What does Short Sale mean?
A short sale is when a homeowner owes more on a home than what it can be sold for and the home owner sells the property at market value and negotiates with their lender to forgive the difference owed.
Why would a bank allow a short sale?
A bank is not approving your deficiency because they love you. They likely will do a short sale instead of a foreclosure, because they will be in a better financial position to do so.
Can I profit on a short sale?
Nope. Think about it. If you loaned someone a quarter a million dollars or more and they negotiated to repay you less and you accepted because you would be in a better position than if you took the collateral for the loan back, would you allow for that person to profit?
How do I start a Short Sale?
The first step is to hire a real estate agent to list your home for sale. I recommend to hire an agent that specializes in short sales. After you list your home for sale, you need to get an agreement with a buyer to sell your home. After you have an agreed offer, then your short sale specialist will submit your offer to the bank and begin the process. Typically the bank will not start without an offer - After all, how would they know what they are negotiating without an offer to negotiate?
Will a short sale affect my credit rating?
It will impact your credit score, but not nearly as devastating a foreclosure or bankruptcy. If you are upside down on your mortgage, have a valid financial hardship, and need to sell, you are not in an ideal situation. A short sale is probably your best choice in this scenario.
What are the tax implications in the short of real estate?
As I am not an accountant, I guide you to the IRS to answer this question. You can find out more information by checking out the Mortgage Forgiveness Debt Relief Act. You will find when you read the guidelines, that if it is your primary residence, you probably have no tax consequence. Be sure to speak with your tax advisor to get clarification for your specific situation.
Should I just give the keys back to the bank?
Only if you want to pick the worst choice in a bad situation. With a foreclosure, your credit will be severely impacted, security clearances can be challenged, your ability to finance ANYTHING in the future will be challenged, and the debt owed will not go away.
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Dan and Traci & Consultants with Keller Williams Realty is a full-service brokerage that helps clients in the Washington metro region buy and sell properties in all price ranges. We specialize in short sale transactions and foreclosures. We have successfully completed hundreds of buying and selling transactions for our clients. We understand and are able to solve the financial and emotional difficulties that often accompany short sales and we have saved dozens of individuals and families from losing their homes to foreclosure. Because of their extensive experience, owners Dan and Traci Rochon are frequent speakers and are often quoted in media stories dealing with difficulties in the current real estate market. In addition to owning the sales team Dan and Traci & Consultants, the Rochons are also owners of Keller Williams Realty in Alexandria - Kingstowne, VA. For more information, call Dan at 703-562-1788 or visit www.greetingsvirginia.com
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