What is a “Short Sale”?
A homeowner is “Short” when – a borrower owes an amount on his property that when combined with closing costs and commission is higher than current market value.
A Short Sale occurs when – a negotiation is entered into with the homeowner’s mortgage company(s) to accept less than the full balance of the loan at closing. A buyer closes on the property and the property is “sold short.”
You don’t need me to tell you that there are many homeowners in distress. There is also no denying that Short Sales will be around for the next few years. As more troublesome loans adjust, and a slowly recovering economy causes many families to no longer afford their homes, there will be a lot of homeowners in distress in the following years.
How can I Short Sell my house?
Banks aren’t interested in granting a short sale to just anyone. You basically have to be in distress and on your way to foreclosure before the bank would even consider allowing you to short sell your home. If you bought your home at the peak of the market and now owe more than what your home is worth but still have the ability to make your mortgage payments, then you are considered a dissatisfied homeowner, not a homeowner in distress.
How do you qualify for a Short Sale?
There are three very basic guidelines that you have to meet to qualify for a short sale:
- The principal that you owe on your mortgage is greater than current market value.
- You are insolvent – you do not have any liquid assets that you could use to pay down the principal of your mortgage.
- You have to demonstrate a legitimate hardship as the reason why you can no longer afford your payments.
Don’t Short Sales take forever?
Short Sales have been an unusual practice until recently. Now they’re becoming the norm. Many Realtors are taking advantage of training programs and designations such as CDPE where they learn to effectively negotiate short sales and get them closed hassle free.
Is there a “phantom tax” out there?
Not from the Federal government. But you could incur a debt-forgiveness tax from the State of California. As long as you meet certain criteria (which you would have to meet in order to short sell your home anyway) you should be exempt from any “phantom tax.” YOU STILL NEED TO APPLY FOR IT THOUGH and should always consult with your CPA for any tax advice.
I want to buy a Short Sale
Great! You can contact me here to begin your free buyer consultation where we can discuss your options and expectations.
Are you having financial difficulty and fearing foreclosure?
As your CDPE agent, I will explore every option with you and work towards a resolution. While it may not seem like it now, there will come a time where you current financial troubles will pass. You will feel much better knowing that you did everything you could to avoid this devastating financial consequence so many people face today.
Russell Odom is a Certified Distressed Property Expert (CDPE). Don’t hesitate to contact him to find out what your options are if you are in financial distress.
