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     Short Sale Information

Over the last year many areas in our nation have been feeling a bit of a housing crunch. This housing crunch is the result of different factors depending on the particular area you are located. No matter what the factors are, an increasing amount of people have been falling behind on payments and are facing foreclosure.

In comes the short sale. Many people in and out of real estate have been talking about the real estate short sale.  Every individual situation will differ slightly depending on the location of the property, and the particular lenders short sale policy.

Put simply a short sale is when a bank agrees to take less money for a property than is owed. (No they will not sell it back to the owner for this price). A home can be sold on the local real estate market as a short sale or it can be negotiated by an individual investor who will purchase the home for less.

I do not recommend using the investor because it limits the potential buyer pool and puts all of your eggs in one basket. Using a Realtor to list a short sale provides the greatest possibility that the home will not go to auction.

The first step is listing the home and giving the Realtor a letter of authorization to negotiate with the bank.

The Realtor then contacts the bank and asks for their specific short sale policy. Banks will usually require a letter of hardship, financial info (pay stubs, w2?s, bank statements), and the listing agreement. This can be forwarded by the Realtor, but some banks require the owner of the property to complete the personal info.

Once an offer is made, all of the information above is forwarded as well as the offer and a loan status report on the buyer. The loan status report shows the bank the buyers ability to pay.

Now that everything is together and in the banks possession, they will take anywhere from 24 hours to 45 days to accept the offer. Short sales require buyers to be patient. Be patient, if you want a good deal you will have to wait. If you don?t want to wait, find a regular home with a higher ?Buy it Now? price.

If the offer is accepted then the bank will usually want a closing pretty fast.

What happens to the difference? When the house is sold for less than is owed there is some money left over. The bank will forgive the debt, however, they will record the money lost is income to the seller via a 1099 form. A CPA or Tax Attorney should be consulted on how to deal with this.

What happens to your credit in a short sale? The debt is paid and the excess is forgiven. Your credit score will not go down nearly as much as a foreclosure that makes it to auction. Completing the foreclosure process is reported to reduce your credit by as much as 300 points. Contact Amber today!