Recently, I have been listing many more homes as short sales. Most people do not understand that there are tax ramifications as well as FICO score points that can affect them later on after selling as a short sale. A short sale can affect a seller's credit by 80-160 FICO points instead of up to 300 from a foreclosure. So, that is a good thing.
Some points to know before trying to do a short sale as a seller. First, you must prove some type of hardship. Here is a list of some of the reasons that a lender would qualify a sale to be a short sale:
1. Unemployment
2. Reduced Income
3. Too much debt
4. Death of a spouse
5. Death of a family member
6. Payment Increase in your loan (such as having an ARM loan - or adjustable rate loan)
7. Job relocation
8. Business failure
9. Severe Illness
10. Damage to property
11. Military Service
12. Incarceration
Selling your home as a short sale must also mean you are selling the house "short" of what is owed. That is not too hard in this market. Please remember, your agent should price your house competitively, however, I would recommend pricing it a bit lower just to get offers. And, remember, the lender will be sending an appraiser out to make sure what the market is for your house. If it is too low after you have an offer, the bank can just say no, or counter.
Remember, this process takes a while to complete. So many lenders now are bogged down with short sales. It is important to find an agent that really knows what they are doing so when an offer comes in, they can submit the whole package to the lender and not waste any time. Typically, after the paperwork goes into the lender, it can take another 30 days to get to a negotiator. In some cases, it may take even longer, it all depends on the lender. From there, it can still take another 2-3 months or longer. However, if you get approved, the lender will want to close as soon as possible. It is very VERY important that you make sure your agent tells the buyers updates so they hang in there. Otherwise, you will have to start all over and resubmit new paperwork because each short sale gets approved for each buyer.
As you can tell, it is important to get an agent who knows what they are doing so your short sale gets approved. If you have any questions, feel free to contact me at calljoan4homes@aol.com or visit my web site at www.calljoan4homes.com
Thank you so much and good luck!
Joan Patterson, B.A., A.S.P. G.R.I. Realtor
Keller Williams Realty
8250 White Oak Avenue, Ste 102
Rancho Cucamonga, CA 91730
951-204-1864
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