What is a short sale?
It's likely you've heard the term "short sale" thrown around quite a bit. But what, exactly, is a short sale?
With having completed over 200 successful short sales, let me give you so good general information.
A short sale is when a bank agrees to accept less than the total amount owed on a mortgage to avoid having to foreclose on the property. This is not a new practice; banks have been doing short sales for years. Only recently, due to the current state of the housing market, has this process become a part of the public consciousness.
To be eligible for a short sale you first have to qualify!
To qualify for a short sale, a.) Your house must be worth less than you owe on it, and b.) You must be able to prove that you are the victim of a true financial hardship, such as a decrease in wages, job loss, or medical condition that has altered your ability to make the same income as when the loan was originated.
*You cannot qualify for a short sale if you simply want to move, as the bank will scrutinize your financial records to confirm financial hardship.
I meet all of these criteria. What do I do now?
Now , the real work begins...
1.) Find a QUALIFIED agent to handle your short sale. It's a good idea to find one who has completed at least 30 successful short sale transactions, as short sales require a very specific skill set. Knowing how to successfully navigate pitfalls and avoid potential delays is key to the success of the transaction. Read through our short sale expertise throughout this site. We are two of the most versed agents in the country on short sales.
2.) Speak to a certified accountant to determine if there are tax ramifications. If you're listing your primary residence (meaning that you have occupied the property for at least two of the last four years), you will more than likely be exempt from any IRS penalty. However, that's not always the case, and in some instances on primary, secondary, or investment real estate you may have some liability. Remember, real estate agents cannot give tax advice, so be sure to see an accountant prior to starting the process.
3.) Put together a short sale package for your agent to submit to the bank. The short sale package should include:
o Your last two years' tax returns
o Your last two months' bank statements
o An authorization letter granting your
agent permission to speak to the bank
on your behalf
o An itemized accounting of how much money
you make per month versus what you're
paying out in bills
o A financial hardship letter.(Your agent
should help you write the letter.)Needs to be specific and at least a page, the letter should "cry" so the bank understand your hardship.
Don't forget your two most recent pay stubs also.
Give all of the information and paperwork to your agent and get that property listed!
*Once your agent has listed the property do not communicate with the bank anymore. All communication from this point forward should be handled by your agent. Remember, dealing directly with the bank can cause confusion and lead to unnecessary delays.
Once you've completed these steps, you can look forward to selling your property and moving on! Bear in mind, the short sale process is extremely complicated, and best handled by a trained, experienced professional. If you need further information on short sales please contact us!
The information above is just an overview for consumer education purposes. There is much more involved in completing a successful short sale! Go to www.moorebrittingham.com check out the website and blog for more information.
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