“I can’t make my house payment and am trying to decide if I want to do a short sale or just let it be foreclosed on. Can you tell me about short sales?”
Answer:
I’m very experienced in short sales, having done about 200 of them.
Qualifying:
It’s the opposite of applying for a loan. For the bank to approve you, you must:
– Show your bank(s) you can’t afford to pay your mortgage
– Have a “hardship” or reason out of your control that makes you unable to pay your mortgage
– Very little in the bank or retirement accounts
– Little or no equity in other real estate
Cost:
You typically have zero out-of-pocket cost. While you are “charged” all the normal seller expenses, the bank in effect pays them because they are deducted from the check they receive at closing. You as the seller are not allowed to receive any funds at the closing.
Credit damage:
A short sale is far better for your credit than a foreclosure.
Taxes:
In some cases, both a short sale and a foreclosure may result in some taxable income for your “forgiven debt.” The good news is under a recent law you are often exempt from federal taxes. Check with your CPA.
Process:
In a nutshell, you accept an offer from a buyer subject to the bank’s approval. Then we negotiate with the bank to approve your financial situation and the amount of their loss. It’s similar – but opposite – to applying for a loan. We need to convince the bank you are NOT qualified and the home is NOT worth as much as they want to be. This process is slow and can take 2-9 months, depending on the bank and the agent’s experience.
Any agent can try to do this, but you want someone who knows what they’re doing.
If you owe too much on your home and need to sell your home, call me at (858)457-KENT and I’ll be happy to tell you if you qualify for a short sale.
