Short Sale Questions? Get Answers Here.
Q: What is a short sale?
A: A short sale is simply where your lender accepts less than what you owe as payment in full at closing. Lenders have been accepting short sales for years. And, if you're upside down and need to sell, you may qualify to short sell your house. Think of it like this... Let's say you let someone borrow $100 and before they could pay you back they lost their job and couldn't pay you back. Then, one day they called you up and said, "Listen, I don't have the $100, but I do have $80. Would you accept this?" Of course you would. Why? Because it would be better to get the $80 back than nothing at all, right? This is a short sale. Lenders accept short sales because, most times, they make more sense than getting the house back by a foreclosure. Right now, more than ever, banks just want to minimize their loss. If they can allow a short sale and avoid foreclosing on your house, they will.
A: A short sale is simply where your lender accepts less than what you owe as payment in full at closing. Lenders have been accepting short sales for years. And, if you're upside down and need to sell, you may qualify to short sell your house. Think of it like this... Let's say you let someone borrow $100 and before they could pay you back they lost their job and couldn't pay you back. Then, one day they called you up and said, "Listen, I don't have the $100, but I do have $80. Would you accept this?" Of course you would. Why? Because it would be better to get the $80 back than nothing at all, right? This is a short sale. Lenders accept short sales because, most times, they make more sense than getting the house back by a foreclosure. Right now, more than ever, banks just want to minimize their loss. If they can allow a short sale and avoid foreclosing on your house, they will.
Q: What can I expect after I fill out your "Contact Me" form?
A: Once you fill out my contact form, I or my partner will call you and make sure your house qualifies for a short sale. We'll ask you some questions to establish; your mortgage balances, how many months behind you are and who your lender is. We will then research your property and pull comparable sales data from your surrounding area to find your property's value. If your house qualifies, we can write up a contract and start negotiating with your lender to accept a short sale settlement so that we can purchase your house.
Q: Do I need to be late on my mortgage to do a short sale?
A: A common myth with short sales is that you must be delinquent to start the short sale process. You do not need to be behind in payments, the bank will need to see that you have a hardship. A hardship can be the loss of a job, a divorce, a catastrophic medical event, job relocation, or a death in the family. Even if your hardship is not mentioned here, you may still qualify for a short sale.
Q: Do you charge any fees?
A: No. There are no upfront fees and no fees added when we close. Our service is free to homeowners who need to short sell their house. There is no obligation to see if your house qualifies.
Q: Can I get any money out of this transaction?
A: The answer is, unfortunately, no. Nearly every lender has requirements when they give an approval and accept a short sale offer that state, the seller will not receive any funds from the sale of the property.
Q: Can you give me an example of a good short sale candidate?
A: Sure. Let's say Mike bought a house a few years ago for $200,000 and took out an interest only mortgage for $190,000. His house is now worth $155,000 and he still owes $190,000. Mike lost his job and can no longer afford to make his house payment and starts to get behind on his mortgage, but he can't sell because he owes more than his house is worth. He lists his home "for sale" trying to simply break even, selling for what he owes. Unfortunately, his house sits on the market and inches closer and closer to a foreclosure auction. He could call us, we could put a contract on his house and negotiate a short sale on Mike's behalf with the lender. We can even suspend the foreclosure sale if there is a scheduled date. When we close, the lender writes off the bad debt and Mike moves on with his life.
Q: Why in the world would my lender accept less than what I owe?
A: Banks do not want to get your house back. Let me repeat that, banks do not want to get your house back. When a bank takes a house back in foreclosure, it is said that it costs them anywhere from $50,000 to $75,000. Your lender is interested in minimizing their loss. If a short sale is less of a loss than a projected loss from a foreclosure, your lender may accept a short sale, it's really that simple.
Q: Will my lender forgive the balance owed when short selling my house?
A: This is something that my short sale expert will work on. During the short sale process, we will request that your lender forgive the balance owed and not pursue you for the deficiency, and we get it in writing. If the lender insists you owe on the balance forgiven for a short sale, it will then be up to you to proceed.
Q: Are there any tax consequences after a short sale?
A: You will want to discuss this with the IRS or your accountant. Due to new tax rules seen here, Mortgage Forgiveness Debt Relief Act, your forgiven debt will not be recognized as a taxable gain.
Q: Is there any guarantee that my lender will accept a short sale?
A: We make every effort to work with your lender and get them to accept a short sale, but we still can't make any guarantees that your lender will work with us. All lenders are different and every situation is different. One thing is for sure, they do not want your property back and many times they will accept a short sale if it makes sense for them. We come up with a win/win offer.
Q: How long is the short sale process?
A: The short sale process is entirely in your lenders hands. Our short sale negotiators work diligently to get our offers accepted, but the short sale process can still take up to 60-90 days and in some situations up to 6 months. Some lenders can have a response to us within 30 days while others take longer.
Q: My house is in perfect condition, will my lender still accept a short sale?
A: A short sale is dependent upon what you your property's current value is, not the condition or even what you owe.
Q: How will my credit be affected? Short sale vs. Foreclosure
A: If you're visiting our website, chances are you've already had some unfortunate circumstances that may be affecting your credit. However, a foreclosure could affect your FICO score as much as 300 points while a short sale might affect your score 75-100 points. Though both a short sale or a foreclosure are not marks you'd like to have on your credit report, generally speaking, a short sale may be better in the long run. While those with a foreclosure may not be able to buy another home for 2-5 years, families with a short sale and good credit may be able to purchase a home in 12-18 months.
Q: I'm ready to find out if my house qualifies, what do I need to do?
A: Simple. Click on the "Contact Me" tab on the left navigation bar and fill out my contact form or you will find my direct contacts at the bottom of my website homepage. I will call you back promptly. If your house qualifies, we can put a contract on your house within 24 hours
