Common Florida Short Sale Questions And Answers

Real Estate Broker/Owner with Tutas Towne Realty, Inc and Garden Views Realty, LLC BK607690

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  1. Do I have to be behind on my mortgage payments to qualify for a Short Sale?

      • Not necessarily. Some lenders will negotiate a settlement if you are current on payments. You won’t really know until you go through the process. If you are current on payments the lender may very well require you to “participate in the loss” by making a cash contribution, signing a promissory note or both.

        1. What is a deficiency and how do I avoid it?

          • A deficiency is the difference between the amount of money you owe and the amount of money paid to or collected by the lender. The deficiency is the “Short” in a Short Sale. A deficiency ALWAYS exist with a short sale. You cannot avoid it unless you just keep paying on your mortgage obligation. The real question is..........

        1. What happens to the deficiency?

          • The deficiency can be waived, written off, paid later, settled or the lender can, at least in Florida, choose to go in front of a Judge and ask for a Deficiency Judgment against you.

        1. What is a Deficiency Judgment?

          • A Deficiency Judgment is when a Judge issues a Judgment making you personally responsible for the deficiency and giving the creditor the right to go after you for the money you owe. In Florida the creditor has 5 years from the creation of the deficiency*** to ask for the Judgment and another 20 years to collect on it if granted. To collect they may take assets, levy bank accounts and garnish wages. ***Please seek legal advice on this matter.

        1. Will I have to pay taxes related to the short sale?

          • Maybe. A short sale IS a tax event. Just as with any real estate transaction the sale is reported to the IRS. In addition the “Short” may be written off as a loss to the lender. A loss to the lender is income to you. How this income is taxed is a question for your tax professional. You may also refer to the Debt Relief Act. Unless extended the Debt Relief Act is set to expire at the end of 2012.

        1. How will a Short Sale affect my credit?

          • How credit scoring works is one of the great mysteries of the universe! The Short Sale itself is not reported as “Short Sale”. Missed and late payments are reported. Also, how the transaction is reported makes a difference. Is it reported as “settled..”, “paid...”, “charged off..”? And have you been paying your other bills? There are just too many variables to be able to give you a precise answer. If your credit score is important to you then my advice is to make your mortgage payments.

        1. What advantage is there to doing a Short Sale over just letting the lender foreclose?

          • Credit scoring aside....on average you can get another mortgage within 2-3 years assuming you pay all of your bills after a Short Sale. A foreclosure will affect your ability to get a new mortgage for 5-7 years. A Short Sale also gives you the opportunity to negotiate a settlement. It gives you some control over the situation. With a foreclosure you are 100% at the mercy of the lender.

        1. How long will the Short Sale process take?

          • A normal Short Sale with no complications will take on average 2-3 months from time of contract. Some go much quicker and some take much longer.


        1. Will my Short Sale be approved and closed or am I wasting my time?

          • We close more than 90% of our Short Sales. As long as you participate, by providing me what I need, when I need it, then yes, your Short Sale will be approved and get closed.

        1. When will I have to vacate the property?

          • Unless we are able to negotiate something different the day of closing belongs to the Buyer. Most lenders will not allow you to rent the property back after closing so plan on moving. You will normally have 30-45 days notice prior to closing.

        1. Who pays your commission?

          • The listing agreement is between you and I. So legally you are responsible for paying my commission. However, just as in a regular transaction, the costs of the sale are deducted from the purchase price. This means the buyer brings money to purchase the property and we pay everything out of that. The lender gets whats left. You pay nothing. Unless it is required by the lender and you agree to do so.

Additional information:

I hope this helps. Please feel free to contact me with any additional questions you may have.

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***I am NOT an Attorney nor do I play one on TV. Click the button below for my Bio.

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 Tutas Towne Realty, Inc handles Florida real estate sales, Florida short sales, Florida strategic short sales, Florida pre-foreclosure sales, Florida foreclosures in Kissimmee Florida Short Sales, Davenport Florida Short Sales, Haines City Florida Short Sales, Poinciana Florida Short Sales, Solivita Florida Short Sales,  Orlando Florida Short Sales, Celebration Florida Short Sales, Windermere Florida Short Sales. Serving all of Polk, Osceola and Orange Counties Florida. Florida Short Sale Broker. Short Sale Florida.

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Re-Blogged 1 time:

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Jo Olson
HOMEFRONT Realty - Kettle Falls, WA
HOMEFRONT Realty @ LAKE Roosevelt - Stevens County

Once again thank you for sharing so much - your Florida customers are very lucky! 

Feb 01, 2012 07:14 AM #1
Debora Nichols
Residential Sales, Purchases, Investors, Vacation Homes - Phoenix, AZ
Realtor Anthem,Phoenix,Scottsdale,Glendale,Peoria

Well stated and easily understood.  Thanks for sharing

Feb 01, 2012 07:43 AM #2
Gary L. Waters Broker Associate, Bucci Realty
Bucci Realty, Inc. - Melbourne, FL
Fifteen Years Experience in Brevard County

Another excellent set of answers. I need to reblog this one.  Too much good information to let go unread.

Feb 01, 2012 08:53 AM #3
Melissa Zavala
Broadpoint Properties - Escondido, CA
Broker, Escondido Real Estate, San Diego County

I came by to see your real estate ramblings for today. And, you were not rambling at all. Lots of great information for short sale sellers in your area and beyond!

Feb 01, 2012 09:28 AM #4
Ginny Gorman
RI Real Estate Services ~ 401-529-7849~ RI Waterfront Real Estate - North Kingstown, RI
Homes for Sale in North Kingstown RI and beyond

Bryant, lots of great information on short sales for FL sellers and beyond...clearly shared...

Feb 01, 2012 02:08 PM #5
Gladys Webb
Kreative Realty LLC - Tuscaloosa, AL

Great information and good questions asked and answered! I enjoy your post.

Feb 02, 2012 02:53 AM #6
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Bryant Tutas

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