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Old 05-04-2008, 07:25 PM
 
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Can someone explain what this means?
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Old 05-04-2008, 07:56 PM
 
Location: Montana
2,203 posts, read 8,222,293 times
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A short sale is where the owner owes more on the house than what he can sell it for and still pay off his mortgage(s) and cover his closing costs. Sometimes an owner has the additional funds available to bring to closing to cover the deficeit. Most times, though, he doesn't and the lender must approve the "short sale". That means the lender has to agree to the price and terms of the offer on the house. Also the seller must provide "proof of hardship" and lots of financial records. The lender will also require either a BPO (Broker's Price Opinion) on the market value of the house or an appraisal. If the offer is too low, the lender will probably reject the offer. The lender may also decide to foreclose rather than agree to the short sale.

It can sometimes take 60-90 days to get a "yes" or "no" answer from the lender.
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Old 05-04-2008, 09:09 PM
 
Location: Southern Arizona
9,308 posts, read 25,652,204 times
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Very informative response, Gretchen.
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Old 05-05-2008, 05:26 AM
 
1,304 posts, read 2,920,693 times
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With short sales.. you better plan on waiting up to 6 months..
Most are started at well-below market value and most never sell
at that price. An offer usually has to be made before the lender
even gets involved, then they will get a Broker's appraisal and usually
will only except the price of what the broker set it at.
I am NOT a realtor.. just know from past experience.
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Old 05-05-2008, 08:44 AM
 
Location: Prescott Valley, AZ
1,782 posts, read 4,437,879 times
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There can also be tax implications with short sales. Current tax law states that if you are forgiven from debt, then the amount of debt you are forgiven is treated as income and you have to pay income tax on that amount. I believe that the Congress is working to pass legislation to change this law, but for now, you could end up owing money to Uncle Sam. Also, some lenders are making sellers sign a promisory note to pay the lender the difference. I.e., you still owe the money to the lender.

Some lenders will accept a short sale becuase they do not want to go through the expensive foreclosure process and because they do not want to own real estate that they then have to sell. Other options are a strait Foreclosure (the lender legally kicks you out and takes the property) or a Deed in Lieu of Foreclosure. A lender may sometimes simply accept the deed to the property (Deed in Lieu of Foreclosure) if you agree to walk away from it. Again, this option is less expensive for the bank because they do not have to foreclose on the property. Finally, a lot of lenders will work with you to keep you in the home and to keep you paying something. You may be able to negotiate a temporarily lower interest rate or you may be able to pay interest only.

In any of these cases your credit will get hit significantly. After all, you borrowed a lot of money and are failing to pay it back. Lenders will not be excited to loan you money again in the future - at least not until the real estate market changes and prices start shooting up again.
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Old 05-05-2008, 10:25 AM
 
571 posts, read 2,198,383 times
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This is a very good Blog about Short Sales lots of good information. Its not California but it still has good information and Banks are Nation wide
BLOG.FranklyRealty.com: Short Sales Are "Fake Listings." Only 5% Close!
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Old 05-10-2008, 01:27 PM
 
Location: Prescott Valley, AZ
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I goofed on the tax implications in my post above. On December 20, 2007, the Mortgage Forgiveness and Debt Refief act was signed into law. This act excludes debt forgiveness from a short sale from taxation. Therefore, you will not be taxed on the amount of debt that you are forgiven by a lender in a short sale. However, the law only applies to principal residences. Investment properties are not covered and you may still be taxed. See Mortgage Forgiveness Debt Relief Act for more detail.
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Old 05-10-2008, 05:43 PM
 
Location: Portland, Oregon
543 posts, read 972,588 times
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Quote:
Originally Posted by Arizona Bound View Post
With short sales.. you better plan on waiting up to 6 months..
Most are started at well-below market value and most never sell
at that price. An offer usually has to be made before the lender
even gets involved, then they will get a Broker's appraisal and usually
will only except the price of what the broker set it at.
I am NOT a realtor.. just know from past experience.
I put an offer in for a client on a short sale last NOVEMBER... and the counter offer that came back was HIGHER than the list price. and the house has been on the market for a year. Go figure. The lenders have no rules (that we can tell) for responses or acceptance or anything. We just wait. and wait...... and wait.
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Old 05-10-2008, 06:35 PM
 
Location: Colorado
43 posts, read 100,248 times
Reputation: 35
Default Short sale

In a nut shell...Short sale means selling the home below it's fari market value & usually applies to properties in foreclosure .. When a "short sale" offer is made, basically you are offering the bank / seller less than what is owed or being asked for

Unless you're heading into foreclosure DO NOT SHORT SELL! you'll not only lose equity from your home but you'll also screw all your neighbors property values into the ground!

Example - You and I have the exact same home in the same subdivision...Our homes are worth $500k but you short sell yours for $350 just to unload it ..When "comps" are pulled for recent sales in the neighborhood, yours jumps out like a flare & now lowers the value / asking price for mine...

DO NOT LET SOME REALTOR TALK YOU INTO SELLING SHORT JUST SO THEY CAN GET PAID! YOU LOSE YOUR MONEY & *********R NEIGHBORS!
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Old 05-10-2008, 06:55 PM
 
8,780 posts, read 16,240,408 times
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Quote:
Originally Posted by EdatGenesis View Post
In a nut shell...Short sale means selling the home below it's fari market value & usually applies to properties in foreclosure .. When a "short sale" offer is made, basically you are offering the bank / seller less than what is owed or being asked for

Unless you're heading into foreclosure DO NOT SHORT SELL! you'll not only lose equity from your home but you'll also screw all your neighbors property values into the ground!

Example - You and I have the exact same home in the same subdivision...Our homes are worth $500k but you short sell yours for $350 just to unload it ..When "comps" are pulled for recent sales in the neighborhood, yours jumps out like a flare & now lowers the value / asking price for mine...

DO NOT LET SOME REALTOR TALK YOU INTO SELLING SHORT JUST SO THEY CAN GET PAID! YOU LOSE YOUR MONEY & *********R NEIGHBORS!
If someone is considering a short sale, the last thing they're going to worry about is their neighbors comp values. Are you suggesting that someone facing a short sale should go around to the neighbors with a hat for donations so they don't have to short sell it?
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