Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
A short sale is when the bank agrees to take less than what's owed on the house. It's generally a long, drawn out process to get the bank to approve it. A short sale expert can help in this area.
A foreclosure is where the bank has already taken it back.
For Sellers : Also, both damage your credit, but short sale is a lot better than foreclosure. If you are falling behind on payments, you would need to contact the bank. They will make you list your home for a minimum of three months so you should find an agent that is familiar with short sales. It usually takes a year of not paying to get to foreclosure though. Nowadays, almost all banks would prefer to do short sales than to foreclose on homes.
For Buyers: I also recommend an agent who has dealt with short sales. You must be very patient because some banks can take months to get back to you as they sit and wait for more offers to come in. A short sale in Old Bridge just closed for 6,000 over asking because it was a great deal, so don't expect to make lowball offers on all short sales. Some are good deals and some are still overpriced. My best advice to you is to find out if there have been any other offers before making one. If there haven't been and the property has been on for over 6 months, then you can make a lower offer just to get the bank representative out there to assess the home.
The agent for the seller can either make the deal or break the deal. When listing the home, the seller should fill out the package for the short sale authorizing the agent to negotiate with the bank,(The bank is more willing to negotiate with an agent than with the seller who is in arrears) List the house at market value, then continue to reduce the price to show history of the listing. This could take some time. If the house is in disrepair, you will need to take pictures as some banks only do a drive by BPO.
Use an agent that has experience in this field and could take control of the transaction.
Also the person doing the short sale could be held liable for taxes on forgivable debt. If the person owes $100K on the house, and short sales it for $80K, they could be taxed on the $20K.
How is short sale different from foreclosure from seller's side?
I see a lot of short sales in the market these days. Do you guys have any suggestions for short sale buyers?
Thanks in advance.
here is a little advice, when thinking of buying a home that is a short sale. Don't get your hopes up. Very few short sales that get offers actually ever close. Typically it takes the bank 8 weeks or more to even look at the offer, and even then they are as likely as not to just say no, or counter over the asking price.
On the sellers side, first your not getting any money from the sale of the home. It will hurt your credit rating, fairly badly. Some banks will come after you later with a judgment and seek to collect what they lost to you, and here is the killer, the federal government considers the difference in the amount you own on your mortgage and the amount the bank actually gets if they approve the short sale to be income to you, and you will be expected to pay tax on it.
Short sales can take anywhere from 30-45 days. If there are any junior liens involved, they can take even longer. If you had any private mortgage insurance (PMI) when you took out the loan, add time for that as well. The PMI company needs to review the loan for their approval. Be prepared to sign a promissory note. The PMI company is going to want to re-coup.
Short sales can take anywhere from 30-45 days. If there are any junior liens involved, they can take even longer. If you had any private mortgage insurance (PMI) when you took out the loan, add time for that as well. The PMI company needs to review the loan for their approval. Be prepared to sign a promissory note. The PMI company is going to want to re-coup.
I think you are being a little optomistic with your timing. Try 8 to 12 weeks to get a response from the bank on the offer. Usually the response is a counter offer. then it takes more time, depending on how the buyer responds to the counter.
Also the person doing the short sale could be held liable for taxes on forgivable debt. If the person owes $100K on the house, and short sales it for $80K, they could be taxed on the $20K.
No they can't.
The Mortgage Debt Relief Act of 2007 excludes debt forgiveness on the principal residence up to $1 million ($2 million for a couple filing jointly) for debts forgiven from 2007 though 2012.
It was part of Bush's bizarro plan to save the country from the housing crash - in this case by removing one of the things that might stop people from not paying their mortgage....
Also, foreclosures result in the same taxable debt forgiveness as a short sale (only if the sale doesn't cover the mortgage obviously).
I think you are being a little optomistic with your timing. Try 8 to 12 weeks to get a response from the bank on the offer. Usually the response is a counter offer. then it takes more time, depending on how the buyer responds to the counter.
Honestly, it depends on the staffing as to when the bank responds. If the offer isn't what the investor is looking for, the investor will counter. If the offer is good enough, the deal is usually done in less time.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Re:
