Short sale is the buzz word in real estate market. House owners who are afraid of getting the desired amount for their house often consider short sale as their best chance of landing a fair deal. Somehow short sales are not the best shot of ending your problems and they may even land you in further trouble in case of insufficient knowledge. I am a certified short sale agent in Temecula and most of my earnings come from short sales only. In this post, my main attention is towards the house owners who lack enough knowledge to understand different aspects of short sales and get best possible solution for their mortgage issues.
Short Sale process in brief
• First step includes signing of listing agreement between seller and real estate agent that permits selling the property as short sale and third party approval is required.
• Agent gets in action to find a buyer offering lower amount than the mortgage sum.
• Seller has to accept the buyer’s offer for purchase of the property.
• Seller’s lender needs to agree to the terms and accept the purchase offer.
• Deal closes with buyer providing funds, lender release the lien and the seller provides the deed for the house.
What are the qualifications for a short sale?
It is important that you are qualified for selling your house under short sale process. If you have an affirmative for all the following conditions then you are eligible for short sale.
• Market value of the home has dropped: It is must that the value of your house has dropped drastically and it is worth less than the existing mortgage amount. There could be a prepayment penalty because of the unpaid balance. It is advised to meet a short sale agent in Temecula to get the exact idea of the property.
• Hard times on seller: If you are a seller then you must submit letters of hardship and it should show that the seller is unable to pay the mortgage. Further it should explain that the seller will not be able to make the monthly payment.
• Status of mortgage is default or nearing to default status: Earlier it was the case that the lender would not permit a short sale if the payments were current. But lenders have realized that there are so many other factors that lead to default status and hence they approve short sale so as to avoid any future issues.
• No assets on the name of the seller: As an experienced Temecula short sale agent, I have witnessed cases where lenders would analyze the credit report and tax returns of the seller. In case the seller has some assets than the lender is not going to approve the short sale as the seller is capable of paying the shortened payments. There are some cases where the seller are given approval even after having assets only after ensuring that shortfall will be paid back.
What are the consequences of short sale?
One of the most important aspects of short sale is that the seller should receive an offer for the house. Without an offer, you are not going to qualify for the short sale and further, the lender should accept the buyer’s offer. With so many clients of short sale in Temecula, I understand the future aspects of short sale on an individual. Two important points are discussed below.
• Blemished Credit Report: There are chances that the short sale may not appear on your report but the loan will appear. Short sale is responsible for reducing your credit score up to 175 points. Creditors will consider you under the unreliable lists and you will not get approval for credit for up to 2 years.
• Tax Consequences: The lender should have the right to offer a 1099 for the amount unpaid as of the provision in IRS regarding debt forgiveness. It is advised to get in touch with an attorney to understand the total amount and whether you will be able to pay it back or not.
In the end, I would suggest you to get a legal counsel before pursuing the short sale process. Short sale agents are experienced but they cannot provide legal advice.
Comments (0)Subscribe to CommentsComment