation
  • Health Concerns
  • Death of Your Spouse

Those are just some of the items that will normally work in your favor but any other serious life changing events can be discussed.

Buying A Short Sale

If you are a thinking about buying a short sale you need to be aware that you will have extra paperwork to complete. The process may take longer than usual and you may have more fixing up to do around the house. You can potentially get an amazing deal through a short sale so it is something to consider as an option when looking for a new home.

A real estate professional can answer any questions you may have in detail about the short sale process.

HAFA Short Sale Program

What is the HAFA short sale program?

HAFA stands for-  Home Affordable Foreclosure Alternative

This program was created by the federal government in the wake of the housing crisis to help home owners get out of their home loans without defaulting or simply walking away.

The Benefits of a HAFA Short Sale:

  • No Deficiency Judgments
  • No Cash Required at Closing
  • No Promissory Notes
  • $3,000 to Seller for Relocation Assistance
  • Additional Incentives for 2nd Mortgages, up to $6,000 more at closing

Do you qualify for a HAFA Short Sale?

Eligibility Requirements For HAFA

  • Must be your primary residence
  • First lien mortgage –cannot be a government loan
  • Originated prior to 1/1/09
  • Is delinquent or default is foreseeable
  • Current unpaid principle balance is under $729,750
  • Total monthly mortgage payment exceeds 31% of Monthly Gross Income

Continue reading...
Page 1 of 11