SHORT SALE INFORMATION
Most Common Short Sale Questions.
What is a short sale?
A short sale is an agreement between the homeowner and the lender to sell the home for less than what is owed on the mortgage.
For example if you owe $300,000 on your mortgage and the lender receives $150,000 in the short sale — they are agreeing to relieve the homeowner of the difference of debt which would be $150,000 in this example.
Now, when we help you sell your home; you will be selling your home just as you normally would — just with terms agreed and accepted to the lender, subject to their approval.
How much will a short sale cost?
The answer is zero. We don’t charge you anything at any point for our services. And we don’t get paid until the short sale is complete. At that point — our services are paid for by the lender at the closing of the short sale.
What is the impact on my credit score after a short sale?
This is a big concern for homeowners attempting a short sale. And you should note that a short sale will have a much favorable impact on your credit than a foreclosure. The majority of our client’s recover and are capable of buying a home they can afford in just 24 months.
Will I be responsible for the shortage at the end of the short sale?
And the answer is no. Currently the law in 2012 states that once the short sale lender accepts the short sale — they have to forgive what is called a deficiency; that is the difference owed.
This usually pertains to a second mortgage. There are exceptions if it’s an investment property, though. For this I will refer back to that as a CPA question, but in most cases our clients or not responsible for the deficiency or the shortage owed at the end of the short sale process.
Will I have to pay taxes on forgiven mortgage debt?
This is a very common question and the answer in most cases is no.
Now, I will always refer clients to a CPA if they don’t have one. However, the current tax law in 2012, allows the deficiency on your short sale to be forgiven as taxable income.
When I say deficiency I’m referring to the difference between what the lender received and what you actually owed. So, if you owed the lender four hundred thousand dollars – they received two hundred thousand dollars – you have a deficiency of $200,000. Normally, that would be seen as taxable income. Through the current year of 2012 that is forgiven.
How long can I stay in my home during the short sale process?
On average four to six months. It varies depending on who is servicing your loan and depending on how many loans you have, but on average you can still live in your home for roughly 4-6 months.
What if a tenant living in my home refuses to cooperate?
Most of the time, once we get involved as a third party, it will help solve most of the issues to get the process moving forward with assistance from the current tenant(s).
How do I receive money for relocation assistance after short sale?
The majority of our clients receive the Home Affordable Foreclosure Alternatives (HAFA) Program making the transition as favorable as possible for the homeowner.
Will I be able to cancel the short sale process without a penalty?
George Barr and I take a lot of pride in having a strong relationship with our clients and making sure that the short sale process is the best possible option for them from the very beginning. With that being said, we have had clients who begin the process, but end up deciding to cancel to possibly pursue another option.
We always want what is best for our clients and will support your decisions. We are certainly not here to force you into something that you don’t want to do. If this becomes a situation with any of our clients, we withdrawal your listing and we will be more than happy to give you any advice moving forward with your plan of action.