7 Tips for Short Sale Success

By
Real Estate Agent with RE/MAX Real EstateGroup.com

This Article by G.M Filisko has some great tips for a successful Short sale.

Article From BuyAndSell.HouseLogic.com

 

By: G. M. Filisko
Published: March 19, 2010

 http://members.houselogic.com/articles/7-tips-short-sale-success/preview/

Have to sell your home for less than it's worth? Our seven tips will help you get the best price.

 

When you owe more on your home than it's worth, but you have to sell, you need to squeeze every dollar possible from the sale. Here are seven tips for navigating the short-sale process.

1. Know who you owe

A short sale has to be approved by any company that has a mortgage or lien against your home. That includes your first, second, or even third mortgage lender, your home equity line lender; your homeowners or condominium association; and any contractors who've placed a lien on your home. Make a list and start talking to everyone early in the process. Ask what documents they'll need from you.

2. Pick your short sale team

You'll need to work with a team of short sale experts, including a real estate agent, real estate attorney, and your accountant. Look for agents and attorneys who advertise themselves as short sale experts. Interview at least three, and listen carefully for signs that they understand the complexities of the short sale process.

Agents should explain how they'll arrive at a suggested price for your home. Ask them to show you a sample short-sale package or for an example of a prior short-sale success.

3. Get your documents ready

Gather the paperwork your creditors and mortgage lenders asked to see, like your listing agreement and a hardship letter explaining why you need to do a short sale. You'll also need proof of what you earn and what you owe as well as copies of your federal income tax returns for the past two years.

4. Expect delays

Despite a federal rule saying banks participating in the federal government's Making Home Affordable loan modification program (http://www.houselogic.com/articles/making-home-affordable-modification-option/) must respond to short-sale offers within 10 days, it may take weeks or months for your lender to decide whether to allow you to sell your home in a short sale--and even longer if you must negotiate with more than one lender or lienholder.

Your lender and lienholders don't have to agree to your proposed short sale. They can reject your terms or make a counteroffer, which can create further delays.

5. Anticipate demands

Discuss with your short-sale team how you should respond to common short-sale demands from lenders. For example, are you willing to sign a promissory note agreeing to pay outstanding amounts after the sale is complete?

6. Know the tax implications

Any unpaid amount of your mortgage "forgiven" by your lender through a short sale may be considered income to you under federal tax rules. Ask your attorney or accountant whether you qualify to exclude that amount as income on your tax returns under the Mortgage Forgiveness Debt Relief Act and Debt Cancellation Act. Also ask if you'll be required to report amounts "forgiven" by other lienholders, if applicable.

7. Consider how the short sale will affect your credit and what you must pay

Ask whether your lender will report the short sale to credit-reporting agencies. Having a portion of your debt forgiven may negatively affect your credit score, but a short sale typically damages your score less than a foreclosure or bankruptcy.

Ask you lawyer whether you'll be responsible for paying back the lenders' loss. If the lender says it will forgive any losses on the sale of your home, get that promise in writing.

Other web resources

More on short sales (http://www.nolo.com/legal-encyclopedia/article-30016.html)

IRS information on the Mortgage Forgiveness Debt Relief Act and Debt Cancellation (http://www.irs.gov/individuals/article/0,,id=179414,00.html)

This article includes general information about tax laws and consequences, but isn't intended to be relied upon by readers as tax or legal advice applicable to particular transactions or circumstances. Consult a tax professional for such advice; tax laws may vary by jurisdiction.

 G.M. Filisko is an attorney and award-winning writer. A frequent contributor to many national publications including Bankrate.com, REALTOR® Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.

"Visit Houselogic.com for more articles like this. Reprinted from HouseLogic.com with permission of the NATIONAL ASSOCIATION OF REALTORS®."

 

Posted by

Peggy

Peggy  Harmeyer & Associates

RE/MAX Real Estate Group

932 Shadyview Blvd.

Pleasant Hill, Ia 50327

Licensed in the State of Iowa

Peggy : 515-208-8132 

Caitlyn: 515-321-3821

Peggy@PeggyHarmeyer.com

An Independently Owned and Operated Member RE/MAX Real Estate Group

Information is believed to be accurate but should not be relied on without verification.

close

This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At
Tags:
short sale
tips for short sale

Spam prevention
Show All Comments
Rainer
109,265
Joe Sosky
KW Commercial - Vancouver, WA
Commercial Real Estate Broker - (360) 816-9652

Peggy,   this is a rally helpful blog.  I really like complete and accurate lists, in particular the ones that I don't have to create.  :)  Thanks for the post.

Oct 17, 2010 07:02 AM #1
Rainmaker
479,406
Debbie Sagorin
Coldwell Banker Real Estate - Irvine, CA
Marketing Irvine to the Highest Level

Thanks for sharing the article!

I just closed a short sale in reecord time, (just over three months), and the piece has some good points.

Oct 17, 2010 07:03 AM #2
Rainmaker
331,688
Susan Morrison
RE/MAX Executive Realty - Franklin, MA

Thanks for the list, Peggy.  It's a complete list and sellers should like it.

Oct 17, 2010 07:06 AM #3
Rainmaker
526,160
Dave Halpern
Keller Williams Realty Louisville East (502) 664-7827 - Louisville, KY
Louisville Short Sale Expert

Peggy,

Excellent synopsis of what sellers and their Realtors should anticipate in a short sale,

Oct 17, 2010 07:12 AM #4
Rainmaker
63,308
Peggy Harmeyer- Harmeyer Team
RE/MAX Real EstateGroup.com - Altoona, IA
Licensed in the State of Iowa

Thanks everyone.  I thought the tips were good ones and I got the article from House logic with permission from NAR.  It seems that we are getting better at the short sales from experience.  My first real experience with a short sale was about 3 yrs ago and we didn't have as much knowledge on them at that time. I have always thought to have power you must have knowledge.  Seems to me the more we do them the more we learn. 

Peggy

Oct 17, 2010 09:50 AM #5
Show All Comments

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?

Rainmaker
63,308

Peggy Harmeyer- Harmeyer Team

Licensed in the State of Iowa
Ask me a question
*
*
*
*

Additional Information