What is a short sale?
A short sale in real estate occurs when a seller, with the bank approval, sells their home for less then what is owed. Basically, the outstading loans and liens against the property are greater than all the proceeds from the sells of the home after all closing costs are paid.The seller still has control over their property, but the bank is the one who makes all the decision, negotiate with buyers, and final approval to close the deal. This occurs only if the home owners meet the qualification and home owner’s lender agree to allow a short sale. Banks will not accept a short sale pay off if the seller is not qualified for.
In the event of a short sale, lender can release you FREE AND CLEAR from your mortgage and fully forgive your debt left behind. In fact, some lenders are offering the sellers $3,000 to $5,000 BACK for relocation expenses as an incentive to homeowners to do a short sale.
The short sale will affect your credit, but not as badly as a foreclosure.
* SHORT SALE X FORECLOSURE
1-A short sale itself will minimally affect your credit score, usually around 50 to 100 points. Late payments usually have the most negative impact on your credit score, around 30 points or more. The good news, stay on your credit report for only 3 years, and in 1 year your credit can be re-established and with a good down payments you can purchase your next home if the bank is willing to approve you.
2-Forclosure on the other hand can affect your credit score on 100 to 300+points and will remain on your records for 5 to 10 years, depending on your state laws. It is permanent on the public records of your county.
***The Mortgage Forgiveness Debt Relief Act of 2007 gives a break to the taxpayer on the debt forgiven for a loan secured by a qualified principal residence. To find our more go to www.IRS.gov.
Sellers need to cooperate with REALTORS in a short sale listing by providing personal information about their financing, etc. We will need to have a honest and open real estate relationship to have a successful ending for a short sale transaction, which can be really painful because of the waiting time, it can take up to 3 months to complete the transaction.
KEEP IN MIND!
SHORT SALE TRANSACTIONS ARE CONSIDERED “ARMS LENGTH” MEANING THE BORROWER CANNOT SELL THE PROPERTY FOR THEIR RELATIVE OR ANYONE ELSE THAT THEY HAVE A CLOSE RELATIONSHIP WITH.
BORROWERS WILL NOT BE TAXED ON THE FORGIVEN DEBT IF THE AMOUNT IS LESS THAN WHAT WAS USED FOR ACQUISITION, CONSTRUCTION OR REHABILITATION OF THEIR HOMES. IF THE AMOUNT FORGIVEN DOES EXCEED THIS, IT COULD BE CONSIDERED INCOME FOR TAX PURPOSES.
THE BUYERS CANNOT RESELL THE PROPERTY AT LEAST FOR 90 DAYS.
***Please call me for an appointment to get your Short Sale Submission Package Checklist ***
***More information about short sale, please call to schedule an appointment***
Do you want to buy a foreclosure?
Go to: http://hudexchange.com/foreclosure-expert/luciedwardshudex and take a look at what I have availble in my area.
Luci Edwards
Short Sale Specialist
406-5795013