Thursday, June 24, 2010

SHORT SALE-What is it?

A short sale is when you sell your house for less than you owe on it. Which brings up some questions. Let me see if I can answer a few here.

Q)  If I sell my house for less than I owe won't I have to pay the difference?
A)  NO. The bank forgives the balance and you will NOT get an IRS form #1099 at the end of  the year which means you do not have to pay taxes on the difference either.

Q)  If I can't pay the mortgage how am I supposed to pay Realtor fees?
A)  If you short sale the house the bank pays the Realtor fees and all other fees associated with selling the house.

Q)  If I short sale my house won't I ruin my credit?
A)  Yes your credit will take a hit of approximately 100 to 250 points but you get to start over again with expenses you can afford. Your credit score can/will recover in about 24 months. If you walk away and let the bank foreclose you will be responsible for the money owed the bank plus all expenses. We all know that the bank can add on penalties and interest real quick. Plus your credit score will take a more significant hit of about 300 to 500 points with foreclosure.

Q)  Do I need the banks permission to short sale my house?
A)  If you are late on the payments and have reasons like lost job, sickness or much less income due to the economy then you have valid reason which in banks terms is called a hardship. You will need to call the bank and let them know you can not continue to make the payments and that you are going to sell the house.

Q)  Can any Realtor sell my house as a short sale?
A)  All Realtors have the ability to sell your house for market value. However you will have a much smoother process if the Realtor is short sale certified. Which means they have formal education and experience in dealing with the banks in regard to short sales. Some banks are now requiring that the Realtor be short sale certified in order to sale the house.

Q)  But I have had no luck with my bank working with me, how am I going to talk to them about a short sale?
A)  Once the Realtor lists the house most all of the conversation with the bank is going to be done by your Realtor. The Realtor with your help will gather all the necessary paperwork (not much) and get it to the bank along with market conditions in your neighborhood. This lets the bank know that the list price for the house is all that the market will pay.

Q)  Will the bank let me sell the house myself as a short sale?
A)  No they require a licensed Realtor so that it is all done legally by the state and federal laws governing Real Estate transactions.

Q)  How do I know which Realtors are short sale certified?
A)  If you know a Realtor just ask them and they will let you know if they have experience in short sales or call me and I'll answer your questions.

Please ask questions but don't let your house go into foreclosure. Foreclosure is a nightmare for all conceerned. Short sales are everyones preference and absolutely the best answer for the seller. So stop worrying your life away over house payments you can no longer make. Call me and I'll do my best to answer your questions and calm your fears.

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