As Virginia Beach Short Sale Experts working in the Virginia Beach and Hampton Roads real estate markets we are consitently asked the same questions about distressed properties over and over! Everyday we rediscover how big the need is for the public to be able to find good ole honest and reliable information on Short Sales in Virginia Beach and Hampton Roads. So in our continuous effort to get good honest and reliable information out to the public we write these posts so that hopefully they will be read and shared with the people that need this information most!
As with anything you read on the web please check with your local experts and professionals in your area including but not limited to your Financial Planner, Accountant and Attorny to determine the best strategy for you in your situation. Everyone has a different set of circumstances that affect them and the information below is not designed to be the answer to every situation. What we have done below is compile very general answers to some of the more fequently asked questions we get in our area.
1. What is a short sale?
● A homeowner is "short" when the amount owed on the property is higher than current market value.
● A Short Sale occurs when a negotiation takes place with the homeowners mortgage company (or companies) to accept less than the full balance of the loan at closing.
● Short sales allow the cash-strapped seller to repay the mortgage at the price that the home sells for minus the costs of sale, even though it is lower than what is owed on the property.
● With plummeting property values, this can save many people from foreclosure and even bankruptcy.
● In the Hampton Roads area we currently have many homes that are in danger of foreclosing. It is happening in all price ranges.
2. How do homeowners qualify for a short sale?
● Must have a financial hardship - a situation causing them to have trouble paying their mortgage
● Must have a monthly income shortfall - their monthly debts are greater than their monthly income
● Must be insolvent - their liquid assets (cash or savings in bank accounts) are not enough to pay down the mortgage.
3. What are some possible financial consequences?
● The IRS may want them to pay income taxes on the amount of debt that was forgiven.
● A security clearance necessary for employment may be affected negatively.
● The bank may have a right to pursue a deficiency judgment for the amount of their shortfall unless they agree to waive this right when the short sale is approved.
4. Why would a lender accept a short sale?
● Banks don't want to foreclosure on a loan; it costs them on average $50,000.
● Banks are not in the business of owning real estate, their business is lending money.
5. What happens to credit when you do a short sale vs a foreclosure?
● May be eligible for a Fannie Mae backed mortgage after only 2 years vs. 5 if they foreclose.
● If you foreclose, you must answer YES to the question "Have you had property foreclosed upon or given title or deed in lieu thereof in the last 7 years?" on all loan applications during that period. It will affect future interest rates; not so if you short sale.
● A foreclosure negatively affects credit for over 3 years vs 12-18 months for a short sale.
● A foreclosure stays on the public record for 10 years or more vs. no indication of a "short sale" on the public record. The loan is typically recorded as "paid in full, settled".
● Many employers pull credit and do background checks. A foreclosure may be grounds for reassignment or termination vs a short sale is not reported on a credit report.
● In foreclosure, the bank has the right in most states to pursue a deficiency judgment whereas in a short sale it is possible to convince the lender to waive this right.
● In foreclosure, the deficiency has a greater potential to be larger than a deficiency for a short sale. Short Sales generally sell for a greater amount of money.
It's easy to see why gathering information on Virginia Beach Short Sales can be so confusing. As Virginia Beach Short Sale Experts we take great pride in working hard to Help Our Neighbors in Need from Virginia Beach to all other areas in Hampton Roads.
If you or anyone you know is in need of more good, honest and reliable short sale advice simply go to our Virginia Beach Short Sale Experts web site fill out the form below and we will be happy to schedule a private and confidential meeting with our team of Virginia Beach Short Sale Experts with the Byrd Realty Group.
Or simply call Bill Byrd at 757-285-6416