|
What is a Short Sale?
A process that allows a property owner to sell their property for less than is owed on the mortgage. A short sale may also exist if there are not enough proceeds to cover total fees and commissions. If you are unable to sell your home for the amount owed, or you have experienced financial hardship due to involuntary circumstances, you may qualify.
What are the possible benefits?
You avoid a foreclosure sale and can remain in the property until the sale closes, allowing time to make alternative living arrangements. Once an accepted offer is received, your lender may at their discretion, postpone the foreclosure process. In addition, you may also be eligible for an additional seller incentive provided by your lender.
Steps to take:
Talk with your tax advisor
Executing a short sale will have tax consequences. Get information regarding a potential tax liability after a sale.
Talk with a Real Estate Attorney
There are potential legal consequences. It is important to be informed about the legal aspects surrounding a short sale. Learn about your rights and options regarding potential liability after a sale and the release of any liability.
Contact an experienced Short Sale Agent in your area
Explain your situation and objectives as well as timeline to sell and together with your lender, you and the agent can put together a marketing plan.
Gather all financial information
A profit and loss statement, Income Tax documents filed, bank statements, W-2s, 1099s, for the last two years, total monthly expenses and a letter explaining why you are unable to meet your monthly mortgage obligations. Once you have all of the information and your letter, you can send it to your lender (Primary), holding the first position lien. Your lender will advise you on whether or not they will accept a short sale option and in most cases, they are willing to work with you. Your lender will authorize a specific short sale price in which to offer your property for sale.
Continue with monthly payments during the short sale listing period
Advise your lender on what amount you can pay each month and make sure to submit those payments as agreed throughout the duration of the listing period.
Regulations Concerning the Buyer
Current regulations concerning short sale transactions require that the designated buyer be a “non-related” party. Family, close friends, business partners, neighbors, are prohibited from purchasing the property. Prior to any offer acceptance by you, all efforts must be made to ensure the transaction is “arms-length” in nature. There are severe penalties for violation of this regulation, or attempts to violate it.
Things to Know:
A short Sale transaction can take place up to 5 days prior to a foreclosure sale on a property.
Mortgages in bankruptcy require special consideration; you will need to discuss your options with your primary lender in advance of contacting a Real Estate agent.
Some short sale transactions may require Mortgage Insurance and / or investor approvals.
This page is for informational purposes only.
|
