short sale ( real estate )
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before we discuss the benefits of hiring a real estate attorney, let’s briefly review what constitutes a short sale .
no. a short sale is a very complicated real estate transaction and one that has very important implications for you. more than any other type of residential real estate transaction, a short sale should be handled only by a real estate broker who has substantial experience with the short sale process, and a strong track - record of success in negotiating short sales for their clients. you wouldn’t have your family doctor perform heart surgery. and, you shouldn’t expect any real estate broker to be qualified to handle this highly complex real estate transaction for you .
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you can get free advice from hud - approved housing counselors and licensed real estate professionals .
find a real estate professional who understands the territory. having a real estate agent on your side who knows how short sales work and who has negotiated others will increase the chances of closing the deal .
real estate news and views for metrowest massachusetts. published by bill gassett re / max executive realty
it is important to work with a real estate professional with experience in short sale transactions to ensure the short sale addendum includes the items that will protect the buyer’s interests during the short sale review and execution process .
real estate agent meg sullivan offers expertise on morris county, n. j.' s historic homes
real estate investors can frequently make very profitable purchases of real estate through a short sale. many short sales do not get approved or fall through for a variety of reasons. learn here the step - by - step process to initiate a short sale, starting with the homeowner - borrower and moving through lender negotiations to the closing .
what is a short sale? short sales have been a significant player in the real estate world over the past several years and continue to be such, so it’s important for a real estate investor or homeowner to truly understand the short sale concept and process. if this article wasn’t the most definitive article answering “what is a short sale, ” well, i don’t know what is !
if you’ve decided to go for it, the first step is to have your real estate agent talk to the real estate agent representing the seller and determine the status of the short sale. below are items that most lenders require from a short seller. if the seller is unable or unwilling to provide this information, the short sale won’t close and any buyer is wasting his or her time. your real estate agent should push for candor from the seller’s agent .
there are too few active buyers in the real estate market these days — but every one of them seems to be looking to buy a foreclosure or a short sale .
debbie drummond, an experienced realtor who runs her own real estate agency in las vegas says that this isn’t realistic for everyone .
so, the short answer is: yes. you should hire a real estate attorney for your short sale. there are many advantages in having a professional at your side during such a stressful time .
“they’ll often take that frustration out on the property, ” says jason scott steinhorn, a maryland real estate investor with experience in foreclosures and short sales .
don’t assume you’re getting a great deal, says connecticut real estate investor jim randel, author of “the skinny on the housing crisis. ”
at the time of writing, elizabeth weintraub, calbre # 00697006, is a broker - associate at lyon real estate in sacramento, california .
at the time of writing, elizabeth weintraub, dre # 00697006, is a broker - associate at lyon real estate in sacramento, california .
our core service areas include personal injury law, family, law, and real estate law. can we assist you with a free consultation ?
“one problem that will continue even with the streamlined short sale process is that homebuyers do not know where the homeowner stands in terms of approval for the short sale, ” says martin. “some real estate agents go ahead and list a home as a short sale even before the lender has approved one. ”
editor’s note: bobbi dempsey is the co - author of two books on real estate including, “the complete idiot’s guide to buying foreclosures, ” for which she researched extensively the short sale process nationwide .
the home seller hires a real estate agent to find a buyer for the short sale. the buyer makes an offer and, if the bank accepts it, the home is sold at a loss .
not all real estate agents adhere to the same standards. find out why it’s better to work with a member of the national association of realtors® .
a short sale in the real estate industry is when the proceeds of a property sale fall short of the balance remaining on the property’s mortgage loan. in other words, the seller owes more on the property than what he or she is selling it for .
first, let’s go over the difference between a short sale and a standard sale .
i work hand in hand with a local short sale real estate attorney who knows how to get short sales done! i will admit there is some luck involved in my success rate but the team i have put together does a stellar job .
a short sale is a complex real estate transaction where all parties involved (i. e. . investors, lien holders, homeowner’s associations and possibly mortgage insurers) must agree on the terms of the short sale. upon completion of the short sale, homeowners will not receive any proceeds from the sale of the property and may be responsible for potential credit and tax implications .
whether you’ve become aware of the distressed situation on a property through an agent, a fsbo ad or word - of - mouth, this is not a do - it - yourself project. a short sale is one real estate deal where you really need to get help from an experienced agent or attorney. not all real estate agents know how to handle a short sale, so make sure you consult with one who can demonstrate special training or a good track record with short sales .
every homeowner’s situation is different, so we always recommend that you speak with a real estate attorney that can advise you on the legal and tax implications for your circumstances .
in one instance, “the short sale approval process took so long that the real estate market improved and the bank increased the price they were willing to accept for the house, even though the borrower’s offer had already been accepted. ”
because the sale price is “short” of the full debt amount in a short sale, the difference between the total debt and the sale price is the “deficiency. ”
in a hafa short sale, your mortgage company works with you to determine an acceptable sale price .
a settlement statement, also known as a
hud - 1 ,
shows how the money from the sale is distributed to all of the participants in a real estate sale. before the seller' s mortgage lender approves a short sale, it will look at the proposed settlement statement to review the following :
i am not licensed to give legal advice and provide this information for general information purposes only. if you desire legal advice or more information, please contact a ​ real estate lawyer .
the short sale niche is certainly growing in importance and popularity. lenders are overwhelmed with foreclosure properties, and the word is that they' re getting a little easier to deal with on short sale offers. a successful short sale helps the lender to avoid yet one more foreclosure home on their books. these 8 tips will give the real estate professional a quick look at what they need to be aware of in working with sellers and lenders in a short sale transaction .
the mortgage lender (commonly referred to as “the bank”) also has to agree to discount a loan balance or to take less money than what’s owed. typically, the owner needs to prove financial hardship before a lender accepts a real estate short sale deal .
you must not have been convicted within the last 10 years of felony larceny, theft, fraud, forgery, money laundering or tax evasion in connection with a mortgage or real estate transaction .
selling a home for less than the amount the current owner owes the mortgage company is called a short sale. buying a home that is a short sale is different from buying a property that is actually owned by the bank, known as an reo, or real - estate owned property, or a property that is in foreclosure .
how is a short sale different from a foreclosure, and what are the advantages and disadvantages of purchasing a short sale? let’s get started .
the short sale process is still a mystery to many people, even after all of these years, so there is no cause for alarm if you don' t know exactly how the short sale process works. a lot of buyer' s agents are confused; puzzled buyers are looking for direction, and not every short sale listing agent knows how to do a short sale. you would hope that people who are in the real estate business would have learned a thing or two about the short sale process, but sadly, short sales are not everybody' s cup of tea .
bill gassett is a thirty year veteran to the real estate industry. he enjoys providing helpful information to buyers, sellers and fellow real estate agents to make sound decisions. his work has been featured on ris media, national association of realtors, inman news, placester, resaas, credit sesame and others. he was the # 3 re / max agent in new england for 2016 .
you must not have been convicted within the last 10 years of felony larceny, theft, fraud, forgery, money laundering, or tax evasion in connection with a mortgage or real estate transaction .
in a short sale, the sale price is “short” of the amount you owe to the mortgage lender. the difference between the total debt owed and the sale price is the “deficiency” .
with a hafa short sale, the loan servicer approved the short sale terms prior to listing the home and then accepted the payoff in full satisfaction of the mortgage. this was different from regular short sales where the lender might be able to pursue a deficiency judgment following the short sale. (to learn more about deficiency judgments in the short sale context, see how to avoid a short sale deficiency judgment. )
buyers can use an online database, such as a multiple listing service, or consult real estate professionals who have experience in short sale transactions. aside from
short sale ,
some key phrases to look for are
subject to bank approval ,
preforeclosure ,
third - party review required ,
and
pre - approved by bank
which may indicate that the property is being sold on a short sale .
twin cities real estate group, inc. - 18279 minnetonka blvd. suite a - wayzata, mn 55391 phone: 952. 278. 7878 fax: 952. 767. 2420 email: info @ urltoken
the property’s market value can easily be gauged by looking at comparable homes that have sold in the area recently. in today' s improving market, short sale prices have risen dramatically. an experienced real estate agent will provide the best advice about how to negotiate a reasonable sales price .
for those who can afford to wait, can power through the uncertainty, and don’t mind dealing with a project when they finally get the keys, a short sale might be worth it. there’s a reason they’re popular targets for real estate investors, after all—the prices can be great .
also, a real estate attorney will be able to help you understand the terms of your short sale agreement. every legal document is full of complicated jargon that many people find confusing, and it’s easy to miss important details that could cause trouble down the road. lawyers can make sure your short sale will leave you clear of any deficiency payments or other complications .
from buying and selling advice for consumers to money - making tips for agents, our content, updated daily, has made realty times® a must - read, and see, for anyone involved in real estate .
the bottom line: don’t choose a short sale if you’re in a hurry .
the foreclosure process is too far along already to complete a short sale transaction .
before you even start considering getting involved in a short sale, there are two situations in which an attempt at a short sale is almost certain to fail .
and yet more and more lenders are willing to consider approving a short sale .
a detailed hardship letter explaining your situation and need for conducting a short sale .
short sales happen when a lender agrees to accept less than the amount owed against the home or because there is not enough equity to sell and pay all costs of sale. not all lenders will negotiate a short sale, and that is why a real estate agent or a lawyer can be a tremendous help by contacting the lender' s loss mitigation department to find out .
when calculating if your house is worth less than the amount owed on the loan, you should deduct out what you would pay in real estate commissions, closing costs, and state excise taxes to sell your home .
if you’re facing foreclosure but have been given the opportunity to sell your home in a short sale, you might be wondering if you should hire a real estate attorney to help you through the process. for many struggling homeowners, a short sale is a last resort in an attempt to avoid more financial hardship. however, without the proper guidance, this type of sale may actually leave you in worse shape than before .
what’s a short sale? a short sale is when you sell your home for less than the total debt balance remaining on your mortgage and the proceeds of the sale pay off a portion of the mortgage balance .
find out if your state allows or prohibits deficiency judgments after short sale. | urltoken
rate search: don’t miss a short sale opportunity. get prequalified for a mortgage today
when learning about what is a short sale, it’s important to understand the process .
an important part of learning what is a short sale is knowing the tax implications .
note that it is not uncommon for the lender to respond with a counteroffer. as with any real estate transaction, buyers will need to know beforehand what their limits are so they can either accept the counteroffer or walk away .
ensure that all renovations have been permitted and approved. “if not, and there is a problem, the city can cite you, ” says brendon desimone, who manages two luxury real estate offices in new york’s westchester county .
note: before you start the short sale process, you may want to talk to a real estate attorney in your area to review your situation. although agents will be involved to facilitate your sale, they cannot provide nor should you rely on any legal or tax advice they offer. each case is different, and with the legal and tax challenges, it’s important you understand what is a short sale, along with your options and consequences .
homeowners pursuing the traditional short sale are not always approved. certain qualifications have to be met in order for a short sale to be considered or approved. while each bank will have different requirements for short sale approval, typically a bank will want to see :
brandon turner (g + | twitter) spends a lot of time on biggerpockets. com. like… seriously… a lot. oh, and he is also an active real estate investor, entrepreneur, traveler, third - person speaker, husband, and author of “ the book on investing in real estate with no (and low) money down “, and “ the book on rental property investing ” which you should probably read if you want to do more deals .
“i think more short sales will be available in 2010 than in 2009 because everyone is cooperating to avoid adding more foreclosures to the market, from the government to the lenders to the homeowners, ” says matt martin, ceo of matt martin real estate management in vienna, va .
during this step, the homeowner chooses an experienced real estate agent to deal with. short sales are complicated events that should be assisted along with an agent who specializes in working with short sales. to find good short sale agents, make sure you do your research and ask the proper questions to narrow down someone who will understand the caveats of pre - foreclosure and can steer the homeowner clear of potential pitfalls .
once we have your file established, our negotiations team will take over from here and remain as your spoc (single point of contact) for the duration of the negotiation with your lender. throughout the process, real time notifications related to status changes in your file are sent to you along with your real estate agent so everyone is in the communication loop .
learn how to avoid owing your mortgage lender money after a short sale of your home .
a short sale may give rise to taxable income for cancellation of debt or capital gains .
because of the complex nature of a short sale transaction, it is strongly recommended that buyers work with a real estate professional who has a track record in successful short sales. with the experience and connections, such an agent should be able to identify and help resolve possible hurdles, help put together a viable offer, protect the buyer’s interests, and negotiate the best deal .
the materials contained within this page may not be reproduced without the express written consent of twin cities real estate group, inc. . the information herein is believed to be accurate and timely, but no warranty as such is expressed or implied .
a few states, like california, do prohibit deficiencies after a short sale. (for more information on laws and pending legislation that prohibit a deficiency following a short sale see states that prohibit deficiency judgments following short sales. )
once the borrower is rejected for a loan modification through the hamp program, the borrower is then eligible to apply to the hafa short sale program or pursue a deed in - lieu - of foreclosure. since i don' t know why anybody in their right minds would do a deed in - lieu, i' ll stick to the short sale process. hafa will preapprove the price of that short sale and give the seller 4 months to sell the property through a real estate agent. here are the eligibility requirements :
albert einstein once said ,
the hardest thing in the world to understand is the income tax. ” if you buy, sell, finance or own real estate, it gets even worse. property and taxes go together like blood and leeches .
a real estate attorney can also help you avoid or deal with a deficiency judgment. in pennsylvania, mortgage companies are allowed to obtain a deficiency judgment against homeowners who complete a short sale, even after the transaction as taken place. if the lender is successful, they may collect the remaining balance through garnishing wages or going after other assets .
short sale package submitted by the seller is incomplete. an experienced listing agent would prevent this .
i have more than one mortgage on my house. can i still do a short sale ?
brandon, great article and resources on the basics on how a short sale works. thank you
this spring, real estate sales began picking up in many u. s. markets as buyers snatched up homes at depressed price levels. but not all sales have been proceeding smoothly. as a rule, sales involving foreclosures and short sales take longer than usual to close because of their inherent complexity .
while doing a short sale will negatively affect your credit, there are many benefits to choosing a short sale over foreclosure. with a short sale, you are in control of the sale, not the bank. you may sleep better at night knowing who is buying your home, and you can spare yourself the social stigma of foreclosure .
a short sale in real estate is when a financially distressed homeowner sells his or her property for less than the amount due on the mortgage. the buyer of the property is a third party (not the bank), and all proceeds from the sale go to the lender. the lender either forgives the difference or gets a deficiency judgment against the borrower requiring him or her to pay the lender all or part of the difference between the sale price and the original value of the mortgage. in some states, this difference must legally be forgiven in a short sale. in some states, this difference must legally be forgiven in a short sale .
before you visit with a real estate attorney, gather up your financial records and a list of your assets, debts, and liabilities so he or she can have a clear picture of your situation. the short sale process is a complicated, often frightening one. it’s important that you have a professional on your side who has your best interest at heart .
matykiewicz anticipates fewer foreclosures in 2010 and more short sales due to the streamlined short sales rules .
you are allowed a certain window of time to inspect the home, known as an inspection period. shortening an inspection period may give you leverage in a regular real estate situation when you’re placing a bid, but don’t skimp on or skip the inspection period when you’re about to buy a foreclosed or short - sale home. use this time to make a decision .
require the borrower to contribute funds at the close of escrow as a condition of the short sale .
still, shoppers may find a short sale a better bet than buying a foreclosure, he says .
what is a short sale? in the most basic definition, a short sale is the process of selling a primary residence for less than what is owed with the approval from the current loan company .
in learning “what is a short sale, ” it’s still important to understand alternatives to this process .
though this isn’t a hard and fast rule, short sales are more likely to be on sale for below market prices, and with a keen eye and some careful research, you can save a pretty penny. the one caveat? since the owners have been strapped for cash, short sales are also more likely to need a little tlc. this makes them a great choice for real estate investors and weekend warriors .
lenders will not talk to investors, potential buyers or real estate agents unless they are instructed to by the borrower. you will need to get their approval in writing, contact the lender with that approval, and make the first telephone contact. learn about it here .
want to work with a dedicated, knowledgeable realtor? click the mls property finder icon to sign up to receive mls access for all homes, condos, land and other real estate for sale in massachusetts. beat other buyers to your dream home. see all new homes entering the market at the same time realtors do !
special thanks to tracy royce, a short sale arizona specialist, for her assistance in answering “what is a short sale? ” without her help, this epic post would still be sitting in the shelves for months to come! also, if you want to learn more about the short sale process from a short sale agent’s perspective, don’t miss the interview we did with tracy royce on the biggerpockets podcast .
it’s not uncommon for the lender to reject your offer or to come back with a counteroffer. as with any real estate transaction, you should figure out beforehand what your absolute highest limit is, and don’t be afraid to walk away if the lender won’t meet your figure .
if you are considering pursuing a short sale at this point, besides learning “what is a short sale, ” it’s advisable to talk to a qualified professional to see if you may be liable for taxes .
therefore, many lenders choose to accept a loss from a short sale to save the time and fees that a foreclosure would take. essentially, a bank will agree to a short sale if it’s in the bank’s best interest to accept a short sale. although there is no guarantee a lender will complete a short sale, even if it seems to be everyone’s interest, it is typically advisable for the homeowner to pursue the short sale in good faith. lender guidelines change often so it’s important to set expectations going in .
the seller of the property will normally have to pay some money at closing or agree to an unsecured debt in order to have the short sale approved. if the seller refuses, then a short sale may fall through even if the seller has approved the sale .
costs that the buyer and seller may be responsible for as a result of executing the short sale contract .
wondering “what is a short sale and how do they work”? the below will give you the basics .
a deed in lieu of foreclosure, also known as a “mortgage release, ” is kind of a halfway point between a short sale and a foreclosure in which the homeowner gives the property’s legal title back to the lender. most lenders will want to see that attempts have been made to sell with a real estate agent for at least 90 days before allowing a deed in lieu of foreclosure .
it can be helpful to work with an experienced real estate agent because they’ll be able to help you navigate the process of putting an offer in and act as the go - between for you when communicating with your lender, the seller’s lender, the seller and any other relevant parties .
you can claim a deduction for real estate taxes you paid as part of your mortgage closing costs. starting with 2018, this amount will be capped at $ 10, 000. the same goes for prepaid interest. it will be included on the 1098 form your lender sends you .
short sale and foreclosure homebuyers need to be aware that the sale won’t necessarily close as quickly as it would for a regular home purchase. the short seller’s lender must approve the foreclosure terms or short - sale price, which will be less than what the seller owes. even so, banks may be slow to respond .
the short sale process may take more time than a traditional retail sale to complete and it may be difficult to pin down a firm closing date until the seller' s mortgage lender (s) agrees to the short sale. junior - lien holders such as second mortgages, heloc lenders and other special assessment liens may also need to approve the short sale. if a buyer is bound by a specific timetable to buy a home, the short sale may not be an ideal route .
when you short sell your home, the total debt owed exceeds the sale price. the difference between the sale price and the total debt is called a “deficiency” .
a short sale is when a house is sold for less than what the homeowner owes on it, and the lender does not get all of its money back. a short sale occurs only with the lender’s permission .
an arm' s - length affidavit is a document created by a short sale bank in an attempt to prevent sellers from selling to a relative and to curb mortgage fraud. the reason the bank does not want a seller to transfer title to a relative in a short sale is that sellers cannot profit from a short sale .
— lenders almost never will accept short sale offers or requests for short sales until the borrower is far behind in payments and a notice of default has been issued .
find out if you' ll have tax liability for mortgage debt that your lender forgives after a short sale .
pros: a buyer may be able to get a significant price reduction when buying a short sale. additionally, because of the hassle, there may be less competition for a property listed as a short sale as well .
you may have heard that buying a short sale is a great way for prospective homeowners to get a property at a bargain price. it’s true that you may be able to buy a short sale for a lower price than in a similar home would sell for in a traditional sale. at the same time, you should be aware of the potential pitfalls associated with the short sale process .
excellent short sale question andrew. since i do not handle the negotiations directly i will check with the short sale attorney i am using to see what their experience is with this situation. i would suspect in some short sale instances it would make sense to get the 1st lien holder to give a little more to the 2nd lien holder .
if the loan was sold to an investor, such as freddie mac or fannie mae, the investor will have to approve the short sale. investors will have their own requirements and review process before they approve a short sale .
even though this isn’t the ideal situation for the owner either way, a short sale is a much better option than going into foreclosure because a short sale typically doesn’t hurt the owner’s credit score as much as a foreclosure would .
[ … ] you’re not clear on what a short sale is, check out this article. if you’ve already put an offer on a short sale, know that you are not alone. in 90 days your [ … ]
if you owe more than your house is worth and can’t afford your mortgage payments, you may qualify for a short sale. every situation is unique, but in general the basic criteria for qualifying for a short sale are :
before negotiating with a bank, a lender will typically want to see that there is an accepted offer on the property. this can be done in one of several ways. a real estate investor may be working with a homeowner directly and offer on the property, at which point step # 1 and step # 2 would be reversed. however, it’s more typical for the homeowner to list the home with the short sale agent, explaining to potential buyers that this is a short sale, and wait for an offer to be accepted .
before we get into the purchase process, let’s briefly go over the difference between a short sale and a foreclosure .
many of my sacramento home buyers wait 6 weeks to 6 months to close on a short sale, sometimes longer .
the seller will need to prepare a financial package for submission to the short sale bank. each bank has its own guidelines but - - with the exception of wachovia, which is the best short sale in the world - - the basic procedure is similar from bank to bank. the seller' s short sale package will most likely consist of :
cons: besides the obvious loss in the note value that the lender will face, a short sale still takes a lot of time and fees for a lender, so a short sale is not without financial cons for the lender .
what makes you able to be the best short sale specialist for me? you are looking for feedback like accreditations, experienced team in place, can point to additional resources, has worked with your lenders, can point out pitfalls, can negotiate effectively on your behalf, and overall, are upfront and realistic. you can also check the bbb, local real estate agent board, and online reviews for complaints and feedback as well .
the meat of your short sale presentation backs up the statements made in the hardship letter. you prepare a thorough and detailed set of documents and financial data to support the claim that a short sale is a good solution for the lender .
fha adopted guidelines in 2010 that says a seller who is current and does a short sale may qualify to immediately buy another home. lenders aren' t so quick to follow those guidelines. however, flagstar bank gave an elk grove short sale seller a new loan within 2 months of closing his short sale, and that seller was current at the time. fha may approve a loan for a short sale seller who qualifies under its back to work program after one year .
the homeowner has filed for bankruptcy. negotiating a short sale is considered a collection activity, which is prohibited in bankruptcies .
of course, there’s another reason a buyer might choose a short sale: sometimes, they just really like the property .
for many homeowners, real estate taxes and mortgage interest are by far some of their biggest tax deductions ,
says art ford, a certified public accountant in boston .
if i pay $ 1, 500 a month in mortgage interest, that' s an $ 18, 000 - a - year deduction .
in a short sale, you sell your home for less than the total debt balance. the lender agrees to accept the sale proceeds and release the lien on the property. the proceeds of the sale pay off a portion of the amount owed. short sales are one way for borrowers can avoid foreclosure. (learn more about short sales to avoid of foreclosure. )
how can a potential short - sale buyer be protected from getting involved in an extended negotiation that doesn’t go anywhere in the end? thompson says you should negotiate an agreement with the seller and the seller’s real estate agent that your offer will be the only one presented to the lender. if the lender isn’t flooded with offers, it will be more motivated to move forward. if the lender turns down the offer without countering, then the restriction disappears .
pros: a lender who agrees to a short sale is doing so to lessen the financial blow that a foreclosure may cost them. a short sale also gives the lender a better public image, as they are seen as helping rather than hurting .
a successful short sale means the seller' s lender is willing to accept a discounted payoff to release an existing mortgage. just because a property is listed with short sale terms does not mean the lender will accept your offer, even if the seller accepts it. that' s because sellers need to qualify for a short sale. if their agent sells very few short sales, that' s a red flag for your buyer .
the basic shape of the short sale process and timeline isn’t very different from your typical sale. however, there are some quirks along the way that you might want to keep in mind .
after a short sale, the lender may decide to come after you for a deficiency judgment. or it might forgive the deficiency
— if the seller has filed for bankruptcy, forget it. few, if any, lenders will consider a short sale when the seller has filed for bankruptcy because negotiating a short sale is considered a collection activity and collection activities are prohibited in bankruptcies .
know what you’re getting into before you buy a short sale or foreclosure property, and be mindful of these five common mistakes .
a short sale is negotiated so that you do not have a deficiency judgment against you. it is a settlement of debt !
if you' re a seller trying to decide whether to let a home go through foreclosure versus attempting a short sale, salvaging your credit may not be an advantage to doing a short sale, says coy. she reports that according to
score factor code # 22, there' s no credit score advantage for a delinquent borrower on a short sale over a foreclosure .
the short sale process is not always the most enjoyable event, but by following the proper steps and keeping excellent records, the short sale process can be navigated. the following section will detail the short sale process, but keep in mind that different lenders may have a slightly different process, so use this as a general guideline, but don’t bet your life on this information .
if you live in a state that does not have a statute that prohibits a deficiency judgment following a short sale, the only way to avoid one is to negotiate a waiver of the deficiency. the short sale agreement must expressly state that the lender waives its right to the deficiency and that the transaction is in full satisfaction of the debt. if the short sale agreement does not contain this waiver, the lender may later file a lawsuit against you to obtain a deficiency judgment after the short sale is completed .
read on to learn which states prohibit deficiency judgments following short sales and what to do if you live in a state that allows a lender to obtain a deficiency judgment following a short sale .
i' m not saying that your intentions were not honorable, but due in part to the short sale flippers and shady double - escrow deals on short sales, banks have cracked down .
a short sale can be a good deal for a buyer, and it can help the seller avoid having a full foreclosure on his or her credit record. although a short sale and a foreclosure negatively affect a seller’s credit score, in a short sale the damage can be minimized if the homeowner can persuade the lender to report the debt to credit bureaus as “ paid in full. ”
whether you should do a short sale or let your property go to foreclosure depends on several factors. in most instances, a short sale makes more sense than foreclosure. in general, when you want to obtain a loan to purchase a property in the future, more opportunities will be available to you if you do a short sale. and, contrary to popular belief, you can be current on your payments and still do a short sale. in fact, if you are current on your mortgage through a short sale, you can qualify for an fha loan afterwards without any waiting periods. the same option will not be available following a foreclosure .
the mortgage lender initially approved the short sale but the homeowner refused to make a contribution to help reduce the lender' s losses .
yes. each mortgage can be negotiated individually. however, multiple mortgages make a short sale more complicated and time - consuming. not only do you need the cooperation of the first lender, the second mortgage holder needs to agree to a short sale as well .
foreclosure is a fairly well understood process, but as “short sale” signs sprout like weeds, you may wonder what it’s all about .
if this is starting to sound kind of ominous, don’t worry. there are plenty of reasons why buying a short sale works .
a short sale is where a homeowner elects to sell their home for a lesser amount that the total amount due on their mortgage (s). conducting a short sale can relieve the homeowner of their current mortgage payments and possibly stop any foreclosure proceedings against them .
it is essential that you review your credit report immediately if you anticipate applying for a new mortgage following a short sale. that is because short sales are frequently reported as “foreclosures” on credit reports. if your short sale is reported as a foreclosure on your credit report, you may be erroneously denied a new mortgage loan because :
if there are first and second mortgage liens, the question becomes: what’s the plan to satisfy these lien holders? the seller and the real estate agent should have a plan that is more sophisticated than crossing their fingers, thompson says. in the best of all possible worlds, the seller will be willing to contribute to paying off the second lien, so the first lien holder gets the full amount from the sale .
the short sale process is complicated and time - consuming. it can take several weeks, or even months, to get a short sale approved. many lenders have several layers of management, insurers, and investors that will have to be satisfied before a short sale is approved. as a homeowner, it is important to be patient during this long process. it is also critical that you work with a short sale negotiator who is familiar with the various requirements of individual lenders to ensure that the process moves as quickly as possible .
if you' ve lost your home through a short sale and want to get another mortgage loan, you might be wondering how long you' ll have to wait. your credit will take a hit after a short sale, although possibly not as much as it would if you had lost your home through foreclosure. nevertheless, a short sale will likely prevent you from getting another mortgage right away .
if you are a homeowner facing foreclosure, a short sale might sound like the perfect solution to avoid foreclosure. however, if you complete a short sale, you could be subject to an income tax hit. read on to learn more about when short sales result in tax liability and when you are exempt from paying such taxes .
this statement (which can be prepared by a closing agent or real estate lawyer) outlines the purchase price, the closing costs and any other costs or fees involved in the transfer of the property. often referred to as a net sheet and the information can be entered onto a hud - 1 settlement statement to show the final, negative result at closing .
in a short sale, the homeowner sells his or her home for less than the total debt balance remaining on the mortgage. the lender agrees to accept the sale proceeds and release the lien on the property. the proceeds of the sale pay off a portion of the mortgage balance. short sales are one way for borrowers can avoid foreclosure. (learn more about short sales to avoid of foreclosure. )
if you’re house hunting and spot what seems like a great deal, chances are good that you are considering a short - sale property .
yes, because in a short sale, the mortgage lender will be receiving less than amount the borrower owes on the mortgage. the lender needs to verify that the homeowner cannot continue to pay the mortgage and determine if a short sale is better than foreclosing on the property .
the hardship letter is the cover for the short sale package. it is a lot like the cover letter for a job resume. it must be convincing and complete. the lender must get the first impression that it' s a short sale or a foreclosure or bankruptcy .
it’s not always possible or even desirable to get a home loan from the bank that has a mortgage on the short sale you’re buying .
no party to the short sale contract is a family member, business associate or a person who shares a business interest with the seller .
finally, when the bank has fully approved the home to be short sold and the paperwork has been fully signed by all parties, the sale can move on to the title and escrow company (or the attorney’s office if your state closes real estate transactions using attorneys .) the transaction will typically close just like any other transaction. you will wire money or bring a cashier’s check to closing (or have your lender send loan docs), legal title will transfer, and the property will become yours.
a short sale is a sale of real estate in which the net proceeds from selling the property will fall short of the debts secured by liens against the property . in this case , if all lien holders agree to accept less than the amount owed on the debt , a sale of the property can be accomplished . a short sale is not to be confused with a short settlement . a short sale has two intrinsic and inseverable components . a short sale is successful when ( 1 ) the lien holder ( s ) ( a.k.a. mortgage company ) is agreeable to net less than the amount owed on the note ( debt ) as the result of ( 2 ) an arm 's length sale at or below the appraised value for that property . the agreeable selling price is intrinsically defined to be at or less than the appraised value allowing the process to be attainable . a prudent buyer will not pay greater than the appraised value , and a bank or finance company will not provide a mortgage for greater than the appraised value , thus limiting the short sale proceeds to a maximum gross yield of the property 's appraised value . it 's important to understand that a lien holder is not bound to accept the appraised value and can demand a greater selling price . in this case , a " sale " with a prudent arms length buyer is no longer a reasonable or attainable expectation . instead the demand for greater than the appraised value ( but less than the amount owed on the debt ) is called a " short settlement " . some lien holders will agree to a short sale but not a short settlement while demanding greater than the appraised value . this is a paradox as neither is achievable and both predestined for failure . therefore , a " short sale " can only be accomplished when a lien holder is willing to accept less than what is owed on the debt while also agreeing to accept a sales price that is at or below the appraised value for the property . creditors holding liens against real estate can include primary mortgages , second mortgages , home equity lines of credit ( heloc ) , homeowner association liens , mechanics liens , irs and state tax liens , all of which will need to approve the sale in return for being paid less than the amount they are owed . the lien holders do not have to agree to accept less , but they often do since the alternative is to let the property go to foreclosure . a short sale is a more beneficial alternative to foreclosure and has become commonplace in the united states since the 2007 real estate recession . other countries have similar procedures . for instance , in the uk the process is called assisted voluntary sale . while both short sale and foreclosure result in negative credit reporting against the property owner , because the owner acted more responsibly and proactively by selling short , credit impact is less . 
a short sale is a sale of real estate in which the net proceeds from selling the property will fall short of the debts secured by liens against the property. in this case, if all lien holders agree to accept less than the amount owed on the debt, a sale of the property can be accomplished. a short sale is not to be confused with a short settlement. a short sale has two intrinsic and inseverable components. a short sale is successful when (1) the lien holder (s) (a.k.a. mortgage company) is agreeable to net less than the amount owed on the note (debt) as the result of (2) an arm's length sale at or below the appraised value for that property. the agreeable selling price is intrinsically defined to be at or less than the appraised value allowing the process to be attainable. a prudent buyer will not pay greater than the appraised value, and a bank or finance company will not provide a mortgage for greater than the appraised value, thus limiting the short sale proceeds to a maximum gross yield of the property's appraised value. it's important to understand that a lien holder is not bound to accept the appraised value and can demand a greater selling price. in this case, a " sale " with a prudent arms length buyer is no longer a reasonable or attainable expectation. instead the demand for greater than the appraised value (but less than the amount owed on the debt) is called a " short settlement ". some lien holders will agree to a short sale but not a short settlement while demanding greater than the appraised value. this is a paradox as neither is achievable and both predestined for failure. therefore, a " short sale " can only be accomplished when a lien holder is willing to accept less than what is owed on the debt while also agreeing to accept a sales price that is at or below the appraised value for the property. creditors holding liens against real estate can include primary mortgages, second mortgages, home equity lines of credit (heloc), homeowner association liens, mechanics liens, irs and state tax liens, all of which will need to approve the sale in return for being paid less than the amount they are owed. the lien holders do not have to agree to accept less, but they often do since the alternative is to let the property go to foreclosure. a short sale is a more beneficial alternative to foreclosure and has become commonplace in the united states since the 2007 real estate recession. other countries have similar procedures. for instance, in the uk the process is called assisted voluntary sale. while both short sale and foreclosure result in negative credit reporting against the property owner, because the owner acted more responsibly and proactively by selling short, credit impact is less.
a short sale is a sale of real estate in which the net proceeds from selling the property will fall short of the debts secured by liens against the property. in this case, if all lien holders agree to accept less than the amount owed on the debt, a sale of the property can be accomplished. a short sale is not to be confused with a short settlement. a short sale has two intrinsic and inseverable components. a short sale is successful when (1) the lien holder (s) (a.k.a. mortgage company) is agreeable to net less than the amount owed on the note (debt) as the result of (2) an arm's length sale at or below the appraised value for that property. the agreeable selling price is intrinsically defined to be at or less than the appraised value allowing the process to be attainable. a prudent buyer will not pay greater than the appraised value, and a bank or finance company will not provide a mortgage for greater than the appraised value, thus limiting the short sale proceeds to a maximum gross yield of the property's appraised value. it's important to understand that a lien holder is not bound to accept the appraised value and can demand a greater selling price. in this case, a " sale " with a prudent arms length buyer is no longer a reasonable or attainable expectation. instead the demand for greater than the appraised value (but less than the amount owed on the debt) is called a " short settlement ". some lien holders will agree to a short sale but not a short settlement while demanding greater than the appraised value. this is a paradox as neither is achievable and both predestined for failure. therefore, a " short sale " can only be accomplished when a lien holder is willing to accept less than what is owed on the debt while also agreeing to accept a sales price that is at or below the appraised value for the property. creditors holding liens against real estate can include primary mortgages, second mortgages, home equity lines of credit (heloc), homeowner association liens, mechanics liens, irs and state tax liens, all of which will need to approve the sale in return for being paid less than the amount they are owed. the lien holders do not have to agree to accept less, but they often do since the alternative is to let the property go to foreclosure. a short sale is a more beneficial alternative to foreclosure and has become commonplace in the united states since the 2007 real estate recession. other countries have similar procedures. for instance, in the uk the process is called assisted voluntary sale. while both short sale and foreclosure result in negative credit reporting against the property owner, because the owner acted more responsibly and proactively by selling short, credit impact is less.