Pros and Cons of Short Sale was a insert box of an article written by Naomi Snyder of the Tennessean today and I thought I would share the info. I have handled a number of these short sales, and on New Year's someone asked me about "looking for a short sale." I don't think folks understand how much patience as a buyer, you must have with a short sale. It takes months and months, and when you finally get an answer from the lender they may not accept your offer. The main thing to remember when either buying or selling a short sale is that you should use a Realtor. Not saying this because I am one, but the short sale is not an easy tranaction and it takes a realtor who knows what they are doing teamed with a title company who also has experience. Please contact me if you have any questions, even if you don't use me as your realtor or one of my referral partners, at least you will have a little more knowledge before tryng your hand with a short sale.
Here's the piece from Naomi Snyders' 1/2/2010 Tennesseean article:
Pros, Cons of Short Sales
Short sales are a way to sell a home for less then what's owed on the mortgage and avoid foreclosure proceedings by the lender.
Short Sale Pros for the seller
•Avoid a foreclosure showing up on your credit report
•It may be easier to get another home loan later. Major mortgage agencies such as Fannie Mae and Freddie Mac will consider another mortgage within as little as two years from a short sale, but they won't do so for three to five years after a foreclosure.
Short Sale Cons for the seller
•Lenders may still be able to come after an owner for any shortfall or money lost on the mortgage after the fact, typically via a promissory signed at the closing (The mortgage company can try to recoup any loss on a foreclosure as well.)
•Taxes: While tax law was changed so your don't pay taxes on the amount of money your lender has forgiven on a mortgage, you may stll owe taxes on amounts forgiven for home equity loans. Check with a tax accountant.
Short Sale Pros for the buyer
- You might get a deal on the price when buying a troubled property, but do your homework.
- Compare recent sales per square foot prices of similar homes in the neighborhood before you make an offer
Short Sale Cons for the buyer
- Would be buyers may have to wait months before the bank will respond to offers of a short sale.
- If your buying from an investor who is "flipping" the property and who hasn't owned it for at least 90 days they you won't be eligible for a Federal Housing Administration loan. One benefits of an FHA loan is that the down payment can be as little as 3.5 percent of the purchase price.
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