Short Sale Questions and Answers
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What is a Short Sale?
Unlike a foreclosure, a short sale is a real estate transaction. In this transaction the lender, not you, is the seller of the property. All offers will be presented by your real estate agent to your lender, not to you. These offers will be for less than what you owe on the mortgage. Thus, what the lender receives from the sale will be "short" of what you owe.
Do You Work with My Bank?
Yes, we work with all lenders.
Why Should I Use Short Sale Army to Sell My Home?
We take a team approach to each and every short sale we work. Highly trained and well versed in short sales, each member of our team specializes in a specific discipline. To learn more about the Short Sale Army team, click here.
What is the Foreclosure Process?
The foreclosure process in Florida begins when the lender files a lawsuit and records a notice of pending lawsuit. You will be notified either by mail or in person. If you don't respond to the law suit, within a specified amount of time, the county clerk can find you in default and the lender can ask the court to make a final ruling. If the court rules against you, the ruling will note the total amount you owe to the lender and the foreclosure sale date.
By paying the total amount listed in the ruling, you can stop the process. But, you only have up until the date of the foreclosure sale, which is typically 20 to 35 days after the ruling.
The clerk will transfer ownership to the winning bidder within 10 days of the sale. In most cases, you will have no right of redemption after the sale is completed. We do however suggest that if a court date has been set, please attend that hearing. If you have a short sale offer in place from us or any other investor, the judge will give you a stay or delay the judgment for as long as 6 months, giving you time to complete the sale of you property.
Do I Have Time to Sell My Home as a Short Sale?
Of course time is of the essence in a situation such as yours. The sooner we get started with the short sale process, the more likely you will be to succeed.
How Do I Know if I Qualify to Sell My Home as a Short Sale?
There are 2 main qualifications for a good short sale candidate:
- The house must appraise for less than you owe on it.
- You must be facing financial hardships. These include unemployment, death of a spouse, divorce, sudden illness, etc.
What Information Do I Have to Provide for the Lender to Determine if I Qualify?
All lenders require a complete short sale package to show a genuine hardship or need to sell the property. Items needed are:
- tax returns for self-employed or W-2 for employed
- current financial statements
- bank statements
- pay stubs or proof of receipt of unemployment compensation
- a recent market analysis of the home
- hardship letter (click here to see sample)
How Long Does the Short Sale Process Take?
It depends on your lender; some lenders approve the short sale application within as little as 6 weeks, some may take 6 months. Once the application is approved, the Short Sale Army will use our resources to market your home to find a buyer. Once the offer is received from the buyer and submitted to the bank for their approval, which can take up to 60 days.
Is There Any Way to Speed Up the Process?
Not really; you are at the mercy of the lender to approve the application as soon as they can. One thing you can do is make sure that everything on your end of the transaction is done in a timely and complete manner. Your short sale package must contain all the items the lender requires. Anything left out will prompt the lender to return the package to you and cause more delay.
Who Pays the Commission to the Buyer’s Agent?
The bank pays all expenses including the real estate commission. We never ask for a penny for our services.
What Will This Process Cost Me?
It costs nothing to do a short sale. There are no upfront fees or closing fees whatsoever. Call us today, and we’ll be happy to give you free in-home consultation with one of our trained short sale professionals at a convenient time and location of you choosing.
When My Homes Sells, Will I Receive Any of the Money?
No, you will not receive any money from the sale of the home.
Will the Bank Come After us for the Difference of the Amount Due on the Mortgage and the Sale Price?
This depends on your lender. The lender may propose that you still owe the difference between the mortgage balance and the discounted amount as the result of a "deficiency judgment." The best action to take is to get the bank to accept "payment in full without pursuit of any deficiency judgment." Make sure this statement contains a qualifier, extending it into perpetuity. This will protect you from a lender that chooses to wait until you are back on your feet financially to pursue payment. We can help you accomplish this.
What Will Happen to My Credit?
The short sale process is far less damaging to your credit than a foreclosure. You will also be able to repair what damage does occur much quicker than you would had you foreclosed on the property. The short sale will most likely show up on your credit report as "pre-foreclosure in redemption." Of course your late mortgage payments will still appear. It's best to discuss the credit ramifications of a short sale with your accountant.
What Are the Tax Ramifications?
The difference between what the lender realizes from the short sale of the home and your loan balance is considered a "forgiveness of debt" for tax purposes. The IRS considers this as taxable income. The mortgage lender will send you a Form 1099 for the amount of the deficiency. However, thanks to the Mortgage Forgiveness Debt Relief Act, you may be able to exclude this debt from your taxable income. See IRS Form 982 for details.
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