Tag Archives: tips

Is A ‘Short Sale’ A Good Idea?

April 2, 2011

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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.

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The Short Sale Process

March 23, 2011

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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.

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Do I Qualify For A Short Sale?

March 19, 2011

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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.

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Should I Buy A Short Sale?

March 19, 2011

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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!

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