Frequently Asked Questions
1. What is a short sale?
- A short sale is: If a house needs to be sold and it is not worth the amount needed to pay off the mortgage or lien holders and selling costs. The bank or lien holder agrees to take less than they are owed so that the sale can be completed. Sellers do this to avoid having a foreclosure and sell with some measure of control. Often we are able to get sellers "relocation expenses" The banks do this to avoid foreclosure saving time and money.
2. Will a short sale hurt my credit as much as foreclosure?
- A short sale will harm credit far less than a foreclosure. In addition, a short sale may be completed sooner or faster than a foreclosure allowing the credit recovery to begin sometimes years earlier. Often sellers of short sales are able to purchase another house 2 years after the short sale. In addition, with a foreclosure the foreclosed party is often responsible for the deficiency (the difference between what the house sells for and what is owed on it)
3. I have a pending foreclosure date soon. Can I still do a short sale?
- Yes. Even if the sale date is today you have alternatives to foreclosure, which will allow you time consider your options and keep you in your home.
4. I have already tried to short sale and was unsuccessful. Can I try again and why would I be successful this time?
- Agents who do not specialize in short sales do not know the nuances of getting a short sale complete. Your previous agent may have been a great agent but that does not make them a great short sale agent. The industry average for completing short sales is less than 1 in 4. Our average is over %90.
5. How long will a short sale take?
- We have completed short sales in as little as 70 days from listing date to closing date. In circumstances where the seller has no money and no place to move to we have been able to slow them down and stop foreclosure for over a year allowing the sellers to save money and stabilize their financial situation prior to closing.
6. How much will it cost me to do a short sale?
- Little or nothing out of pocket to sell. We do not expect you to pay us anything out of pocket. The 1st mortgage or lien holder will allow proceeds from the sale to pay the usual closing costs and broker fees as well as any legal fees. Some lenders will even pay outstanding municipal electric and water bills.
7. Can I do a short sale if I have not missed a payment but my house is not worth what I owe?
- Yes. Lien holders will evaluate the property to determine the value. If the property is not worth what is owed they will consider a short sale.
8. Why not just let it go to foreclosure?
- Foreclosure is FAR worse for your credit. In addition, you may be responsible for any deficiency. The deficiency is the difference from what you owe including outstanding payments, and what the bank nets from a foreclosure sale minus the cost to foreclose. Foreclosure is expensive. The bank usually gets far less from a foreclosure sale, after all the legal expenses, than they would from a short sale. This deficiency can stay with you for years after the foreclosure. Lien holder can go after other assets you have to satisfy it. In the case of a short sale banks usually grant “global relief” in addition to the lien release. This means you would be free and clear.
9. I own another home. What will happen if I allow one of the homes to go to foreclosure or short sale it?
- If you allow a home to go to foreclosure and you own another one, the lien holder from the foreclosed home may pursue equity in the other home.
10. What are the tax implications of a short sale?
The Mortgage Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for the relief.
This provision applies to debt forgiven in calendar years 2007 through 2012. Up to $2 million of forgiven debt is eligible for this exclusion ($1 million if married filing separately). The exclusion does not apply if the discharge is due to services performed for the lender or any other reason not directly related to a decline in the home’s value or the taxpayer’s financial condition.
More information, including detailed examples can be found in Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments. Also see IRS news release IR-2008-17.
11. I have more than one mortgage/ lien. Can I still short sale?
- Yes. We have successfully negotiated many short sales multiple liens including: IRS, Mass Department of revenue and municipal liens. In addition to hundreds of different banks holding second mortgages.
12. I have attempted to sell my house by a conventional sale but there was not enough funds to cover the selling costs and the mortgage what can be done?
- I would suggest a short sale in that particular circumstance.
13. Can I receive any funds from the sale of the property?
- Yes! Qualified sellers can receive up to $10,000 in relocation expense. The seller and their loan must both qualify to receive money. The seller may also gain some financial benefit from IRS or Massachusetts Department Of Revenue tax liens and outstanding municipal bills being paid.
If you have any questions that dont appear above CALL ME for a free consultation at 978-590-4181
Copyright 2013 Mike Becker