The Top 25 Short Sale Questions

The Top 25 Short Sale Questions

  1. What types of real estate can I short sale?

It can be your primary residence, a second home or an investment property. In short, every type of real estate can qualify for a short sale.

  1. How long does a short sale typically take to close?

In general, a short sale takes 4 to 6 months to complete.

  1. Why does it take so long?

It is an exhaustive process that requires several steps — all of which require time to complete and have to be performed in sequence. These include:

  • Assembling the documents to submit the proposed short sale to the lender
  • Lender review including appraisals and any negotiations which may be required
  • Closing
  1. What specific documentation should I provide?

At the very minimum, you will need to provide the following to support your request for a short sale:

  • Bank statements
  • Payroll stubs
  • Tax returns
  1. What documents usually bank required?
  • Listing agreement
  • Short sale addendum
  • Purchase agreement
  • 2 year tax returns
  • Payroll stubs
  • Form 1040
  • Bank statements
  • Hardship letter

 

  1. What is a Short Sale addendum?

A Short Sale is contingent upon the seller’s lender 
agreeing to accept less than the amount owed, the addendum clarifies that contingency and also sets forth the time period that the buyer is willing to wait 
for approval.

  1. What is a hardship letter?

A hardship letter explains why a homeowner is defaulting on their mortgage and needs to sell their home for less than what’s owed on the mortgage

  1. What is Form 1040?

Form 1040 (officially, the “U.S. Individual Income Tax Return”) is one of three IRS tax forms (see variants section for explanations of each) used for personal (individual) federal income tax returns filed with the Internal Revenue Service (IRS) by United States residents for tax purposes.

 

  1. Can I stay in my home during the Short Sale process?

Yes, you can stay in your home until it closes. If you are facing foreclosure and actively pursuing a Short Sale, your bank will usually postpone foreclosure allow you to stay in your home a little longer.

  1. Will I have to move out immediately if the lender agrees to the short sale?

No. Even if someone makes an offer on the house immediately, it can still take three to four months for the short sale to be approved at the bank.

  1. If I do a Short Sale, how much will I have to pay to sell my home?

Nothing. In most cases you will pay literally no sales costs if your lender approves a Short Sale. All 
commissions, title and escrow fees, and even most repair expenses are paid by the lender as part of the Short Sale approval. Your contract should include language such as: “Seller’s agreement to sell is subject to approval by existing lender of a Short Sale at no cost to Seller. Seller shall not be required to deposit funds to close escrow.”

  1. Who pays for the agent’s professional services?

These fees are absorbed in the transaction and do not come directly out of your pocket.

  1. Can any real estate agent handle a short sale?

Because most of lenders require to have a house on a market, 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

  1. 14. What if a property needs work, can I still apply for a Short Sale?

Yes. In fact, lenders are more motivated to do a Short Sale on a property that needs work than on a property that doesn’t. The lender knows the risk of loss goes up when they foreclose on a property that needs lots of work.

  1. Why are Short Sales offered “as is?”

The homeowner is not in a financial position to make repairs so the property will be sold with the understanding that any necessary repairs will be the responsibility of the buyer.

  1. I don’t want my neighbors to know that my house is close to foreclosure.  Do I have to have a sign on my lawn?

No.

  1. What happens if my lender rejects an offer?

The lender may reject an offer with the expectation that the buyer may return with a higher purchase price

  1. What is the Moving Allowance all about?

If you qualify, you may be eligible to receive up to $3,000 at closing for moving expenses. Plus, this program delivers TOTAL PEACE OF MIND because you are CLEARED OF ALL REMAINING DEBT from your mortgage. You’ll have money to move on, and you can rebuild your financial life faster!

  1. How does a Short Sale affect neighborhood values?

A Short Sale will not impact on the values of neighboring properties. It may result in a price that is 4 percent lower than if the property was the subject of a standard home sale.

  1. What happens in a Short Sale when you have two or more loans?

A Short Sale package must be submitted to each lien holder and clear title must be obtained.

  1. What is a deficiency judgment?

If a short sale or foreclosure auction fails to cover a sufficient amount of the outstanding loan balance, the lender may file for a deficiency judgment against you. A deficiency judgment is a court order that makes you liable for unpaid debt. In negotiating a short sale, THE PROPERTY SOLUTION TEAM will make every effort to remove any potential future claims as part of your agreement with the lender

  1. Are there any tax consequences?

In 2007, The Mortgage Forgiveness Debt Relief Act and Debt Cancellation legislation was passed. This allows homeowners to short sell their homes up to 2 million dollars with no tax consequences. Be sure to consult your tax professional for more information. You can also visit the IRS website at www.irs.gov.

  1. What if the terms the bank is offering are unfavorable to me?

If the terms of the Short Sale are not in your interest, you are not required to sell the property or complete the Short Sale. If you choose not to complete the Short Sale, the bank will continue to pursue you for the outstanding loan balance.

  1. Will the bank continue their collection activities?

Yes, they will. That may mean calling or sending you letters looking for payment even if you are currently pursuing a Short Sale. But, most banks will not foreclose on your home if you are actively working on a Short Sale.

  1. Do you work with all banks?

Yes, we are currently working with all banks. We have experience in working with over 50 different banks/lenders across the Nation.

 

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