What is a short sale?
A Short Sale is a sale of a property where the lender agrees to accept less than what is owed to pay off the loan. In a Short Sale situation the owner owes more on the property than they can sell the home for on the open market. The Owner can request that the bank allow them to sell the property to the highest offer and forgive the difference between the amount received and the amount owed. Not all situations allow the Owner to be forgiven. In some circumstances, you may be taxed on the difference or asked to sign a Note for the difference. You will need to consult with a tax professional. This can be a viable option for many Sellers and Banks as it is a less expensive option for the Bank than to take the property through foreclosure.
Short Sale properties are typically sold in “as-is” condition, similar to purchasing an REO property. It is ALWAYS our recommendation that you hire an independent inspection of the property when purchasing any home. Selling “as-is” is most often due to the Seller’s inability to afford repairs.
As a Buyer of a Short Sale, you can expect a sometimes lengthy process in obtaining a Bank’s approval of your offer.
Who can qualify to sell their house as a short sale? A home owner who has a mortgage on their home and owe more than the home is worth may decide to sell their home as a short sale. The lenders will look at the sellers circumstances and any hardship they may have encountered since obtaining the loan. This hardship can be illness, divorce, loss of a job, reduction of income, mortgage rate adjustment etc. The seller will have to submit a hardship letter to the lender along with complete financial statements and short sale package. The seller will have to prove hardship to the lender.
It is everyone’s goal to keep you in your home whenever possible. It’s important to talk to your lender to try to work out a solution to keep you in your home. If that process fails and a Short Sale can be your next option. A Short Sale is less detrimental to your credit in the long term.
We are trained and here to help you through the process of a Short Sale. Selling your home as a Short Sale does not always work, but we can help you navigate the process. It has been a viable alternative for many people.
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